Canada’s publicly funded healthcare system is often considered to be a source of national pride. While Canadians benefit from near-universal coverage of physician and hospital services, they are often left to pay out-of-pocket or rely on private insurance for prescription drugs dispensed outside of the hospital setting. Because regulations are divided between federal, provincial, and territorial levels, disparities between public drug plans and unequal access to marketed products are major criticisms of this framework.
In addition to the tremendous repercussions for Canadians in terms of access and affordability, drug manufacturers are also faced with the significant challenge of navigating the complex and fragmented approval processes of multiple independent bodies for the pricing and reimbursement of pharmaceuticals. However, manufacturers equipped to manage this complex environment will find a competitive and attractive business landscape.
Like other healthcare systems, the COVID-19 pandemic has exerted tremendous pressure on already limited resources and exposing horrendous conditions in public and private institutions. This is expected to result in further cost-cutting efforts.
Canada’s Payer Stakeholders
- The Patented Medicines Prices Review Board (PMPRB) is the body responsible for regulating prices of all patented prescription and non-prescription drugs sold in Canada.
- The Canadian Agency for Drugs and Technologies in Health (CADTH) is an independent agency funded by federal, provincial, and territorial governments. CADTH is a health technology assessment (HTA) agency that houses services including the Common Drug Review (CDR) and the Pan-Canadian Oncology Drug Review (PCODR).
- CDR provides evidence-based clinical and economic information and expert advice to participating public drug plans (federal, territorial and all provinces except Quebec). While Ontario participates in CDR, certain products may also qualify for their own independent Rapid Review Process. With over 60 per cent of the Canadian population living in Quebec and Ontario these provinces are incredibly important.
- Conseil du medicament is Quebec’s influential HTA body. It recommends drugs to be listed on the Quebec provincial formulary. Final decisions are made by Quebec’s Minister of Health. The formulary is published three times per year.
- The Ontario Ministry of Health’s Rapid Review Process applies when a new product will fill a significant unmet medical need, or the listing will result in significant savings for the province. A unique aspect of the Ontario Rapid Review Process is that submissions can be made before the receipt of Health Canada Notice of Compliance (NOC) authorising the drug for sale within Canada.
Important Points to Keep in Mind
Health Canada is the federal health department responsible for approving new drugs. Health Canada releases a formal marketing and distribution authorisation called Notice of Compliance (NOC) following the satisfactory review of a new product submission.
Pricing and reimbursement are two separate considerations.
Pricing approval for patented medicines is regulated by the federal government through the PMPRB. While manufacturers are free to set the prices for their products in theory, the prices of patented medicines are monitored by the PMPRB to ensure that prices are not “excessive.” The PMPRB assesses drug prices in accordance with the level of therapeutic innovation:
- Breakthrough – first to treat a particular illness effectively or address a particular indication effectively
- Substantial Improvement
- Moderate Improvement
- Slight/no improvement and line extensions
The prices of “breakthrough” drugs are pegged to the median ex-factory price for the same drug in reference countries. Pricing of other new patented drugs is managed via therapeutic price referencing. Prices are limited so that the cost of the therapy is in the same range as other patented drugs already on sale in Canada. Prices can never exceed the highest referenced price or increase by more than the consumer price index (CPI).
Reimbursement prices are not set by the PMPRB nor does it enter pricing arrangements with manufacturers. The reimbursement process is governed by a combination of federal, provincial, and private drug plans. The result is that reimbursement criteria and prices can vary considerably between plans.
Manufacturers should evaluate the potential of accelerated market access via the Ontario Rapid Review Process. A positive decision can shortlist a drug on the formulary and serve as a positive reference to build momentum for the rest of Canada.
Private payers may cover all Health Canada approved drugs, establish their own formularies, or follow the public drug plan in their provinces. In Quebec, private insurers are required to cover at least all drugs listed in the provincial formulary. Many private drug plans ask for submission dossiers and specific requirements vary by plan.
Hospitals maintain their own formularies through Pharmaceuticals and Therapeutics Committees. Dossiers must be submitted to individual hospitals or hospital consortia.
Product listing agreements (PLA) tailored for unique product characteristics and payer concerns can help accelerate market access. These may be an option for overcoming negative CDR recommendations.
Implications for Industry
In December 2017, the federal government proposed amendments to the regulations governing the PMPRB. The amendments that were due to come into effect in July 2020, include three significant changes. The first is on the roster of countries whose drug prices are compared with the proposed Canadian price in the PMPRB’s international comparison. Six lower-price countries are replacing two with higher prices. The effect of the switch will be to reduce the maximum prices for new medicines in Canada to around the median of prices charged in over 30 OECD countries.
The second change is that the PMPRB will be required to assess the “value” of each new drug using cost-effectiveness analyses already reviewed by the Canadian Agency for Drugs and Technologies in Health (CADTH) when it makes its reimbursement recommendations to Canada’s public drug insurance plans (except those in Quebec). CADTH does not set prices but frequently recommends big reductions — 50 to 80 per cent, sometimes over 95 per cent — to achieve cost-effectiveness.
The third major change is a requirement for pharmaceutical manufacturers to divulge information to the PMPRB on confidential rebates and other commercial terms negotiated with Canadian insurance plans.
Additionally, market price restrictions are expected to also impact new drug launches. There is concern that pharmaceutical companies will not seek regulatory approval for their medicines because they view Canada’s market conditions unfavourably. This is already happening in Canada — about 20 per cent of new therapeutic drugs approved in the United States do not come to Canada. Innovative Medicines Canada, the industry association representing Canada’s research-based pharmaceutical companies, has publicly stated that numerous pharmaceutical companies have already decided not to market certain new drugs in Canada. This move will surely impact the health of many Canadians.
GLOBALHealthPR’s Canada office has more than 30 years of local experience and can help you navigate this challenging environment to reach key healthcare stakeholders and patients via innovative communications and marketing strategies.
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