Canada Makes Drug Price Crackdown Official Over Industry Opposition

By Allison Martell

August 12, 2019

TORONTO (Reuters) - The Canadian government on Friday announced final regulations to reduce patented drug prices it said would save Canadians C$13.2 billion ($10 billion) over a decade, overriding heavy opposition from pharmaceutical companies.

The changes are the biggest reform to Canada's drug price regime since 1987 and could eventually cut the earnings of drugmakers in the United States, the world's largest pharmaceutical market.

The new rules, described in a statement by Health Canada, were largely in line with a December 2017 draft. They came after months of delay prompted speculation the government would back down in the face of industry lobbying or simply run out of time before Canada's October election.

"We are taking the biggest step in a generation to lower the price of drugs in Canada by moving forward with these regulations," Minister of Health Ginette Petitpas Taylor said in an interview.

Under the new rules, Canada will change the countries the federal drug price regulator, the Patented Medicine Prices Review Board (PMPRB), compares domestic prices to, dropping the United States and Switzerland where prices are highest, and let the agency consider the cost-effectiveness of new medicines.

It will also force drugmakers to disclose some confidential discounts to the PMPRB, which sets maximum prices.

Initially expected to go into effect in January, the regulations were delayed so the government could review feedback. Petitpas Taylor said the regulations should now go into force within a year.

She said while the new features of the regulations, which would take into account cost-effectiveness of medicines and their impact on government budgets, would only apply to new drugs, changes to the countries Canada compares its prices with could affect some drugs already on the market.

REFORMS COULD AFFECT U.S. MARKET

Global drugmakers, including Johnson & Johnson, Merck & Co and Amgen Inc, argued against the draft plan.

Petitpas Taylor said the new rules would lay the foundation for a new national pharmaceutical care program. Prime Minister Justin Trudeau's government is expected to announce a program to cover the cost of prescription drugs for some or all Canadians, but the program's scope is not yet clear.

While the Canadian government's focus is on reducing domestic patented drug prices that are among the highest in the world, the new policy could eventually have consequences south of the border.

The Trump administration in July said it would allow U.S. states and other groups to start pilot programs related to importing drugs from Canada. It has also said it may start determining what the government healthcare program Medicare pays for certain medicines based on prices in some other countries, including Canada.

Reuters reported in February that pharmaceutical lobby groups had offered to give up C$8.6 billion in revenue over 10 years, freeze prices or reduce the cost of treating rare diseases in order to head off the Canadian reforms.

Innovative Medicines Canada (IMC), the main industry lobby group, has argued lower prices could result in delayed drug launches and reduce life sciences investment in Canada.

The federal government has argued many countries with lower prices have more pharmaceutical industry investment and access to drugs that meets or exceeds Canada's.

"This is something that we wanted to get right," Petitpas Taylor said. "We took the time that was necessary, and I'm extremely pleased that we're moving forward."

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