I want to pick up on a couple of points. First, we just completed a study in which we interviewed decision-makers from nine high-income countries comparable to Canada about issues like value-based pricing, reference pricing, and contract negotiations with pharmaceutical manufacturers.
The punchline of that story—there are two of them—is that there's no question that the global pricing paradigm for pharmaceuticals is now one of secrecy, starting with an inflated list price that everyone in the world can see, but then negotiating rebates from that list price based on some kind of contracted outcomes.
Those outcomes might be something simple like the volume of sales in your country, or they could be something complicated like a true pay-for-performance contract. That is, if the patient survives a certain period, or if they live without a hip fracture for long enough, the manufacturer gets a bonus. Or, on the contrary, if they break their hip early or they pass away early, the manufacturer may need to rebate the cost of drugs.
Second, as Marc-André Gagnon just mentioned, you cannot do this in a fragmented system. You have no technological capacity nor moral authority to negotiate value-based pricing for pharmaceuticals, unless you are also the actor paying for medical and hospital care for the affected population. That's a clear message from international experience.
As it relates to who can help coordinate federal arrangements, this is unquestionably going to be a classic case of the federalism challenge for Canada. We need, in my view, a strong role for the federal government because horizontal policy collaboration, as it's known in the policy literature—that is, collaboration in a voluntary way among partners like the provinces—can only be sustained to the point where partners can afford the collaboration and they can support it in terms of their political will. In essence, in health care, that is the job of the federal government. Canada is to take the provinces places they would like to go but cannot go on their own in a sustainable way.
By the way, this is vertical policy integration, having some meaningful skin in the game financially so that the provinces have an incentive to continue the partnership, but also having some centralized capacity.
Value-based pricing and other mechanisms for negotiated pricing are extremely costly in legal and administrative terms. Small provinces—I would venture to say any province with fewer than a million and a half people—simply can't get in the game in a meaningful way. Again, coordinated capacity such as through the common drug review or other mechanisms is essential, in a sense, for the national equity interests here.