No, Chair, I'll do the initial address.
Thank you very much for having us here. I'm Glenn Monteith. I'm the vice-president, innovation and health sustainability, for Innovative Medicines Canada, the association representing Canada's innovative pharmaceutical industry.
With me is Brett Skinner, executive director of health and economic policy at Innovative Medicines Canada.
Innovative Medicines Canada represents more than 50 innovative pharmaceutical companies. Our membership includes start-ups through to well-established international pharmaceutical companies. Our association advocates for policies that support a strong and robust life sciences economy in Canada and that also ensure access to innovative medicines for Canadian patients.
Our sector is an important partner in Canada's health care system. We interact every day with public and private health plans. In addition, we're at the table with the pCPA as a trusted partner in the sustainability of Canada's health care system. The sustainability is fundamental to Canadians.
As a principle, we believe all Canadians should have fair, equitable, and affordable access to the medicines they need when they need them. We are therefore pleased to be here to speak on the topic of pharmacare.
I want to begin with some preliminary facts about the role of our member companies within Canada's current health care system. Spending on patented medicines has declined from 8.4% to 6.4% of total health care spending in Canada between 2004 and 2014. According to the PMPRB's most recent data, in 2014 the prices of patented medicines in Canada were on average 13% lower than the median international price and 31% below the international prices at market exchange rates. Another way to describe it that they were 19% below the median prices and 45% below the average prices at purchasing power parity.
Adjusted for inflation, per capita spending on patented medicines was lower in 2014 than in 2003. For 25 of 27 years under the PMPRB regulation, patented medicines' price increases were less than the consumer price index. What this means is that medicines have become more affordable over time relative to inflation. According to the PMPRB's annual report, in 2014 Canada actually ranked third of eight countries in terms of the average prices of patented medicines at market exchange rates. In same comparison using purchasing power parities, Canada ranks number four.
Rather than being a cost-driver in the health care system, innovative medicines contribute significantly to its sustainability, from avoided hospitalizations and shorter hospital stays to fewer invasive surgical procedures, and the avoidance of what sometimes can be a lifetime of chronic illness or disability.
Without access to medicines, these health care costs would become much greater and health outcomes poorer. Innovative medicines also lead to reductions in health system costs. For example, here in Ontario in 2012 we know that out of the $1.2 billion that was spent on six classes of innovative medicines, the expenses were offset by more than $2.4 billion in savings and productivity gains alone. Today in Canada, all hospital administered medications are publicly funded. Outside the hospital setting, the majority of Canadians have financial coverage for innovative medicines under a collection of private drug plans designed for the working population, as well as public drug plans run by provinces and territories that are focused on vulnerable populations such as seniors and those on social security.
The system works well for most Canadians. If pharmacare is only about saving money, there is a belief that the only way to do that is by severely restricting access to innovative medicines. I do not believe Canadians want this. However, we do believe a program or programs could be developed to focus on the following challenges in the current system.
First is the challenge of the uninsured and the underinsured. Despite the strength of our system there are Canadians who do not qualify for either public or private drug coverage, or who do qualify but still struggle financially to fill their prescriptions.
Second is the challenge of the quality of drug plan coverage. This is an issue with the number of drugs covered in public drug programs. In a study that we conducted, we found that of the 121 new medications approved by Health Canada from the period 2010 to 2014, only 37% received public reimbursement as of December 31, 2015, across the provinces accounting for at least 80% of the eligible national public drug plan population. As a result, Canada ranks 18th out of 20 countries in that regard.
Third is the challenge posed by the time to listing in public plans. Canadians in public plans also wait inordinately long to access innovative medicines. On average, it takes 449 days to list a medicine in a public drug plan, even after it has been approved by Health Canada. As a result, Canada ranks 15th out of 20 countries in our comparative study.
The fourth challenge, as indicated by data from another study, is that coverage in Canada's private drug plans is much better than in public plans. Of the 464 new drugs approved for sale by Health Canada during the period 2004 to 2013, 89%, or 413 were covered by at least one private drug plan compared to only 50%, or 231 drugs that were covered by at least one public plan as of January 31, 2015.
Our industry has defined a set of principles to guide discussions on the development of a pharmacare program as follows: first, our first priority is patient access to necessary medicines to meet diverse patient needs; second, we believe that maintaining the prescriber-patient relationship and choice are both critical and fundamental rights; third, we must address the gaps in care and access to treatment for the uninsured and those who cannot afford it; fourth, we believe in direct public funding for those most in need; fifth, the economic and societal benefits of medicines and vaccines must be considered; sixth, Canada's health care system must support innovation and the adoption of groundbreaking science and technologies to improve health outcomes; and seventh, any program must provide the best standard of care for all Canadians, not simply cost-containment driven solutions. Programs focused on cost-containment often mean reduced access to medicines, the exact opposite of what we would hope for Canadians.
I passionately believe that we should build systems that will facilitate greater and more timely access to innovative medicines, improving health outcomes, and securing the future of our Canadian health care system.
Thank you for your attention. I look forward to your questions and comments.
Thank you.