Canada legislates to reduce patented drug prices

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The Canadian government has announced final regulations to reduce patented drug prices it said would save $10bn over a decade, overriding heavy opposition from pharmaceutical companies. Reuters Health reports that the changes are the biggest reform to Canada’s drug price regime since 1987 and could eventually cut the earnings of drug makers in the US, the world’s largest pharmaceutical market.

The new rules, described by Health Canada, were largely in line with a December 2017 draft. The report says 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.

Under the new rules, Canada will change the countries the federal drug price regulator, the Patented Medicine Prices Review Board, compares domestic prices to, dropping the US and Switzerland where prices are highest, and let the agency consider the cost-effectiveness of new medicines. It will also force drug makers to disclose some confidential discounts to the PMPRB, which sets maximum prices.

The Center for Biosimilars explains that under the Patent Act, the Patented Medicine Prices Review Board (PMPRB) can take action against patent holders who charge what the board determines to be an excessive price. Factors that PMPRB takes into consideration include the price for which a drug is sold, the prices of other drugs in the same class are sold, the price charged in other countries, and changes in the consumer price index (CPI).

Drugs are assessed for their therapeutic benefit relative to existing products, and depending on the outcome of that assessment, are given a ceiling price based on the median price of the same drug in United States, United Kingdom, France, Germany, Switzerland, Italy, and Sweden. The ceiling price can then grow in keeping with the CPI.

The new amendments will change the basket of countries to which Canada compares itself, and will remove the United States and Switzerland—the only two countries with higher drug prices than Canada—from consideration.

Drug makers were quick to voice concerns about the regulations; Innovative Medicines Canada (IMC), which represents drug makers, said in a statement that regulations will drop drug price ceilings by up to 70%, thereby weakening companies’ business cases to launch new medicines in Canada. IMC also warned that the regulations will impact decision-making with respect to conducting clinical trials in Canada.

Reuters Health report Center for Biosimilars report

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