Health Committee on Nov. 6th, 2018

[Douglas Clark]

There are a couple of corrections.

It's not the same company. It's a different company. The actual ratio between the price of Cystagon and the price of Procysbi is even more outrageous, I would say. It was closer to $5,000 a year for Cystagon and about $300,000 for Procysbi.

I can't really speak too much to that particular example because that drug is currently under investigation and could potentially go to a hearing. Typically, when you see an original version of a drug that has conventional release characteristics—you just swallow it and it gets absorbed by the stomach—it gets genericized with a brand name company to retain some market share. It comes out with an extended release version of that same product, which is analogous to the situation—

[The Chair, Liberal, Bill Casey]

I'm sorry.

I have to end it now.

[Douglas Clark]

There's about a 15%, or 30%, or maybe double price markup, but a 60-fold markup is unheard of. I think it speaks for itself.

[The Chair, Liberal, Bill Casey]

Thanks very much.

We're going to go back to seven minutes with Mr. McKinnon.

[Ron McKinnon, Liberal, Coquitlam—Port Coquitlam, BC]

Thanks, Mr. Chair.

Thank you all for coming here.

Mr. Clark, you mentioned that you're recommending changes to the regulatory framework.

Can you go into more depth into what specific changes you need there?

[Douglas Clark]

Sure.

I should specify that there are three legal instruments that make up the legal framework of the PMPRB: the Patent Act, the regulations and our guidelines. The act is obviously the responsibility of Parliament, the MPs. The regulations are the responsibility of the Minister of Health, subject to being ratified by the Treasury Board. The guidelines are our own responsibility.

So, it's not that we're recommending these regulations or sponsoring them. They originate from the Minister of Health, from Health Canada.

That being said, I can describe in very broad strokes the nature of the changes that are proposed. For people who are interested in the details, the actual proposed regulations were gazetted on December 2.

There are basically three types of changes. It's proposed that the basket of countries that we compare ourselves to for pricing purposes be changed so that it's no longer such a premium set of countries because we realized, as I mentioned, that this aspirational policy didn't bear fruit over time in terms of an R and D footprint in Canada. We're looking at a group of countries that are a bit more similar to Canada in terms of health systems and economy, and more reflective of OECD median prices.

The second thing that Health Canada is doing is introducing new factors that the PMPRB can consider in trying to make a determination as to whether a price is excessive. Currently, there are only four or five factors in the act that we can look at, and they don't provide us with much insight, especially in the current context with the types of drugs that are posing sustainability challenges to payers. These new factors are pharmacoeconomics, market size and GDP. They'll enable us to leverage the work of CADTH, for example, in trying to set a cost-effective threshold for a lot of these new drugs and take a look at overall affordability in terms of the expected market size of the drug relative to GDP or GDP per capita.

Then the third type of change is enabling us to have visibility into what prices are actually being charged in Canada. The whole pricing issue has gone underground in recent years. I'm sure you're familiar with this. Most public payers negotiate confidential rebates with patentees, so list prices really don't reflect what's truly being paid in the market. Unfortunately, the PMPRB is doubly handicapped in the sense that it doesn't know what prices are truly being paid in the countries that we're comparing ourselves to, and in addition, it doesn't even know the current prices being paid by public payers in Canada. This is because of a very unfortunate court decision dating back to 2009.

It's proposed that we actually can compel that type of information. The main rationale for enabling us to do this is so that companies will be able to comply with these new, much lower price ceilings that will result from our application of these new factors of pharmacoeconomics, market size and GDP. So, it's in the companies' interests to provide us with that information.

I should emphasize, however, that this information will not be made public. It will be kept confidential by the PMPRB. Unfortunately, if we were to reveal the true prices in Canada, it would have a domino effect, a cascading effect. Internationally, it would be a race to the bottom, and we would no longer be able to secure those kinds of deals.

I hope that answers your question.

[Ron McKinnon, Liberal, Coquitlam—Port Coquitlam, BC]

Thank you.

You mentioned that you're doing the best that you can with the tools that you have available. Is that what you mean—that you need those kinds of regulatory changes—or are there other tools that you have in mind that you'd like to see?

[Douglas Clark]

I think that's the ideal. If we had to pick our top three, that's where we would land.

I think it would be helpful if we had a more enhanced ability to compel information from companies, and if we had something in the nature of administrative monetary penalties in the cases of non-compliance. Currently, if a company prices above our ceiling, it's required to lower its price eventually and to pay back excess revenues. The only real stick that we have is if it's a wilful policy of pricing above our ceiling. If the company does it knowingly, we can order that twice the amount of revenue be paid back to the consolidated revenue fund, but I don't think that's much of a deterrent, really. Many other regulatory bodies that have an enforcement function to them have some kind of means at their disposal to incent compliance, and I would say that that's a gap in our regime.

[Ron McKinnon, Liberal, Coquitlam—Port Coquitlam, BC]

Thank you.

I'd like to extend that question to you, Ms. Logan. What tools do you need to help us end up with better pricing for drugs, better affordability?

[Heather Logan]

We need to continue to advance the collaborative nature of the partnerships between Health Canada, INESSS, PMPRB and pCPA. We need to be willing to be innovative and try new things. This aligned review...I think you heard from the people who presented from Health Canada. It really started from a conversation between two people that we could accelerate this process. Rather than having sequential processes, we now run them in parallel at the request of the manufacturer. It's a voluntary initiative.

We need to be willing to try to do those things, and to be able to learn when they don't work, and to build on them when they do, first and foremost.

Secondly, we also need to be able to work with the provinces to understand, from their perspective, the kind of data and information that they need in order to publicly reimburse medications. Some of those conversations are already taking place.

Thirdly, we need to be able to continue to advance in this health technology management approach. What that means is a full life-cycle approach for drugs; that not only do we review them, and then provinces, if they have the ability to fund, fund them, but we then keep an eye on how they function in the real world. We need to collect evidence and bring that back into the HTA process to reassess the clinical and economic value of that drug, and make a different choice, if that's the best decision for Canadians.

If we're not seeing the clinical outcomes that we expected to see, that we negotiate again, either working with PMPRB or pCPA, and potentially, for a very small number of drugs where they truly don't perform, if they don't perform, to have the ability to reinvest funding from those drugs into drugs that we know are doing a better job for Canadians. We need to continue doing a lot of the things that we're already starting to do.

[The Chair, Liberal, Bill Casey]

We will now go to our five-minute round, starting with Ms. Gladu.

[Marilyn Gladu, Conservative, Sarnia—Lambton, ON]

Thank you, Chair, and thank you to the witnesses for being here.

What's the average time for CADTH to approve a drug?

[Heather Logan]

Both pCODR and CDR have targets. In general, it takes between six and nine months. It depends on the complexity of the file, and whether there are specific requirements to go back to the manufacturer for clarification.

[Marilyn Gladu, Conservative, Sarnia—Lambton, ON]

I have the same question for PMPRB. How long does it take to process the drug and get that price?

[Douglas Clark]

It really does depend on the drug. We do have service standards. Typically three months, but it will also turn on whether the patentee is inclined to comply voluntarily or whether we end up in a hearing. If it's a hearing, then there are no service standards that apply to hearings. It really depends on how long it takes for the board panel to dispose of the issue.

[Marilyn Gladu, Conservative, Sarnia—Lambton, ON]

The reason I'm asking that is because I have heard concerns about the changes that are being proposed to the PMPRB. Dr. Eyolfson made a great point when he said it's not price that's keeping us from getting more R and D. It may have to do with the amount of time and the number of hurdles that people have to go through before they have price certainty in Canada. If I look at some of the suggestions that I heard, Ms. Logan, the streamlined process sounds like a really great idea for cutting the amount of time it's going to take to get there.

Is there anything we can do to improve the price certainty at an earlier time for people who are trying to bring drugs to Canada, so we can keep those clinical trials and that research happening?

[Douglas Clark]

Before I came to the PMPRB, I worked at the Competition Bureau and dealt with many different industries and sectors of the economy. Everybody wants price certainty. No one gets it. What you want is the most predictability and visibility in the regime, but there is no country that I'm aware of where a company can go back to its headquarters, and say this is the price we're going to get before it goes through the various processes, the HTA process, the negotiation process.

It would be nice if we could provide perfect certainty. We're certainly aspiring to bright-line tests in the new framework that is being contemplated, but at the end of the day, this is the one concern that is recurrent from industry that has some legitimacy in Canada.

It really is like a relay race at times. We are working more collaboratively. We are working to collapse processes and have them run concurrently, instead of consecutively, but at the end of the day, we have a federal health and safety regulator. We have a pan-Canadian HTA regulator. We have a federal price ceiling regulator, and we have the pCPA. We have a patchwork of coverage in the market, public payers by the pCPA and private insurers.

There's no question that by not having a single national buying authority, reimbursement authority, to harness the collective buying power of the populace, we are leaving money on the table. That's why, at the end of the day, PMPRB exists. It's to compensate for the fact, by having a regulator, we don't have a national reimbursement authority or negotiating authority. Drugs are not part of our publicly funded health care system.

[Marilyn Gladu, Conservative, Sarnia—Lambton, ON]

Can you tell me why we picked South Korea as a country we want to put in the bucket of similar countries?

[Douglas Clark]

What's wrong with South Korea?

[Marilyn Gladu, Conservative, Sarnia—Lambton, ON]

I don't know anything about their health standards, but I would be surprised if they had the same access to drugs and health outcomes. I just don't know. That's why I'm asking.

[Douglas Clark]

As I mentioned before, PMPRB is supportive of the changes to the regulations, but they don't originate with us. We don't have policy authority over them. I think you'd be better served by directing that question to Health Canada.

There are criteria they've identified in the RIAS that they considered in selecting those 12 countries. Part of it is GDP per capita. Another part is a similar health system, similar access. I can only assume that's true of South Korea.

[The Chair, Liberal, Bill Casey]

Mr. Grewal.

[Raj Grewal, Brampton East, Lib.]

Thank you very much.

We've had a lot of testimony on rare diseases. I'd like to know what jurisdiction, if any, gets it right, and if there any best practices that Canada can follow and learn from when it comes to developing a policy on combatting rare diseases in this country.

[Heather Logan]

There are pockets of excellence around the world. There are components of the process that work exceedingly well in some jurisdictions. If any jurisdiction had this mapped out perfectly, I think we would be one of the first organizations to try to copy that jurisdiction as much as we could. What's being proposed, in particular by the expensive drugs for rare diseases working group, is truly innovative. Based on consultation and further discussion with assistant deputy ministers and deputy ministers at the jurisdictional level, if some of these provisions move forward it will alter the way drugs for rare diseases—highly specialized and complex drugs—move through the system and how patients and clinicians get access.

[Douglas Clark]

It's hard to improve on that answer, but some of the reforms we're looking at do, in fact, borrow from best practices abroad. Canadians try to incorporate these reforms into our regime and adapt them to the Canadian system. At the end of the day, everybody is struggling with this issue; everybody's grappling with it.

I've heard good things said about the U.K. system, which is one model we're relying on quite heavily in moving forward with these reforms. Anecdotally speaking, I was there last year meeting with a friend of mine who is responsible for rare diseases access for a particular company I won't name, headquartered out of the U.K. I told her it sounded like the U.K. really had it all figured out. Her answer was that the U.K. was the worst country she'd ever worked in. She said her counterparts in other countries would tell her that industry thinks the U.K. is the worst country but that it is somehow getting the best price. We're figuring it out as we go along, but I think we're on the right track.