What action can we take on drug prices without hampering healthcare innovations?

To control public health costs, the Government of Canada is trying to reduce the cost of pharmaceutical products by reforming the mandate of the Patented Medicine Prices Review Board (PMPRB). The Chamber took part in consultations on this major issue for the life sciences and health technologies (LSHT) industry. Read our three recommendations to pursue innovation in the sector and protect access in Canada to innovative medication.

Study the economic impact of the reform to protect the ability of companies to innovate

To innovate, LSHT businesses are working closely with the scientific community. Canadian patients are the first to benefit from treatments that emerge from these partnerships, treatments that are then exported around the world. But these medical advances are the result of major investments. Pharmaceutical companies invest on average US$2.6 billion to take a medication through the stages of research, clinical trials and approvals, so it can ultimately be administered to patients[1]. Yet, in its current form, the PMPRB reform would result in a sharp drop in the price of patented drugs, which would have negative consequences for the industry, workers and patients. For these reasons, we encourage the government to conduct a more exhaustive study of the project and its potential economic impact.

Maintain Canada’s attractiveness to address global competition in the industry

Globally, the LSHT industry generates US$1,950 billion in annual revenue and R&D investments of US$200 billion[2]. Given the strength of our LSHT ecosystem, local businesses are well positioned to harness that potential. However, if the proposed changes to the PMPRB are implemented, Canada’s attractiveness for clinical studies and new drug launches could be affected. To increase our ability to attract and generate investments by key economic players in LSHT, Canada has to maintain an internationally competitive business environment. This is why we are emphasizing the importance of a prudent approach to price controls, so as not to undermine the major efforts being made across the country to develop our innovation ecosystem.

Modernize the PMPRB by taking into account new business models in the sector

Since the beginning of the 2000s, LSHT businesses have developed new business models that have rationalized their manufacturing and R&D activities. These new trends result in an increase in investments by members of the pharmaceutical industry in universities, hospitals, centres of excellence and start-ups. Changes to the industry’s business culture must be reflected in the proposed reform to the PMPRB, specifically in how R&D investments are assessed. The PMPRB currently recognizes only investments eligible for a tax credit, and we believe that the criteria should be expanded.

We recognize the importance of finding balance in the price of pharmaceutical products and reforming Canadian regulation based on best international practices. But the Government of Canada needs to consider a key issue: developing innovative medication is a complex, expensive process. We encourage the government to work with the pharmaceutical industry to review the proposed reform to generate savings within the healthcare network without slowing the development of new treatments.

[1] DIMASI JA, GRABOWSKI HG, HANSEN RA (2016), “Innovation in the pharmaceutical industry: new estimates of R&D costs”, Journal of Health Economics, 47: 20-33.

[2] MONTRÉAL INVIVO (2016), Tableau de bord de l’industrie québécoise des SVTS.

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