Health Committee on April 13th, 2016

[The Acting Chair, Liberal, Bill Casey]

I call the meeting to order. We have a quorum.

We're anxious to hear from witnesses. I see some old friends back.

Today we have four organizations here. Each organization will have 10 minutes. When you get to 10 minutes, I'm going to put a little red tag up here showing that your time is up. We're always anxious to ask questions.

The order we're going in is the Department of Health, first; the Canadian Institute for Health Information, second; the Patented Medicine Prices Review Board, third; and the Canadian Agency for Drugs and Technologies in Health, fourth. After that, we'll open the floor for questions.

Welcome to our committee. We have a big audience today, so you must be popular people.

Thanks very much.

Go ahead, Department of Health.

[Abby Hoffman, Assistant Deputy Minister, Strategic Policy Branch, Department of Health]

Thank you, Mr. Chairman.

Good afternoon, and thank you for the invitation to speak to the committee.

With me are Health Canada colleagues Frances Hall, the acting executive director of the office of pharmaceuticals management strategies; and Scott Doidge, who is director general of the non-insured health benefits directorate in the first nations and Inuit health branch at Health Canada.

I'm going to focus my remarks on government roles, including, in particular, the federal role in pharmaceutical policy and drug coverage; make some comments about drug coverage in Canada today; and conclude with some comments about possible approaches to strengthening drug coverage for Canadians.

Federal, provincial, and territorial governments share responsibilities for pharmaceuticals. The provinces and territories, as you know, are responsible for the organization and delivery of health care services in their respective jurisdictions. With respect to drugs, that includes, at their discretion, providing drug coverage for their eligible populations and deciding which drugs qualify for reimbursement—generally those that are listed on the drug plan's formulary, which may also specify conditions for certain classes or categories of drugs. They also are involved in negotiating patented drug prices with manufacturers through product listing agreements and regulating the prices of generic drugs.

In addition, the provinces, along with medical regulatory bodies, may regulate prescribing and dispensing practices of health care professionals.

While the provinces and territories provide most public drug coverage, the federal government has some unique and important responsibilities with respect to pharmaceuticals.

Through the Canadian Institutes of Health Research, the federal government funds basic research and clinical trials.

We protect intellectual property related to patents and data via the Canadian Intellectual Property Office, associated with Industry Canada, and through Health Canada's health products and food branch.

We assess submissions from manufacturers that wish to sell a product in Canada to determine whether that product meets regulatory standards for safety, efficacy, and quality, and then we monitor the safety of authorized products once they are in the marketplace.

In terms of coverage, various federal departments manage drug plans for so-called federal populations, including first nations and Inuit, members of the Canadian Armed Forces, veterans, the RCMP, federal inmates, and immigrants and refugees under certain terms set by Immigration, Refugees and Citizenship Canada.

As well, in its capacity as Canada's largest employer, the federal government provides drug coverage to public service employees and their dependants.

Finally, as you will hear in more detail in a few moments, the federal government regulates the prices of patented drugs through the Patented Medicine Prices Review Board.

Along with the provinces and territories, we support two key agencies that support work in this area, and you will hear from their representatives in a few moments, as well.

In January of this year, the federal government joined the pan-Canadian Pharmaceutical Alliance, the so-called pCPA. This alliance is an initiative of the premiers, dating back to 2010, and it combines the purchasing power of all government drug plans to negotiate lower drug prices. Drugs recommended for formulary listing by CADTH are considered for negotiation by the pCPA with the respective manufacturers on behalf of all public drug plans. The pCPA has a companion initiative for generic drugs.

As of March 2015, the pCPA had concluded 63 joint negotiations on brand-name drugs and achieved price reductions on 14 generics. This has resulted in an estimated savings of $490 million a year.

Let me turn to some comments about drug coverage in Canada. When I addressed the committee a few weeks ago on the Canada Health Act, I noted that governments in Canada provide insured first dollar coverage for medically necessary physician and hospital services, including drugs used in hospitals; and that the cost of drugs used outside of a hospital setting are covered through a mix of discretionary public plans, private insurance—usually related to one's employment—and out-of-pocket spending by individuals.

Of the $29 billion spent on drugs each year—that is the number for last year—public plans finance 43% of that amount, about $12 billion; private plans, in the range of $10 billion, or 35%; and the remaining $6 billion, or 22%, is covered by out-of-pocket spending by individuals and their families. This may be direct purchases, but it may also be contributions in the form of deductibles and co-payments related to private coverage that these same individuals have.

On the general coverage picture in Canada today, approximately 57% of Canadians have some employment-based or employee-sponsored access to a private drug plan; 21% are covered by provincial and territorial plans, which as you probably know cover specific groups such as seniors, social assistance recipients, and in some cases individuals with particular diseases. The conditions and eligibility parameters vary across jurisdictions. Three per cent of the population is covered by the federal drug plans I mentioned a few minutes ago.

That leaves about 10% of Canadians without any practical form of ongoing coverage. For those individuals, they may have coverage if it's offered by their province or territory for so-called catastrophic coverage. That's coverage that kicks in when drug costs for an individual are very high. The threshold for eligibility for this type of coverage varies, and it may start when drug costs reach a fairly low threshold, 1.25%, for example, of an individual's net family income, but the eligibility threshold may be as high as 12% of net family income. A further 10% of Canadians could generally be considered to be under-insured. These are people who have very high drug costs that exceed the limits of their drug plan, and that leaves them with very significant out-of-pocket costs.

Over time, plans have added elements but again costs and eligibility vary. I'll just give you one example. A couple over age 65 with a net income of $35,000 a year and annual prescription drug expenditures of $1,000 would have no direct costs in the Yukon, but they would pay $1,000 if they lived in New Brunswick or Newfoundland. That's an example of the variability. Similarly, coverage varies among private plans as well. There are thousands of such plans in the country, and while they have some common elements because they are managed by a smaller number of large insurers in terms of benefits, co-pays, deductibles, caps, and so on, they too vary.

Public plans control costs quite well through formularies based on clinical assessment of cost-effectiveness, aggressive price negotiation, and generic substitution. Private plans are more likely to list any drug authorized by Health Canada for sale in Canada and to act pretty much as price-takers.

On coverage, our mixed public and private system provides coverage for the majority of Canadians, but there are significant challenges. Coverage and costs to patients vary; 10% to 20% have no or inadequate coverage; and the multitude of payers limits effective price negotiation. That situation is the backdrop to the government's current commitment to improve the affordability and accessibility of drugs. This issue is one of the priorities that FPT health ministers agreed to tackle this past January in the course of their discussions leading to a new health accord.

I just want to close with what the few costs would be to include prescription drugs as an insured service under the Canada Health Act. Prescription drugs in that model would be treated in the same way as physician and hospital care in Canada, and patients would face no direct cost. Prescription drugs would be publicly funded and drug plans publicly administered. This approach would certainly address the issue of Canadians not filling prescriptions because they can't afford to; access would be based on need not on the ability to pay. However, in this model Canadian governments could assume very significant costs. In our current system where employers and individuals cover 50% of the $29 billion spent annually on prescription drugs, clearly a considerable portion of that cost would fall to governments. While there might be some efficiency gains in administration and lower prices, and certainly greater likelihood of harmonized coverage for everyone in a public system, public sector spending on drugs would increase substantially.

The second broad approach would take advantage of our current mixed financing system. In this model the existing system could be adapted to be more equitable, efficient, and harmonized without such a dramatic change in the level of public financing. Coverage could be extended to close current gaps and incentives could be provided to harmonize coverage across existing public and private plans. All plans could benefit from joint price negotiations, a common system of drug assessment, and a national formulary. Experts you may hear as witnesses later on in this study will no doubt offer their views on the incremental cost and parameters of such an approach. Some may well tell you that this approach might be more feasible and fiscally prudent in Canada.

Of course, there are advantages and disadvantages to any system of coverage. Any coverage model, however, whichever of those two broad paths might be chosen to be viable, needs to tackle the challenges of Canada's high drug prices, making the best use of available funds by discipline when it comes to listing and prescribing drugs and having the information on which to base those decisions.

My colleagues will speak to some of these issues in their remarks.

Mr. Chairman, I'll conclude there and indicate that I'm prepared to respond to your questions later on in this session.

Thank you.

[The Chair, Liberal, Bill Casey]

You have packed a lot of information into ten minutes.

Thanks very much.

We now have the Canadian Institute for Health Information.

[Brent Diverty, Vice President of Programs, Canadian Institute for Health Information]

Thank you very much, Mr. Chairman. My name's Brent Diverty. I'm vice-president, programs, and I'm joined by my colleague Michael Gaucher, who's our director of pharmaceuticals and health workforce. I'm very pleased to address the committee today.

On behalf of the Canadian Institute for Health Information, I would like to thank you for the opportunity to appear before the committee. Since 1994 we've played a unique role in Canada's health sector. Working with a broad range of stakeholders, we are responsible for collecting, sharing, and publicly reporting on health data and information. We recently reviewed our mandate, and that's the beginning of a new chapter for our organization.

We continue to believe that better data contributes to better decisions, ultimately improving the health of Canadians. We are committed to making our information more accessible and easy to use. Working collectively with our stakeholders is critical to achieving our goals, and this plan, our strategic plan, highlights the importance of responding to their needs quickly with innovative tools and approaches.

Ultimately, our goal is to drive health system transformation and improvement across the continuum of care.

Today we're here to give you an overview of the current landscape of drug coverage and spending in Canada. Our data, which is drawn directly from the provinces and territories, and our analytical expertise, mean CIHI is well positioned to provide unbiased information to inform conversations about improving the accessibility and affordability of drugs. Based on data from our national health expenditures database, we know that Canada spends $29 billion, or $814 per Canadian, on drugs. Drug coverage is currently provided by a number of public- and private-sector payers, with 37% financed by provincial and territorial governments, 35% by private insurers. In addition, 22% of drug spending is paid for out-of-pocket by individual Canadians, and the remainder is financed by social security funds at 4% and the federal government at 2%.

Internationally, Canada ranks second behind the United States in per capita drug spending. Among OECD countries, Canada ranks near the bottom in the share of public drug-spending financed by the public sector. In other words, in Canada private insurers and individuals pay a higher share of drug costs than they do in most other OECD countries.

In recent years, growth in drug spending has been slowed by the expiration of patents on many widely used blockbuster medications like statins, which are used to lower cholesterol. In addition, public drug programs have implemented policies, limiting the prices they are willing to pay for generic drugs. More recently, provincial and federal drug programs have come together, through the pan-Canadian Pharmaceutical Alliance, to reach coordinated pricing agreements for selected brand-name and generic products. These agreements have achieved further savings.

CIHI's recent report on prescription drug spending in Canada found that, although these changes have led to significant savings for public drug programs, the savings were offset by increased spending on specialized medications such as biologics to treat conditions like rheumatoid arthritis and Crohn's disease. These and other new drugs, like those used to treat hepatitis C, are putting significant pressure on both public and private drug programs.

As the trend towards higher-cost drugs continues, the need to understand cost drivers and to forecast future trends will become greater, as even a single drug may present significant challenges for the sustainability of drug budgets. CIHI maintains information on public drug programs across the country, and tracks changes in program policies over time. Public drug coverage is available in all provinces and territories, but the design of public drug programs varies widely as to who is covered and how costs are shared between individuals and the drug program.

Some provinces and territories provide coverage to all residents, with the level of coverage depending on a person's income and drug costs, while others provide coverage to particular groups like seniors, people receiving income assistance, and other selected populations. Although some programs cover all eligible costs, generally costs are shared between programs and beneficiaries, and the ways that costs are shared varies.

There are also differences in which drugs are covered, resulting in disparities in access to certain medications across jurisdictions. Each provincial, territorial, and federal drug program maintains its own formulary, which includes the list of drugs it covers and the criteria under which it covers each drug. The benefits and costs of any changes made in drug coverage to improve accessibility and affordability are highly dependent on how they are designed and managed.

Our data and expertise place CIHI in a strong position to support both the evaluation of various options and ongoing monitoring, measurement, and evaluation activities. Since 2004, CIHI has maintained the national prescription drug utilization information system for public drug claims. The system was designed in collaboration with representatives from federal, provincial, and territorial drug programs, along with the Patented Medicine Prices Review Board, to provide information that supports pharmaceutical policy development and the effective management of Canada's public drug programs. It holds pan-Canadian information related to public drug program formularies, drug claims, policies, and population statistics.

Data from public drug programs in all provinces except Quebec, as well as from the federal drug program managed by Health Canada's first nations and Inuit health branch, is available in this database. It will soon hold data from Yukon.

Formulary data that we maintain shows there's a high degree of similarity and drug coverage despite the differences among public drug programs. This suggests the pan-Canadian agreement on the coverage of at least a certain set of drugs is achievable. This high-level analysis does not, however, take into account the details of how drugs are covered by each program. CIHI regularly conducts these types of more detailed analyses and is able to assess the comparability of public drug program formularies across the country.

We share our drug claims data with participating jurisdictions and the PMPRB to support their work. We also provide data to support the work of CADTH, Health Canada, and other national and provincial organizations. To date, CIHI and its network of partners have used CIHI data to support public drug programs to measure the drivers of drug spending; support evaluation of policy options; better understand trends in drug use and spending; and examine safety concerns like potentially inappropriate drug use, prescription drug abuse, and polypharmacy.

What has been learned? In one example, by linking drug data with our other holdings that contain hospital in-patient and emergency department data, we found that seniors were five times more likely than other Canadians to be hospitalized for an adverse drug reaction. In another study we found that two-thirds of Canadian seniors were taking five or more drugs and almost 40% were using a potentially inappropriate medication. Notably, CIHI’s drug claims database contains information on more than 70% of Canadian seniors.

But our data remains incomplete. In order to have a complete picture of drug use and safety, and to more accurately forecast and examine policy options, comprehensive data is needed on all drugs used by all Canadians, including people with private insurance or without any drug coverage. The data must also be collected in a way that it can be joined together with other health datasets, such as those for emergency department visits and hospitalizations, to provide a more complete picture of Canadians' encounters with the health system.

Despite this imperative, CIHI currently has comprehensive drug data from just three provinces: British Columbia, Saskatchewan, and Manitoba. We are working with other jurisdictions to collect private insurance data from drug information systems, as well as data on hospital and cancer drugs, but the process is slow and we expect it to take many years. Greater collaboration among governments, health system stakeholders, and the private sector is needed in order to expedite the creation of a comprehensive dataset.

CIHI is able to support the work of the committee and the ongoing discussion around drug policy in Canada, for example, in the evaluation of different program options and their associated costs. Our data and analytical expertise, which enables us to analyze trends and to forecast future drug use and spending, may be useful as you weigh the impact of various policy options and changes.

Going forward, we would be pleased to provide the committee with any information it needs as it considers this important and complex topic.

I thank you again for the opportunity to present this information and I look forward to taking some of your questions at the end.

[The Chair, Liberal, Bill Casey]

Thank you very much.

Next, we have the Patented Medicine Prices Review Board.

[Tanya Potashnik, Director, Policy and Economic Analysis Branch, Patented Medicine Prices Review Board]

Mr. Chair, members of the committee, good afternoon.

Thank you for the invitation to appear before you today. My name is Tanya Potashnik, and I'm the director of policy and economic analysis at the PMPRB. With me today I have my colleague, Guillaume Couillard, who is the director of the board secretariat, communications and strategic planning at the board.

I'm appearing today before you on behalf of our executive director who has fallen sick and sends his regrets.

The PMPRB is an independent, quasi-judicial body established by Parliament in 1987 as a result of major reforms to the Canadian drug patent regime. These reforms sought to balance strengthened patent protection for pharmaceutical companies with consumer protection from excessively priced patented drugs. As you may know, in return for these newly strengthened rights, the pharmaceutical industry committed to increase its R and D in Canada to 10% of sales.

Although the PMPRB is part of the Health portfolio, because we are in part an administrative tribunal with a quasi-judicial function, we must carry out our mandate at arm's length from the Minister of Health and other portfolio members.

The PMPRB is composed of approximately 70 civil servants, known commonly as board staff, and five Governor in Council appointment board members. The chairperson of the board is designated under the Patent Act as the CEO of the PMPRB, with the responsibility to supervise and direct the work of the PMPRB. Its work is carried out by board staff under the day-to-day direction of the executive director.

The PMPRB is a consumer protection agency with a dual mandate; first, to ensure that prices at which pharmaceutical companies sell their patented medicines in Canada are not excessive; and second, to report on pharmaceutical trends in general and on R and D spending by pharmaceutical patentees in particular.

In terms of a price regulating mandate, the PMPRB sets ceiling prices based on the factors in the Patent Act and its guidelines for all new patented drugs when they enter into the Canadian market and are continually regulated until the patent expires. There are approximately 1,300 patented drugs under the PMPRB jurisdiction at any given time.

The PMPRB encourages patentees to comply voluntarily with its price ceilings and investigates any suspected instances of excessive pricing. When the result of an investigation is that the patented medicine appears to be priced excessively, the patentee is given the option to lower its price and/or refund the excess revenues through a voluntary compliance undertaking, commonly known as a VCU.

If a patentee chooses not to submit a VCU, the chairperson of the board may issue a notice of hearing. At the hearing, staff and patentees appear as parties before the panel of two to three board members who must exercise their quasi-judicial responsibilities by making a legal finding based on the evidence and the applicable factors in the Patent Act as to whether the drug is priced excessively. If the panel finds that the price is indeed excessive it can order a patentee to reduce the price and/or refund the excess revenue.

In carrying out its quasi-judicial responsibility, the board possesses all the powers, rights, and privileges as are vested in superior court.

Since 2008, PMPRB has accepted 67 voluntary compliance undertakings from patentees, for a total of more than $100 million in excess revenue refunded to the Government of Canada.

As of today, the PMPRB staff is overseeing more than 100 investigations of suspected excessive pricing, and there are three active hearings before the board. There are also a number of ongoing Federal Court cases that relate to the decisions of the board or the scope of its jurisdiction. One such case seeks to have the provisions of the Patent Act, which empower the PMPRB to set price ceilings on patented drugs, declared unconstitutional. If successful, this would mean the federal government has no meaningful role to play in controlling drug prices at the national level.

In terms of our reporting mandate, the PMPRB reports annually to Parliament through the Minister of Health on its price review activities, the prices of patented medicines, and price trends for all prescription drugs, as well as R and D expenditures that are reported to it by the patentees.

In addition to its annual report, the PMPRB publishes a multitude of studies every year under the national prescription drug utilization information system that was already mentioned by my colleague. The PMPRB has produced and published approximately 28 analytical studies over the last decade under the NPDUIS initiative.

In the last two years in particular, the PMPRB has worked closely with provincial governments through NPDUIS and directly with lead jurisdictions through the Council of the Federation to provide relevant pricing and market analysis aimed at reducing costs of generic drugs in Canada.

The work of the PMPRB was referenced in achieving price reductions in 18 commonly used generic drugs and continues to inform discussions on generic prices in a national framework.

These are challenging times for industry and pricing and reimbursement authorities alike. While recent years saw growth in drug expenditures stabilize relative to a decade ago, as already mentioned, by any measure Canadians spend an inordinate amount on drugs relative to our OECD partners. While Canada has enjoyed a period of relative stability in the growth of drug expenditures lately, the PMPRB's analysis of the underlying cost drivers behind these trends suggests that increased spending on high-cost specialty drugs, such as biologics, oncology drugs, and orphan drugs, will place increasing strain on the public and private drug plans. Global spending on these drugs is projected to quadruple by 2020. In 2014, Canadian spending on biologics and oncology drugs grew by double digits, and spending on new drugs alone increased tenfold.

The PMPRB's 2014 annual report, tabled in Parliament last December, provides some helpful high-level statistics to explain that spending in context and breaks it down further.

Internationally, Canada ranks in the top 10 major drug markets and boasts sales similar to those of the U.K.

Sales of patented drug products in Canada increased by 3.1% in 2014, to $13.7 billion. Although our prices in Canada do not increase beyond the rate of inflation, they also tend not to decrease over time, contrary to trends in many other developed countries. Canadian patented drug prices have thus steadily risen relative to prices in seven countries we compare ourselves to under the PMPRB regulations. We commonly refer to these countries as the “PMPRB7.” Whereas in 2005 Canadian prices were third lowest of these seven countries, in 2014 we are third highest, nearly on par with Germany but still well below the U.S., which is a major outlier.

Beyond the PMPRB7, Canadian drug prices are the fourth highest of the 31 countries in the OECD, and on average Canadian prices are 26% higher than the OECD median. Canada spends more on drugs per capita and as a percentage of GDP than most other OECD countries.

On the other hand, R and D in Canada continues to decline and currently stands at 5% of sales. This is the lowest recorded figure since 1988, when the PMPRB first began reporting on R and D. In contrast, the average R and D ratio for the PMPRB7 countries has held steady at about 20%.

The increasing cost pressure of high-cost pharmaceuticals is not a uniquely Canadian issue. All developed countries are struggling to reconcile patient access to promising technologies with finite health care budgets. In recent years, growing concern over sustainability has led many of these countries to introduce measures to address affordability, maximize value for money, and keep pace with a rapidly evolving pharmaceutical market.

The PMPRB has followed these developments closely as it recognizes that its regulatory environment has changed significantly since 1987. It is imperative that its legal framework adapt to these changing circumstances, if it is to remain relevant and effective in protecting consumers from excessive pricing.

To that effect, last December, the PMPRB published its 2015-18 strategic plan, identifying a new vision and a revised mission statement, as well as four strategic objectives that will allow the organization to better leverage its strengths and unique legislative remit to complement the efforts of its federal, provincial, and territorial partners and other stakeholders in advancing a common goal of a sustainable health care system in Canada.

Going forward, consumer-focused regulation and framework modernization will be at the forefront of PMPRB's efforts in ensuring a sustainable pharmaceutical system where payers have the information they need to make smart reimbursement choices and Canadians have access to patented drugs at prices they can afford.

As a first step, in the coming months we will be releasing a discussion paper on guidelines modernization and holding national consultations with interested members of the public and other stakeholders on this subject.

Thank you very much.

[The Chair, Liberal, Bill Casey]

Thank you very much.

Number four is the Canadian Agency for Drugs and Technologies in Health.

[Dr. Brian O'Rourke, President and Chief Executive Officer, Canadian Agency for Drugs and Technologies in Health]

Thank you, Mr. Chair, and like my colleagues, I thank you for the invitation to appear before the committee.

I'm Brian O'Rourke, the president and chief executive officer of the Canadian Agency for Drugs and Technologies in Health, and that's the last time I'm going to use the full title because I'll run out of my 10 minutes. Plus, we prefer to be called by our acronym, which is CADTH.

Let me begin by telling you a little bit about CADTH, the work we do, and how that may be of value to your study on the development of a national pharmacare program.

CADTH is an independent not-for-profit corporation established in 1989, and the members—or as we call them, the owners—of CADTH are the federal, provincial, and territorial deputy ministers of health, who fund the agency. That's Health Canada and all provinces and territories, with the exception of Quebec. We're governed by a board of directors that reports to the deputy ministers. Our annual operating budget is approximately $28 million, with 58% of that coming from the federal government and 27% from the provinces and territories, all except Quebec again. As well, 15% of our revenue comes from other sources.

We refer to ourselves as a health technology assessment agency, meaning that we provide evidence-based assessments of the clinical and cost-effectiveness of drugs; diagnostics; medical, dental, and surgical devices; procedures; and programs.

In essence, we have two broad areas of work: our drug portfolio and our medical devices portfolio. We have a number of programs and products in place to support the management of medical devices in Canada. However, I'll focus my comments today on our drug portfolio.

CADTH provides a range of services to support the effective management of pharmaceuticals in Canada: most notably, the CADTH common drug review, well known by its acronym CDR; and the CADTH pan-Canadian oncology drug review, known as pCODR.

The CADTH common drug review program is a federal, provincial, and territorial process, established in 2004 to provide a common approach for reviewing the clinical and cost effectiveness of new drugs and existing drugs that may have new uses. We also receive input from patient groups as part of this review. It certainly is a wonderful example of federal, provincial, and territorial collaboration. The common drug review supports coverage decisions for 18 of the 19 publicly funded drug plans in Canada, including the six plans managed by the Government of Canada for specific populations that Ms. Hoffman mentioned, such as members of the military, veterans, and Canada's first nations and Inuit people.

The pan-Canadian oncology drug review program was established by the provinces and territories in 2010, again with the exception of Quebec, and was transferred to CADTH on April 1, 2014. The federal government joined as a funding partner of pCODR on April 1 of this year. Similar to CDR, pCODR provides a common process for the assessment of cancer drugs and makes reimbursement recommendations to Canada's federal, provincial, and territorial drug plans and cancer agencies to guide their cancer drug funding decisions.

CDR and pCODR programs support funding decisions for individual drugs. We also conduct multi-drug reviews on classes of drugs under the auspices of our therapeutic review and optimal use programs. For example, we've completed therapeutic reviews of biologics used to treat patients with rheumatoid arthritis; we've conducted a therapeutic review on the new drugs that are used to treat patients with hepatitis C; and we're currently undertaking a project to assess the clinical and cost effectiveness of new drugs for the treatment of patients with type 2 diabetes.

These therapeutic reviews and optimal use projects support formulary management decisions, and they provide the evidentiary foundation to promote the appropriate prescribing and utilization of prescription pharmaceuticals. However, we are challenged with keeping up with the demand for therapeutic reviews of prescription pharmaceuticals required to support the public drug plans. They're very valuable to the policy-makers and to the clinicians to help them navigate how new and typically very expensive drugs fit within the therapeutic options currently available. In addition, they help answer questions as to whether or not older drugs are being used in the most appropriate way, based on the evidence.

For example, we have done a number of projects looking at the evidence related to prescription drug abuse. These therapeutic reviews, however, are extremely complex to undertake, and they are very resource intensive. This is, indeed, one area of our pharmaceutical portfolio that could benefit from additional funding.

As another example, the cancer agencies have started to ask us if we could do therapeutic reviews on classes of cancer drugs. That would be extremely helpful for them. However, we're not currently resourced to conduct reviews in the cancer space.

One other service I'd like to mention is our rapid response service where we provide quick evidence reviews of the dauntingly large and complex medical literature. This service is extremely valuable in that it directly addresses urgent needs for evidence that informs both policy and practice.

Mr. Chair, CADTH has well-established linkages with government officials tasked with managing the federal, provincial, and territorial drug plans, and the cancer agencies. For example, we have several advisory committees and working groups with representation from all public drug plans. In fact, that's where I was this morning. We have a meeting of our drug policy advisory committee drug plan managers from across Canada here in Ottawa. And we provide secretariat support for a group that's referred to as the federal, provincial, and territorial pharmaceutical directors' forum.

We have developed partnerships with Health Canada and many other health organizations to promote collaborative work in the pharmaceutical space, and we have created mechanisms to engage patient groups, clinicians, and representatives from the pharmaceutical industry.

We also work closely with and support the work of the drug safety and effectiveness network, housed at the Canadian Institutes of Health Research, and we're open to exploring the transfer of DSEN, the drug safety and effectiveness network, to CADTH as was recommended in the Naylor report.

We also provide drug listing recommendations and additional health economic support to the pan-Canadian Pharmaceutical Alliance that was mentioned earlier, which is responsible for implementing the drug funding recommendations that we make in a consistent manner, and in working with manufacturers to help address concerns that we identified during our CADTH reviews.

Mr. Chair, CADTH's existing programs and services, our linkages to federal, provincial, and territorial drug plans, our partnerships with other health care organizations, and our willingness to interact with concerned stakeholders such as industry and patient groups, certainly could be leveraged to enhance the management of pharmaceuticals in Canada.

We are well positioned to contribute to a national formulary, as was described in the mandate letter of the health minister, and to enhance both the accessibility and affordability of pharmaceuticals for Canadians.

Mr. Chair, that concludes my remarks, and I'm open to answering any questions that may come up.

[The Chair, Liberal, Bill Casey]

Thank you very much.

Before we turn it over to Mr. Ayoub, are all your organizations stationed or centred in Ottawa?

[Dr. Brian O'Rourke]

We have an office in Ottawa and a smaller office in Toronto. We also have a liaison officer, a staff member, in all of the provinces as well. It kind of gets our eyes and ears on the ground within the ministries.

[The Chair, Liberal, Bill Casey]

Thanks very much.

Mr. Ayoub, fire away.

[Ramez Ayoub, Liberal, Thérèse-De Blainville, QC]

Thank you, Mr. Chair.

Thank you for joining us. We are very fortunate to have you here with us.

My first question has to do with the fact that it seems a consensus has been reached during the 2015 pan-Canadian ministerial tour on the coverage of drug prescriptions. According to all parts of the government, too many Canadians still have no or insufficient coverage. It seems that if this portion of drug coverage is not reformed, the situation could become exacerbated or take a turn for the worse.

Could you tell me what your thoughts are on the issue?

[Abby Hoffman]

Mr. Chair, and Mr. Ayoub, I'm happy to make a couple of initial comments.

I think it's clear, and all of us in one form or another in our remarks have indicated, that there are clearly gaps in drug coverage for Canadians. There are, as I mentioned in my remarks, individuals who have no coverage and individuals who have inadequate coverage. I think it's fair to say there is more to the concerns and challenges in the pharmaceutical sector than simply coverage, as important as that topic is.

There's been mention here of relatively high drug prices that Canadians pay. Yes, it's true that Canadians in general receive less public support for their drug costs than many comparable countries, but our prices are high. The access that Canadians have is highly variable among provinces and territories, and between public plans and private plans.

We have problems also associated with both the underuse and the overuse of medications, and there's often a tendency to focus on the gaps in coverage. By the same token—Mr. Diverty talked about this—we know there are a number of instances where the absence of any degree of control among certain segments of our population, particularly seniors, and particularly seniors in institutions, is quite likely to subject them to what we might call polypharmacy, which is over-consumption of multiple medications for many different purposes. That has cost impacts, but worse it has severe impacts on the health and well-being of those individual patients.

We certainly have huge differences in formularies. It's not just that private plans generally speaking will list and reimburse any drug, while public plans tend to be more restrictive in wanting to have an assessment of the value of a medication before they pay for it. The problem with that is that often the most efficient ways of providing coverage occur in the public sector drug plans, but do not operate at all in the private sector, where basically any individual, if they're prescribed a prescription medication, will be reimbursed by that private plan. We don't make good use of the dollars we already spend on prescription drugs.

Maybe I'll just stop there, but I want to make the point that while coverage tends to be the area of focus, there are many other issues.

The last one I'll cite is that there are multiple reviews of drugs. You've heard from Brian O'Rourke about the common drug review. The PMPRB does its own assessment of a drug to determine whether it's a breakthrough medication when it looks at the price. Health Canada has already done a review to determine whether or not the drug should be made available for sale in the marketplace. Many provinces and territories, even after the CDR, still do their own review.

I don't want to make the situation more complicated than it needs to be, but I will say that there are multiple issues that need to be addressed in this area as you carry on with your work looking principally at coverage issues.

[Ramez Ayoub, Liberal, Thérèse-De Blainville, QC]

Thank you for your answer.

I'm from Quebec where the situation is unique. Coverage in Quebec is different from the rest of Canada.

Mr. O'Rourke, what are the best practices in your view? Is Quebec a point of reference? Is it used in the rest of Canada to develop a pan-Canadian plan that will end up serving all Canadians? Will we be able to have the same treatment from coast to coast to coast?

[Dr. Brian O'Rourke]

The agency in Quebec is INESSS. We have a good, close working relationship with INESSS. They do similar work to what we do for pharmaceutical reviews.

Where Quebec does have a very good system in place is at the hospital level with the hospital formularies and some of the assessments they would do. Our mandate for a Canada is to look at drugs that are used outside of the hospital. Hospitals are meant to look at their own drugs. That's an area of increasing concern for a number of the provinces in that a patient may be started on a drug when they're in the hospital, get released from the hospital, and then that drug isn't covered by their public or their private plan.

That is an area where Quebec is a bit of a leader in Canada.

For the reviews themselves and the patient engagement, I would say we're probably one of the global leaders in how we engage patients into the process and with our connections with industry to allow them to have good dialogue with us, through engaging clinicians, and with the expert committees that we do. I think we have a lot of world-class practices.

[Ramez Ayoub, Liberal, Thérèse-De Blainville, QC]

In Quebec, and in other places too, medicine is administered at hospitals and that works well. Patients can continue to take the drugs even outside the hospital. However, if the patients are not properly treated or do not receive follow-up at home and the illness comes back, they return to the hospital to receive temporary treatment before they go back home. I think it is a vicious circle.

What do you think about that? What are the solutions to solve the problem and what are the related costs?

[Dr. Brian O'Rourke]

Perhaps I'll look at the solutions aspect.

We're already having negotiations with the provincial drug plan managers as to whether or not we should expand our mandate to start looking at the drugs used in hospitals as well, so that the formularies would be somewhat consistent within the hospital sector and the public drug plan sector. That negotiation is happening now.

It would require some additional resources to include an additional number of drugs from the provinces and territories, and all of the drug plans associated with CADTH. As for the actual costs, I'll leave it to our expert from CIHI.

[Brent Diverty]

As I mentioned in my remarks, drug use in hospitals represents an information gap for us right now, just like with cancer drugs. An important piece of the evidence in answering questions such as those you've raised would be to have the ability to analyze hospital drug data alongside data from public programs outside of hospitals.

[The Chair, Liberal, Bill Casey]

Ms. Harder.

[Rachael Thomas, Conservative, Lethbridge, AB]

My first question goes to the Canadian Institute for Health Information.

When I look at the report on prescribed drug spending in 2013 for the top 10 drugs, which represent about 30% of spending, I would say most of these costs are related to complications having to do with either obesity or aging, with the exception of depression of course. If we were to put forward a national strategy with regards to paying for our pharmaceuticals, do you believe that costs would increase with regards to the drugs that are being prescribed in relation to obesity and aging?

[Michael Gaucher, Director, Pharmaceuticals and Health Workforce Information Services, Canadian Institute for Health Information]

It's certainly something that we would look at. Offhand, it is difficult to know whether having a national approach would really impact those utilization patterns. They vary right now by province, and a lot of factors come into play such as how they're prescribed, the health status of the population, and demographics.

There are a lot of factors that influence usage and the utilization patterns of those drugs, so it's difficult to know if a different approach could potentially have a positive influence on that.

[Rachael Thomas, Conservative, Lethbridge, AB]

Based on the stats that I see, obesity is going up and our aging population is going up. We have both of these going up, and both of these are among the top reasons for our drug spending within that top 10 category.

Given those facts, where are we going to start in terms of a cost for a national pharmaceutical strategy? What's that going to look like in 2016 or 2017? What percentage can we expect that cost to increase by based on what I'm seeing in this report with regards to our top 10 spending?

[Michael Gaucher]

We have data in our claims database that not only allows us to establish the baseline as to where we are now, but also how that changes each year. That's certainly something that could be monitored over time in terms of looking at what the effect of any change in coverage might be. We have the data and the expertise to track those changes, to monitor them, to report on them, and to see what happens.

It's difficult to know because there are different things at play. For example, with some of the generic pricing deals that are coming into play, which affect some of these drugs, the price may go down, but utilization may in fact be increasing at the same time.

Our data allows us to monitor both, and we have 10 years of data for most provinces, so we can really see what's happening over time and certainly incorporate other factors that might be influencing those changes.

[Rachael Thomas, Conservative, Lethbridge, AB]

Can it just be clarified for me—maybe I missed this detail—what is the dollar figure? What are we looking at here for one year?

[Brent Diverty]

We spend $29 billion on drugs in the country.