Pharmacare reform pits affordability against access to novel drugs

Too many Canadians have no insurance for prescription drugs or insufficient coverage. Others can’t afford copayments and deductibles required by public and private insurers. Too few medicines are insured, especially by government plans.

Since first elected, some in the Trudeau government have focused on affordability and accessibility of prescription medicines. Affordability is the false premise of new regulations for the Patented Medicine Prices Review Board (PMPRB), the federal tribunal whose role is to prevent time-limited monopolies for new medicines being abused by “excessive” prices.

Implementation of these regulations, “intended to provide transparency and predictability,” has been delayed three times, likely due to legal challenges by drug developers and patient organizations. So far, two court decisions have struck down a requirement for manufacturers to report confidential discounts and rebates offered to insurers; a constitutional challenge is ongoing against the new regulations. This summer, the Federal Court of Appeal admonished the PMPRB, nullifying its ruling against Solaris on pricing and questioning whether the Board had helped itself to a power it does not have.

Decisions against the PMPRB are being appealed. What happens if appeals succeed and new medicine prices are severely reduced in Canada? Those who want Canadian drug prices radically reduced will be pleased, but will patients and physicians?

Health Canada and the PMPRB say the new regulations will not deter manufacturers from launching new medicines here, pointing to western Europe where they claim medicines are less expensive but launched quickly. This ignores: (1) western European countries are a market 10 times Canada’s; (2) all have at least one multinational manufacturer’s headquarters or major research and production facilities; and (3) their governments recognize the economic importance of the biopharmaceutical industry. 

In contrast, no major multinational manufacturer is based in Canada, few company research and production facilities exist here, and Ottawa’s attitude toward the industry has been antagonistic for years. Drastic price cuts in Canada will negatively impact multinational companies’ business worldwide. The result: manufacturers will delay launching innovative medicines in Canada – in some cases, until being genericized – or decide not to launch them here at all.

Canada will be placed on par with New Zealand as a potential marketplace for pharmaceuticals. Developers see New Zealand as a low-priority market due to its tiny population and government policies making it difficult to get a new drug insured. Consequently, manufacturers apply for marketing approval for few medicines in New Zealand and only do so much later than in Canada and other countries. 

Access by patients to medicines has taken second place behind affordability in Ottawa’s agenda, which apparently is the linchpin to introducing universal pharmacare. The Liberals’ advisory council recommended pharmacare initially cover a “carefully chosen list of priority essential medicines.” In other words, let’s further ration access and ignore those needing medically necessary but unlisted medicines.

If new medicine prices are severely reduced, will patients and physicians be pleased?

Medicines for common illnesses are essential and lower-income Canadians should not have to choose between paying for them or other necessities. But this must not be the only purpose for introducing national pharmacare. Novel medicines that significantly improve the lives of people suffering from once untreatable, life-threatening disorders are also essential. However, their cost is often beyond the ability of Canadians to pay as individuals. Access to costly lifesaving and life-changing medicines should be high among the goals for genuine reform.   

Introducing regulations to severely reduce new medicine prices will not achieve this access. Just the opposite. New Zealand’s fixed drug budget and requirement for price concessions led to it covering only six per cent of 403 modern medicines publicly funded in 20 OECD countries from 2011 to 2018. As of April 2020, nearly 100 new medications had been recommended for coverage in New Zealand but remained unfunded: 15 per cent were cancer therapies; 12 per cent were rare disorder drugs; and 49 per cent had been waiting for five years or longer for public funding. Lack of coverage leads to limited medicine choices that can have an adverse impact on health outcomes.

The present situation in Canada is that all provincial public plans provide at least some coverage for seniors, low-income residents and persons with disabilities, and most also have means-tested programs to protect against catastrophic costs. However, coverage is subject to out-of-pocket copayments and deductibles that vary by province but must be paid before financial assistance can be claimed. 

The biggest difference between provinces is in how many medicines are covered. Quebec’s public plan, the most comprehensive, covers around 8,000 products, Ontario’s about 5,000, but some provinces cover as few as 2,000. Where they are covered, medicines – especially new, costly ones – are often limited to patients whose health status satisfies the drug plan’s criteria for access. This would be reasonable if the criteria appropriately selected all the patients most likely to benefit from the medicine, but the conditions sometimes make little or no clinical sense to the specialist physicians who treat the patients and are often so restrictive that only one or two patients qualify.

Despite the Liberals’ desire for national pharmacare, most provincial governments are unenthusiastic but are willing to accept federal help to pay for costly new medicines. The $35 million for Prince Edward Island to improve its drug coverage (the poorest in Canada) allowed the Liberals to promote it in their election platform as the first agreement to accelerate universal pharmacare, but this seems to be just a stopgap.

Introducing regulations to severely reduce new medicine prices will not secure access to costly lifesaving medicines.

Just the opposite.

Ironically, Ottawa has a model for national pharmacare. The federal government is Canada’s largest employer and its 300,000 workers, together with retirees and dependents, have top-notch insurance for every drug approved by Health Canada negotiated by their unions. If that kind of drug coverage is good for federal employees, why not for the rest of us? It would be expensive and its affordability is debatable, given the scale of federal spending on the pandemic. Nevertheless, one must question the fairness of Canadians experiencing poorer health outcomes due to their lack of access to medically necessary medicines because they don’t have the same quality of coverage as federal employees whose access is supported by their taxes.   

Ottawa needs to work collaboratively with the biopharmaceutical industry and the provinces on solutions for Canadians with too little or no drug insurance and those requiring costly novel medicines. All Canadians need the federal government to have their backs in pharmacare reform.


During the past three years, Nigel Rawson has received research or consultation fees from Canadian Health Policy Institute, Fraser Institute, Macdonald-Laurier Institute, Canadian Cancer Survivor Network, Advocacy Solutions, Fasken, 3Sixty Public Affairs and Abbvie Canada, and John Adams has received consulting fees from Canadian PKU and Allied Disorders, Biogen Canada and Novartis Canada. The views expressed are the authors’ own and do not necessarily represent those of the organizations with which they collaborate. We have no conflicts of interest.

The comments section is closed.

  • Joel Lexchin says:

    Rawson and Adams rightly point out that the mortality from cardiovascular diseases is higher in New Zealand than in Canada but so is the rate in the United States which approves a larger number of new drugs than Canada does. Mortality rates are influenced by many factors, not just the number of new drugs a country approves. My point about life expectancy and infant mortality rates being almost the same in New Zealand and Canada was to emphasize that more new drugs do not necessarily equal better (or worse) health.

    If Barry Katsof can provide me with the names of the drugs that he is referring to, I’ll try and answer his questions.

  • Barry Katsof says:

    I do not agree with Joel’s comment. I know first hand of a “game changing” drug for a rare disease that is already approved and being commercialized in 31 countries around the world but not yet here in Canada. After years of being available to patients in other countries it is only now crawling through the Canadian process. I know of another drug , also a “game changer” that is being commercialized in the USA , EMA approval in expected any day but Health Canada submission has not yet been made. Why Joel ?

  • Joel Lexchin says:

    The article by Rawson and Adams is typical of the ones produced by people and organizations that oppose the new guidelines that will allow the Patented Medicine Prices Review Board (PMPRB) to lower the introductory prices for new patented drugs. First, and most importantly, Rawson and Adams seem to assume that every new drug approved by Health Canada is a major therapeutic advance, but that is simply not the case. Independent evaluations of therapeutic value are done by a number of organizations including the Human Drug Advisory Panel of the PMPRB, Prescrire International a French drug bulletin and IQWiG, the German health technology assessment agency. Based on these evaluations, at most 15% of new drugs are significant advances. It’s true that we also might need more choices in some classes of drugs because not all people benefit from the same treatment. In that case, one would expect drug companies to test drugs on that group of people – the ones who cannot tolerate the standard therapy, but that’s not what happens.

    The authors claim that companies will introduce fewer new medicines in Canada should the PMPRB changes go ahead. This claim echoes the statement from Innovative Medicines Canada, the industry lobby group, that this is already happening. However, no one has presented any independent analysis showing that is the case except for Life Sciences Ontario an organization whose membership is dominated by pharmaceutical companies.

    Rawson and Adams cite the situation in New Zealand as an example of what will happen in Canada if the PMPRB changes go ahead but don’t bother to present any information about health indices in that country. Survival for some diseases may be better in Canada than in New Zealand, but overall life expectancy is virtually the same – 81.9 years in Canada versus 81.7 years in New Zealand. Infant mortality in Canada is 5.0 per thousand live births versus 4.9 in New Zealand.

    Most provinces currently are not enthusiastic about a national pharmacare plan as Rawson and Adams say. But in 1966, when the Medical Care Act was passed that paved the way for national coverage of the cost of visiting a doctor, most provinces did not support that either. Would Rawson and Adams have opposed medicare back in 1966 because the provinces didn’t like it?

    What Ottawa needs to do is to ensure that medically necessary drugs are available to all Canadians at affordable prices to governments and individuals.

    • Nigel Rawson and John Adams says:

      While we agree with Lexchin that not every new drug approved in Canada is a major therapeutic advance, we do not accept that only the limited number of first-in-class medicines classified by the PMPRB and Prescrire are the only significant advances. When these organizations classify a medicine as a breakthrough intervention, any subsequent medicines in the class are not similarly categorized. This interpretation of what can be a major advance is too narrow and bureaucratic. Later additions to a class often turn out to be more effective and/or better tolerated medicines than the first-in-class drug and are significant innovations from a patient perspective.

      Applying the same narrow definition to aircraft would mean that the unique innovation in human flight was the brief flights by Orville and Wilbur Wright in their Kitty Hawk in 1903. All subsequent improvements in aviation over the following 118 years would be considered only modest advances. This analogy helps to illustrate the profound ignorance of applying the unduly restrictive and arbitrary first-in-class definition to the spectrum of progress in pharmaceutical therapies.

      Lexchin has yet to see an independent analysis showing that fewer medicines will be introduced in Canada as a result of new PMPRB regulations and dismisses work done by IQVIA because it was supported by Life Sciences Ontario. Demonstrating the reliability of a projection is not straightforward as we have seen with COVID-19. It is, nevertheless, known that some novel medicines are already not being launched in Canada due to hostile health technology assessments and pricing negotiations and poor provincial acceptance of drugs previously made available in the same disease areas. It is also known that the number of approvals of manufacturer-sponsored late-phase clinical trials for non-oncology drugs has decreased in recent years and that manufacturers have delayed submitting some new drugs to Health Canada as they wait to see how events roll out in this country. Why would regulations that will lead to significant price reductions reverse these trends that have been evident since Ottawa first proposed the new rules in 2016?

      One of us (NR) has previously demonstrated that New Zealanders have fewer options for the treatment of cardiovascular conditions than Canadians and poorer cardiovascular outcomes. Moreover, life expectancy is an aggregated measure that provides no information about particular health outcome and no insight into citizens’ quality of life.

      Lexchin rhetorically asks whether we would have opposed medicare in 1966. With the benefit of foresight, we may have done so had we been able to predict that the federal government would cut its share of medicare from the original level of 50% to today’s 22% and that Canadians would have a system that has fewer physicians, nurses, hospital beds and diagnostic scanners per capita and longer wait times for access to healthcare than most other OECD countries. The independent Commonwealth Fund’s 2021 review of health systems in high-income countries ranked Canada as the bottom among countries with universal public health insurance. Canada ranked especially poorly on health outcomes and equity.

      Finally, we agree with Lexchin that all medically necessary drugs should be available to all Canadians who need them at affordable prices, but our concept of all medically necessary drugs is probably more comprehensive than his. We do not believe that access to all medically necessary drugs will be achieved by federal government regulations requiring severe price cuts.

  • Jane Duval says:

    Thus far, sounds like money that could be spent on medications is going to the lawyers. Quoi de neuf?
    Any bets as to how long this will go on?


Nigel Rawson


Nigel Rawson is an independent researcher in Saskatoon and an affiliate scholar with the Canadian Health Policy Institute.


John Adams


John Adams is cofounder and CEO of Canadian PKU and Allied Disorders Inc. in Toronto and volunteer board chair of Best Medicines Coalition.

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