U.S. Health and Human Services Secretary Robert F. Kennedy Jr. speaks at an event on lowering drug prices, in the Oval Office at the White House, on Nov. 06.Andrew Harnik/Getty Images
The Trump administration is asking drugmakers to share confidential details of contracts they have signed with insurers in Canada and other developed countries as it pushes pharmaceutical companies to lower their U.S. prices and raise them in Canada and elsewhere.
The U.S. government plans to use the information it is seeking to set prices for reimbursement under Medicaid, the state-and-federal health insurance for low-income residents. Drugmakers who volunteer to join the new program would have streamlined, easier access to being listed by state drug plans.
Details of the initiative, called the “GENErating cost Reductions fOr U.S. Medicaid (GENEROUS) Model,” were announced late last week.
Innovative Medicines Canada, the group that represents patented drugmakers, said U.S. President Donald Trump’s drug policies should be a “wake-up call” for Canada and could have implications for Canadians’ access to medication.
“Canada can no longer delay addressing pharmaceuticals in trade discussions,” Michael Dietrich, IMC’s vice-president of market access and policy, said in a statement.
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The association did not say whether its members − most of whom also operate in the U.S. − would be open to the American request.
The U.S. is seeking information about prices in eight countries to set its “most favored nation” benchmarks: the other six members of the G7 (United Kingdom, France, Germany, Italy, Canada, and Japan), plus Denmark and Switzerland, which are home to some of Europe’s biggest drugmakers.
The price that Canadians pay for a drug is decided through multiple steps at federal and provincial agencies. Health Canada first evaluates a pharmaceutical product for its safety and efficacy. Then Canada’s Drug Agency, a national non-profit, assesses a drug for its effectiveness and value for money.
That agency’s recommendations form the basis for a price negotiation between the drugmaker and the pan-Canadian Pharmaceutical Alliance (pCPA), a body that represents all public health plans. The pCPA and drugmakers then sign a letter of intent that includes any confidential discounts or rebates on the drug’s public list price.
Guillaume Bertrand, spokesperson for Health Minister Marjorie Michel, said Health Canada was monitoring the new U.S. program closely.
“We expect drug manufacturers in Canada to respect their legal obligations and contracts,” he said in an e-mail.
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That sentiment was echoed by the pCPA.
“Drug price negotiations are confidential as agreed upon by both the pCPA and the manufacturers we negotiate with,” chief executive officer Mauro Chies said in a statement. “Jurisdictions in Canada enter into public listing agreements in good faith, and we expect all parties to be mindful of the terms of the agreements.”
Historically, the pharmaceutical industry has carefully guarded the value of those discounts. For example, in 2017 the federal government attempted to reform a federal regulator, the Patented Medicine Prices Review Board (PMPRB), which can intervene with penalties such as levies if a drug is brought to the market at an “excessive” price.
One element of the reforms would have given the PMPRB access to information about the confidential discounts that drugmakers were giving public plans in Canada, which the PMPRB otherwise didn’t have access to. But the drugmakers took Ottawa to court and the federal government ultimately abandoned most of its reform efforts, including the sharing of confidential pricing information between public bodies.
Doug Clark, who was executive director of the PMPRB at the time, said he was “stunned” by the Trump administration’s latest proposal.
“At first blush, I don’t see how this new regime is operationally viable,” he said in an e-mail.
He said insurers in Canada and other affected countries would be unlikely to waive confidentiality, and so manufacturers could be exposing themselves to liability if they share the information with the U.S. government.
Pharmaceuticals are one sector that have repeatedly drawn Mr. Trump’s attention this year. The U.S. President has also said he would like more drug manufacturing to move to the United States and has repeatedly threatened tariffs on the industry, though none have so far gone through.