\u201cThe Most Favoured Nation policy identified eight countries, Canada is one of them, that have benefitted from the lowest drug prices in the Western world compared to the United States,\u201d explains Dr. Bettina Hamelin, President and CEO of Innovative Medicines Canada, which represents the pharmaceutical industry. \u201cThe United Nations have determined it is not fair. The most favoured nations are not paying their fair share of innovation.\u201d<\/p>\n
According to Innovative Medicines Canada, its costs on average $3.5B and ten to fifteen years to bring a new medication to market. Much of those costs are recouped in the U.S. where prices are significantly higher than in other Organization for Economic Co-operation and Development (OECD) countries, and the population is much larger.<\/p>\n
\u201cThere is an upward pressure on the price here. I think that\u2019s the idea of it. It\u2019s a rebalancing and most favoured nations are not paying their fair share, and you need to pay your fair share. That means prices of drugs need to go up and recognize there is a value to the innovation,\u201d says Hamelin.<\/p>\n
In Canada, setting drug prices is a complex and lengthy process. After clinical trials are complete, if Health Canada approves the drug, pharmaceutical companies then submit it to Canada\u2019s Drug Agency who evaluate the cost-effectiveness of the therapy and recommend whether or not it should be covered by public insurance plans. <\/p>\n
From there, it goes on to the pan-Canadian Pharmaceutical Alliance (pCPA) who negotiate prices on behalf of Canda and even then, drug companies have to deal with ten separate provinces to get the drug listed on provincial formularies.<\/p>\n
Prices negotiated for drugs in Canada and in other OECD countries are significantly lower than in the States.<\/p>\n
\u201cA pharmaceutical company ends up with a situation where it either has to force aggressive pricing negotiations in domestic markets or end up having an unfavourable lower price serving as a reference price for its U.S. price, which would not be very good for it,\u201d explains Rambod Behboodi, Senior Counsel with Borden Ladner Gervais LLP (BLG).<\/p>\n
\u201cI think when the idea of MFN pricing was first broached, there was a concern in the pharmaceutical industry that it would result in some drugs not even being introduced into Canada and other markets because their pricing would become a benchmark for pricing in the U.S.,\u201d adds Behboodi.<\/p>\n
It\u2019s already starting to happen. According to a survey of 31 pharmaceutical and life sciences companies by EY (formerly Ernst & Young), sixteen medicine launches in Canada have been cancelled directly because of MFN pricing, and another 32 drugs have seen their rollouts delayed because of the policy.<\/p>\n
Novartis announced its Health Canada approval of Vanrafia \u2013 a drug that aims to slow progression of IgA nephropathy (IgAN), or Berger\u2019s disease and ultimately, end stage kidney disease \u2013 with a splashy press release last month, then quietly backed away from the approval process.\u00a0<\/p>\n
It did not mention MFN as a driving cause of this decision, but in a statement to CityNews they wrote: \u201cWhile Novartis remains committed to expanding access to our medicines for patients in Canada, we have determined that under the current Canadian access environment, the likelihood of successfully securing reimbursement for Vanrafia is limited. As such, Novartis Canada has made the decision not to seek reimbursement for Vanrafia in IgAN at this time. \u201c<\/p>\n
\u201cThe side effect of this policy (MFN) is that we\u2019re not going to be able to access drugs,\u201d says Hladunewich.<\/p>\n
It could also mean that drug prices in Canada will have to rise considerably, so that pharmaceutical companies can sell them in the U.S. at current, or higher prices. <\/p>\n
\u201cIf you end up in a situation where drug prices go up and the public framework doesn\u2019t necessarily support them, there could be consequences in the private [insurance] side as well,\u201d says Behboodi. <\/p>\n
\u201cIf there\u2019s a major rejigging of pricing, I think you\u2019re going to have a much bigger discussion about public healthcare policy in Canada.\u201d<\/p>\n
\u201cThe market share in the States is so much larger that it wouldn\u2019t be rational to drop the price of the drug in the U.S. to match the smaller nations,\u201d says Hladunewich, adding, \u201cI think this is going to seriously impact not just renal diseases, but other rare diseases from other organ systems\u00a0in Canada as well.\u201d<\/p>\n
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