An insight into Canada’s greatest drug pricing overhaul in decades

On Friday, the government of Canada settled for the biggest overhaul to its drug pricing regime as from 1987, giving new authority to the Patented Medicine Prices Review Board, the federal drug price regulator.

According to the government, it aims to bring the prices down for the patented drugs overall. However, its effect on the individual drugs, particularly the impact of government budget analyses and new cost-effectiveness, will be dependent upon how the new authority is being used by the Patented Medicine Prices Review Board.

Guidelines are still being drafted by the regulator for describing how it will be making the new regulations implement. On Friday, it stated that it will the guidelines which are being drafted might be published in September.

Some of the primary features of the regulations are as follows:

New comparison countries; the drug prices are regulated by Canada by comparing them with the list prices in other countries. In the new rules, the list of countries which it uses for the comparison will be changed.

Cost-benefit analysis; evaluation of some of the drug prices will be done on the basis of their cost-effectiveness. This approach targets drugs based on how much it will be costing to use them to extend life.

Budget impact; some of the drugs will be evaluated depending on the basis of how they could impact government budgets. Drug-makers will have to inform the Patented Medicine Prices Review Board the estimated maximum use of the drug in Canada.

This would then help the regulators in distinguishing between the drugs which have a very high cost but are used only by a small number of patients, for instance, those drugs used for the treatment of rare disease and drugs which are slightly cheaper but are used widely and hence expected to hit government drug plans hard.