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 The federal Patented Medicine Prices Review Board (PMPRB) is
targeting an increasing number of expensive drugs, including a
rare-disease medication made by Horizon Pharma that can cost
C$325,000 ($253,409) a year, documents reviewed by Reuters shows.
The agency can challenge the list price of any patented drug in
Canada and order companies to repay some revenue. Data show the
number of open PMPRB investigations into potentially overpriced
drugs has more than doubled since 2013, reaching 122 as of March
2018.
(See graphic on escalating enforcement actions here https://tmsnrt.rs/2LuY5og)
New proposed regulations could enhance the PMPRB's powers and help
set a broader agenda for taming prices in Canada.
This shift toward greater regulation - years in the making but not
always so visible - could hurt pharmaceutical revenues in Canada and
has alarmed drugmakers. But it could benefit private drug plans and
provincial governments and help patients with out-of-pocket costs.
In addition, although Canada is a relatively small market for major
drugmakers, lower prices in Canada could spread into the U.S.
market, experts say. Washington is considering a proposal to base
some drug prices on the cost of medicines in other developed
nations.
Cross-border sales could also put pressure on U.S. prices for
patented drugs, which lead the world and well exceed even Canada's.
Some American patients already buy prescription drugs illicitly from
Canada, and last year the U.S. Food and Drug Administration created
a working group to study legalizing some wholesale imports.
The pharmaceutical industry's main lobby group in Canada, Innovative
Medicines Canada, has argued that the changes, if approved by the
cabinet of Prime Minister Justin Trudeau, could delay or limit
Canadians' access to new patented medicines. Reuters reported in
February that drug companies offered to give up C$8.6 billion($6.4
billion) in revenue over 10 years to head off the PMPRB reforms.
Last month, the U.S. Trade Representative said in a report that it
was closely monitoring the reform effort, noting it "would
significantly undermine the marketplace for innovative
pharmaceutical products."
Drugmakers around the world are under pressure as governments and
insurers grapple with skyrocketing drug prices, especially the
United States.
Stephen Frank, president of the Canadian Life and Health Insurance
Association, said changes at the PMPRB reflect a broader willingness
to tackle drug prices.
"There's a momentum and an energy around becoming more engaged on
pricing issues," he said. "There's many layers to this, that have
sort of aligned to give them the space they need to try and be more
active."
UNUSUAL AGENCY
From its founding in 1987, the PMPRB was an unusual agency. With a
budget of C$15.4 million and approved staff of 83, it is one of the
smallest federal departments in Canada. By comparison, the National
Film Board employs about 400.
Healthcare is generally a provincial responsibility in Canada, but
the PMPRB draws its power from federal patent law. Instead of
bargaining drug prices down, it can declare some to be an illegal
abuse of patent rights. It caps prices paid by private as well as
public plans. The agency's cases are most often settled out of
court.
Its size belies its importance. Canada's universal healthcare system
does not cover most patented - or generic - prescription drugs,
which are paid for by more than 1,000 public and 100,000 private,
employer-sponsored drug plans as well as patients themselves.
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Executive Director Douglas Clark, who took over in 2013, said he
believes the rise in investigations has been driven more by the
escalating prices set by pharmaceutical companies than by his
agency's toughened stance.
But the agency could soon gain more muscle. The reform proposal,
shepherded by federal regulator Health Canada, would allow PMPRB to
figure in the effectiveness of drugs and what Canadian governments
can afford when determining whether costs are excessive.
Announced in 2017, the rules were scheduled to take effect in
January but have been delayed as the government reviews feedback.
There is no guarantee the reforms will proceed, especially given the
uncertainty of federal election results in the fall. But even if
they are shelved, Clark said, his agency has some ability to change
pricing guidelines on its own.
"We don't have the same maneuverability if we don't have regulatory
change, but we'll make the best of what scope we have," he said.
PUNCHING ABOVE ITS WEIGHT?
The PMPRB is already taking on some of the drug industry's big
players.
The agency recently targeted Horizon Pharma, for instance, deeming
its drug Procysbi, tagged at C$325,000, excessively priced.
Health Canada approved the drug in 2017 to treat a genetic disorder
known as cystinosis, which afflicts about 100 Canadians. Without
treatment, the condition causes irreversible kidney damage.
The federal approval essentially elbowed out a far cheaper
alternative drug, making it difficult for patients to get.
Horizon argued that its medication was superior, that the$180
million it spent on research and development justified the price and
that patients unable to afford Procysbi were able to get it on
discount or for free.
Sales in the United States and Canada were $154.9 million in 2018.
In January, PMPRB sought to force the company to reduce Procysbi's
list price by at least 71 percent. The agency argued that the
current price was so much higher than the similar alternative drug -
listed at around C$25,000 - that PMPRB should set aside its usual
guidelines, based largely on what is charged internationally.
Horizon is fighting back, saying in a recent statement that PMPRB
wants the drug to sell at "a small fraction of the lowest price in
the world." The matter is set for hearings and could be decided in
federal court.
But in the end, said Joel Lexchin, a University of Toronto professor
and pharmaceutical policy expert, the problem of escalating drug
prices won't be settled by individual showdowns with drug makers
over specific drugs. A broader approach - like the new proposed
regulations - is needed, he said.
"We can't really keep going with these one-offs," he said. "We need
a general policy."
(Editing by Denny Thomas and Julie Marquis)
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