Drug-price reduction plan not backed by evidence, says policy expert

by Leo Almazora06 Dec 2017
The federal government recently announced plans to change drug-price regulation in order to protect Canadians from excessive costs of patented drugs. But according to one policy expert, Canada’s own drug-price regulator believes the plan is not advisable.

“The PMPRB [Patented Medicine Prices Review Board] uses the median international price as the threshold to determine whether Canadian prices are excessive,” explained Brett Skinner, founder and CEO of the Canadian Health Policy Institute (CHPI), in a piece for the Financial Post. “There are seven countries used for comparison to Canada, including France, Germany, Italy, Sweden, Switzerland, the United Kingdom and the United States.”

Citing data from the PMPRB’s latest annual report, Skinner noted that Canadian drug prices have been lower than the median international prices for the last 16 years. In 2016, he said, median international prices for drugs were as much as 25% higher than Canadian prices.

“When the PMPRB used the mean [or average] prices, and adjusted currencies at purchasing-power parities, international prices for patented drugs were 51-per-cent higher than Canadian prices in 2016,” he added.

Under the proposed change, the US and Switzerland would be excluded from the countries used in determining drug-price thresholds; meanwhile, Australia, Belgium, Japan, Netherlands, Norway, South Korea, and Spain would be added. “This is a blatant attempt to bias the price ceiling downward by excluding higher-priced markets and adding lower-priced markets,” Skinner said.

Referring again to the PMPRB’s annual report, he said most of the 12 countries included in the new proposal have lower price levels for new or patented drugs. He cited data from another PMPRB report, which showed that in markets where prices were lower, there were also fewer launches of new drugs — suggesting that patients in those countries had less access to new drugs.

“Using data from the PMPRB and the Organization for Economic Cooperation and Development [OECD], CHPI tested the correlation between the number of new drug launches and three independent variables: the price level for patented drugs, the per capita GDP and the total market size (population) in each of 31 OECD countries,” Skinner said. “Market price level was the only variable that was a valid predictor of the number of new drug launches.”

Claiming that there is no evidence to justify changes to existing price regulations for patented drugs, Skinner called on policymakers to reject the PMPRB’s proposed regulatory changes because they “are unnecessary and will almost certainly reduce access to new medicines for Canadian patients.”

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