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Pandemic showed that Canada needs a thriving biopharmaceutical industry

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Pandemic showed that Canada needs a thriving biopharmaceutical industry

Last month, new amendments and guidelines went into effect for the Patented Medicines Prices Review Board (PMPRB) whose primary function is to ensure that maximum Canadian prices for patented medicines are not excessive.

What do the changes mean for Canadians? First some quick history.

Changes to the PMPRB were first proposed in May of 2017.  What followed included multiple delays, a variety of changes, the abandonment of several amendments and finally a decision in April 2022 on the implementation of a new basket of “comparator” countries (that is, the board uses prices in these countries to help determine prices in Canada) and reduced reporting requirements for those medicines at lowest risk of excessive pricing. As such, the adopted amendments were designed and are now touted as having the potential to drastically reduce drug prices, potentially more than 60 per cent for some medicines.

At first blush this sounds encouraging for Canadian patients, but one must consider the wider ranging consequences of such a change, especially long-term. Specifically, a recent analysis determined that industry losses could be more than three times the government’s troubling estimate of an $8.6 billion loss in revenue over 10 years. Fundamentally, the proposed changes would reduce the interest and financial capacity of patentees to invest in the Canadian life sciences sector. The result of which would be reduced innovation and fewer drugs in development. 

The new amendments incorporate only a fraction of those originally proposed. The original set of changes would have significantly altered Canadian policy, to the detriment of Canadian patients and the international community as well. Essentially, the now-shelved changes would have a) provided additional price regulatory factors and reporting requirements related to the new factors of pharmacoeconomic value and market size, and b) have allowed the PMPRB to collect price and revenue information net of third-party rebates. With this in mind, it’s not surprising that the majority of the proposed amendments were scrapped in April.

The proposed regulatory changes would have discouraged innovators from launching new products in the Canadian market, increased cost-containment measures, and maintained the inadequate intellectual property protections in the biopharmaceutical sector. The proposed amendments are representative of a longstanding trend. At its core, the combination of government policies and regulations implemented in Canada over many years has created an environment hostile to biopharmaceutical research and innovation.

There are very few Canadian innovators in the biopharmaceutical industry. The majority of multinational firms are affiliates in Canada, and even their presence is shrinking. Concurrently, those high-paying manufacturing and research jobs are being relocated to other countries. The antipathy for the life science sector goes beyond research, development and manufacturing. The would-be PMPRB guidelines and regulations disincentivize investment in a sector that already faces challenges. In particular, firms in the Canadian biopharmaceutical industry and life science sector take issue with Canadian intellectual property protections for the biopharmaceutical industry.

The pandemic brought this into sharp focus, revealing the woefully small extent of domestic investment in the biopharmaceutical sector. Indeed, Canadians had quite rapid access to COVID vaccines and drugs because—ironically—they were exempted from PMPRB scrutiny. Given this, one must question the role the PMPRB plays in bringing safe and affordable medicines to Canadian patients. More importantly, we must ask whether the approved amendments will improve both the timing of access and availability of new treatments and cures, as well as their prices. After all, the intention of launching innovative medicines is to improve patient health.

The pandemic demonstrated that a thriving biopharmaceutical industry is more important than ever. For Canada to support and embrace the biopharmaceutical sector and establish Canada as a frontrunner in drug development and vaccine production, it must embrace an environment that encourages and incentivizes biomedical innovation.

Rather than benefiting from avoiding PMPRB scrutiny, innovative drugs should get to Canadian patients faster and at lower cost through PMPRB channels. They don’t. While the abandonment of the most drastic PMPRB changes was a step in the right direction, the approved amendments do not bode well for the future of Canadian health care or patients.

Fundamentally, significant uncertainty remains surrounding how the PMPRB will implement the "status quo" or what the eventual guidelines will be. The PMPRB has not yet published new guidelines to operationalize the amendments, and PMPRB won’t even consult on the revised guidelines until September 2022. Implementation is even further off.

The PMPRB and the government are still intent on reducing drug prices and the PMPRB maintains a lot of leeway to interpret its role as it and the federal government see fit. The lack of certitude in the Canadian market reduces its attractiveness as a place to invest, create jobs and launch new medicines in a timely way, which should worry us all.

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