Evidence of meeting #8 for Health in the 43rd Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was price.
A recording is available from Parliament.
Liberal
Executive Director, Patented Medicine Prices Review Board
A number of these drugs are already on the market in Canada. I don't know exactly why they claimed this. I can say that this analysis is based on data that's now outdated.
The thresholds that will be applied under the new guidelines are no longer the thresholds used as the basis for the calculations at the time. I think that they did this after the release of our—
Bloc
Luc Thériault Bloc Montcalm, QC
According to your October 23 guidelines, there would still be two out of six today.
Executive Director, Patented Medicine Prices Review Board
I don't have the information in front of me. It's hard for me to provide an unequivocal response to your point.
I don't know whether Mr. Levine wants to add to my response.
Chairperson, Patented Medicine Prices Review Board
I don't really have anything to comment on specifically to the last point, but there was the concern that was earlier addressed that somehow the PMPRB was going to supplant the government drug program negotiations. Of course that's not the case. We're setting a ceiling and they can negotiate below that ceiling, but we have to remember that 57% of the market is not even part of those government-planned negotiations. We're there to protect against excessive pricing, especially in the 57% who don't have a common voice negotiating on their behalf.
Liberal
The Chair Liberal Ron McKinnon
Thank you, gentlemen.
Thank you, Mr. Thériault.
We go now to Mr. Davies for six minutes, please.
NDP
Don Davies NDP Vancouver Kingsway, BC
Thank you, Mr. Chair.
Mr. Clark, if I understand your explanation of the purpose of these regulatory reforms, it's essentially to attempt to reduce drug prices in Canada and to increase transparency in the drug-pricing process. Would that be a fair statement?
Executive Director, Patented Medicine Prices Review Board
If it's a forward-looking statement, part of it is fair. It's not that we're necessarily looking to reduce prices in Canada; it's just that we're looking to have mechanisms in place that ensure that prices are not excessive in Canada on a go-forward basis. The impact of that would be lower prices in some instances, but most of the regime is forward-looking.
In terms of transparency, I know it's a concern for many people that real prices internationally and domestically are not known outside the parties to the negotiations, the contractors who sign them. There's nothing about these changes that would lift the veil, so to speak, on those confidential prices. The PMPRB would have access to them, although we currently do not—which seems a bit absurd when you're an economic regulatory body that sets price ceilings on a particular industry—but we won't be broadcasting those confidential prices to the general public.
The implications of doing so would be dire. Industry would obviously be reticent about entering into those types of negotiations if they knew the Canadian price, the true net price, was going to be disclosed publicly with the ensuing domino effect that would have on negotiations internationally. That's not our intention.
With regard to our list price ceilings, what we're proposing eventually under this regime is to have two price ceilings: a public list price ceiling and a non-transparent confidential price ceiling that is known only to the patentee and the PMPRB. The patentee can choose to disclose that to the pCPA or to private insurers in the context of a negotiation. Nothing precludes them from doing so, but we would not be advertising that price. As a matter of fact, for precisely those reasons we've turned ourselves inside out over the course of various iterations of these guidelines to ensure that our processes do not lead to a situation whereby competitors or folks in other countries can easily come back from our price ceilings and come up with a rough estimate of what the ceiling price would be in Canada.
NDP
Don Davies NDP Vancouver Kingsway, BC
Okay.
The regulations are obviously not in force right now. I think it's fair to say that the main concern about these proposed regulations is the potential impact on access. We know there's a problem with access now because clearly we have patient groups all across this country who can't get access to the medication they want. Trikafta was mentioned as a famous example, and patients aren't getting access to that drug under the current regulations without these proposed changes to the PMPRB.
I'll put a thesis to you. In a system where we have finite resources—i.e., in Canada—we can only spend a certain amount of money every year on pharmaceutical products. Wouldn't controlling excessive costs help provide greater access to drugs than not?
Executive Director, Patented Medicine Prices Review Board
That's our operating presumption. I know a lot of people feel strongly that there is a link between price and access. I would point out that notwithstanding the fact that Canada currently pays the third-or fourth-highest prices in the world, we are roughly 13th or 14th in terms of access. Even the industry's own studies show at best a very weak correlation between price and access. If you remove the U.S. from the equation and from many of those models that folks in industry put forward, there's hardly any correlation at all. You'd have to have a huge increase in price to get even a tiny improvement in access.
However, yes, ultimately the objective here is that if prices come down, and particularly the prices of these incredibly high-cost drugs—and not by a significant margin, mind you, and again the ultimate impact of this is $6.2 billion in the context of about $200 billion spent over the next 10 years—then presumably, if basic economic theory holds in this case, access would go up and utilization would go up. If prices go down, utilization goes up. Obviously you don't want prices to go down to a point where companies can't make a profit in Canada—
NDP
Don Davies NDP Vancouver Kingsway, BC
Do you have any concern, Mr. Clark, that it may happen here? I ask because it seems to be the concern of patient groups that if these measures go through, they will discourage or dissuade pharmaceutical companies from making their products available in Canada. What do you say to that concern?
Executive Director, Patented Medicine Prices Review Board
Yes, I share that concern. I don't think that's going to be the impact. I think companies can afford to bring their products to Canada. I don't think the Canadian price has to be the highest in the world for companies to make a profit in the Canadian market. I don't understand that argument.
One of the things we're putting in place, now that we're close to the implementation date, is a comprehensive monitoring and evaluation plan. We will be looking at benchmarks today. Currently we're 13th in terms of access. We get about 50% of new substances that come to the market in any given year, notwithstanding that we have very high prices. We're going to be looking at the impact over time of these changes. Is access going down or going up? If it's going down dramatically, do we need to make adjustments?
Canada is not unique in struggling to find a socially acceptable price for products like Trikafta and other cystic fibrosis—
I'm sorry. I think I've answered your question. I don't want to take up too much time with my responses.
NDP
Don Davies NDP Vancouver Kingsway, BC
Just quickly, does the EU have similar regulations to what is being proposed here, and if so, what has been the impact on access there?
Executive Director, Patented Medicine Prices Review Board
It's important to understand no two regimes are alike internationally. The thing that's unique about Canada, as Dr. Levine alluded to, is we don't have the monopsony power that most other developed countries have when they include prescription drug coverage as part of their universal health care system.
Every country that I'm aware of uses market size and pharmacoeconomic value to some extent in trying to figure out what price they think is socially acceptable for a product. They don't use it in the exact same way. Japan, the Netherlands and France use market size as a trigger for conducting pharmacoeconomic value assessments. Some countries, like the U.K., have specific thresholds for pharmacoeconomic value in place. We're going to have a ceiling price that's a function of pharmacoeconomic value. I'd say the distinction is one without that much of a difference. In either case, it's sort of the gateway to meaningful market penetration.
These new factors that we're adopting are based on best practices internationally, but adapted to a made-in-Canada context, as is necessary, given the unique characteristics of our regulatory regime.
Chairperson, Patented Medicine Prices Review Board
Could I also just add to the response?
Chairperson, Patented Medicine Prices Review Board
I would remind you that three-quarters of new drugs aren't even going to be in category I, as we estimate, which means that all we're asking for the other three-quarters is that they come in at a median price of countries just like us.
Why would Canada have to pay a higher price than the median of similar countries when obviously, if the pharmaceutical company can make a profit in these other countries, they can certainly make it here? In fact, Canadians purchase drugs at a higher frequency than a lot of other countries. We spend as much on pharmaceuticals as the U.K., and they have twice the population that we do, so Canada is a very viable market for the pharmaceutical industry to be successful.
Liberal
The Chair Liberal Ron McKinnon
Thank you, everybody. I have to call an end to it there.
Thank you, Dr. Levine and Mr. Clark. We're looking forward to having you back again on Friday. I'm sorry for having to spread it out this way.
We have to do some planning now, so thank you for your time today.
Executive Director, Patented Medicine Prices Review Board
Thank you very much for your interest.
Chairperson, Patented Medicine Prices Review Board
Thank you for your interest. See you Friday.
Liberal
The Chair Liberal Ron McKinnon
The reason we had to split this up is we have to do some planning so that we know who to invite for next Monday. We need lead time to do that.
We have two studies we have to plan for. Certainly we have the other meetings of the PMPRB and we have meetings for the first part of the COVID-19 study.
Also, since we had originally planned to bring the law clerk in on the first meeting of the COVID-19 study, and we don't even have that organized and ready to go, we have an opportunity to bring the law clerk in on Friday for an hour. The current plan is that we bring the law clerk in for an hour on Friday and we will have the Patented Medicine Prices Review Board back for another hour on Friday. That's the current plan.
Could we agree on how to proceed with the PMPRB study? Before we rise for the Christmas break—not counting today, which is used up, and not counting Friday, which is also allocated—we have four more meetings to deal with. It would be good if we could get those meetings squared away so we know whom to invite and when so that we can have the clerk issue the invitations and make sure they have their headsets and make sure the technical issues are resolved.
Let us start with the Patented Medicine Prices Review Board.