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Pharmaceutical Pricing and Reimbursement in Canada


Description: Canada’s pharmaceutical market is the eighth largest globally, showing a 6% growth in prescription drug sales in 2008. Much of the steady growth over the last decade is attributed to the relatively high prices and moderate generic penetration rates, both of which make the Canadian market attractive to manufacturers of branded drugs. However, the proportion of patented drugs on the market in Canada, currently at 65%, has consistently declined over the last ten years as patents expire and generics and now follow-on biologics are introduced into the market. Public payers are very budget conscious and are negotiating confidential listing agreements with brand manufacturers and imposing price cuts on generic drugs. Reviews of clinical and pharmacoeconomic evidence undertaken by the Common Drug Review, Quebec’s Conseil du Medicament, and the Joint Oncology Drug Review are important components of the market access process for new brand name drugs. The pharmaceutical industry will have to demonstrate cost-effectiveness and respond to payers’ expectations for cost sharing when they launch new drugs.

Questions Answered in This Report

- The Patented Medicine Prices Review Board (PMPRB) has mandate, authority, and jurisdiction over determining whether a patented drug price is excessive. What are the factors that are considered by the PMPRB when reviewing new drugs? What limits are imposed on price increases? What happens when a price is deemed excessive?

- Canada’s brand-name drug prices tend to be well below U.S. prices. For many years, U.S. legislators have debated the issue of cross-border trade of pharmaceuticals—that is, whether or not to allow U.S. citizens to purchase prescription drugs from Canada. While factors such as the U.S. Medicare Drug Benefit for seniors, a rising Canadian dollar, manufacturers’ limits on supplies to Canadian “Internet Pharmacies,” and expiring patents have lessened the volume of cross-border sales, the issue is still being debated in the United States. The latest legislation under consideration by Congress is the Pharmaceutical Market Access and Drug Safety Act of 2009. What implications would the U.S. legislation have on Canada’s prescription drug market if it passes?

- The extent of public reimbursement varies between provinces and private insurance plans cover 37% of national prescription drug costs. What are the major differences between the criteria used to determine coverage by private insurers and public plans in Canada? How are these differences reflected to industry players?

- In April 2009, Omnitrope (somatropin), the first biosimilar (referred to as “subsequent entry biologics” [SEBs]) was approved in Canada. What is the process for SEB approvals? What agencies will make decisions about pricing and reimbursement of SEBs?
Scope

- Issues impacting the Canadian pharmaceutical industry: Drug pricing, public and private reimbursement, cross-border trade, influence of patented drugs/generics/SEBs on pricing and reimbursement, hospital drug funding.

- Pricing of prescription drugs: Comparing Canada’s drug prices with other countries, recent developments at the PMPRB, pending changes to pricing guidelines, new developments in provincial public pricing policies (e.g., drug plans in Ontario and Quebec), pricing restrictions on generic drugs.

- Reimbursement of prescription medicines: recent developments in provincial reimbursement programs (e.g., Ontario’s Transparent Drug System Act of 2006, Quebec’s Pharmaceutical Policy and Alberta’s Pharmaceutical Strategy), update on the Common Drug Review (CDR) and Joint Oncology Drug Review (JODR), recent developments in private drug plan reimbursement.

- Outlook: Prospects for change in the Canadian pricing and reimbursement landscape.


Contents: Executive Summary
Strategic Considerations
Stakeholder Implications
Introduction
Organization and Funding of the Canadian Healthcare System
The Canadian Pharmaceutical Market
Recent Developments in Canada’s Drug Approval Process
Pharmaceutical Pricing
Pricing of Prescription Medicines
Comprehensive Review of Excessive Price Guidelines
Categories
Price Tests
Any Market Review
Pricing Trends
Reimbursement of Prescription Medicines
Private Drug Plans
Provincial and Federal Government Reimbursement
Common Drug Review
Common Drug Review Process
Recent Changes
Cancer Drugs
Hospital Drugs
National Pharmaceutical Strategy
Outlook for the Canadian Pharmaceutical Market
Sidebar
1. Cross-Border Trade of Prescription Drugs
2. Controversy Surrounding the Reporting of Rebates

Tables
1. Source of Finance on Prescription Drugs Expenditure, 2005
2. Common Drug Review Final Recommendations, 2007, 2008, and 2009 (Q1-Q3)

Figures
1. Pharmaceutical Spending and Percentage of Total Healthcare Expenditures in Canada
2. Matching Price Tests with Select Levels of Therapeutic Improvement
3. Annual Changes in Patented Drug Prices Compared with Consumer Prices, 1990-2008
4. Consumer Price Index Versus Patented Drug Prices, 1989-2008
5. Percentage of Drug Prices in Select Countries Compared with Canada, 1987-2008


Companies Mentioned - Processes/Rulings/Entities for Pricing and Reimbursement in Canada - Abbreviated New Drug Submission (ANDS) - Biologics and Genetic Therapies Directorate (BGTD) - Canada Health Act - Canadian Access Program for Drugs for Rare Diseases - Canadian Agency for Drugs and Technologies in Health (CADTH) - Canadian Expert Drug Advisory Committee (CEDAC) - Canadian Generic Pharmaceutical Association - Canadian Institute for Health Information (CIHI) - Committee to Evaluate Drugs (CED) - Common Drug Review (CDR) - Health Canada - Health Council of Canada - Health Technology Assessment (HTA) - Joint Oncology Drug Review (JODR) - National Pharmaceuticals Strategy (NPS) - Non-Insured Health Benefi ts Program (NIHB) - Notice of Compliance (NOC) - Organization for Economic Cooperation and Development (OECD) - Patent Act - Patented Medicine Prices Review Board (PMPRB) - Régie de l’assurance maladie du Québec (RAMQ; Quebec Health Insurance Authority) - Research-Based Pharmaceutical Companies (Rx&D) - The Advisory Committee on Pharmaceuticals (ACP) - Therapeutic Products Directorate (TPD) - Transparent Drug System Act of 2006 - Voluntary Compliance Undertaking (VCU)


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