Access, Value and Reform: An Analysis of Canada's Pharmaceutical Policy Framework

Abstract

This is a rejoinder to an article challenging the pharmaceutical industry's claims that Canada lags in access to innovative drugs due to substandard policies. This rejoinder is in agreement with the article's main argument that Canada succeeds in attracting the new drugs that matter most, and that higher prices or stronger intellectual property protection would have a negligible impact on the timing and degree to which new drugs are launched here generally. At the same time, the rejoinder does acknowledge the legitimacy of the industry's concerns around system inefficiencies stemming from federal-provincial fragmentation but posits that national pharmacare could resolve industry and payer concerns alike. The article calls for thoughtful reform, deeper research into unmet needs and a shift in focus toward patient-relevant outcomes.

Introduction

Lexchin 2025 challenges claims by the pharmaceutical industry that Canada ranks poorly in terms of access to new and innovative pharmaceuticals because of substandard and complex domestic policies. It argues that Canadian drug policy should not be judged by how many new drugs are sold here or how quickly they come to market but by whether those drugs provide meaningful therapeutic value at sustainable cost. The article urges the government to move forward with pricing reforms and national pharmacare to improve equitable access to necessary medications and not to be cowed by industry threats that initiatives of this kind will negatively impact drug access in Canada.

I agree that criticism of Canada as a substandard market for access to new, innovative pharmaceuticals is overblown, particularly when posited on arguments of price differentials between Canada and other developed countries, or how Canada's intellectual property (IP) regime for new drugs compares internationally. As regards the former, the weight of the evidence suggests that there is a negligible correlation between price in a market and both the timing and extent of access to new drugs in that market, and no correlation when the US is excluded from the analysis. Were it otherwise, one would expect Canada, with the third or fourth highest drug prices in the Organisation for Economic Co-operation and Development (OECD) countries, to rank much higher in its access to new drugs than it currently does.

As for the latter argument, despite perpetual calls from industry for a stronger IP regime for pharmaceuticals in Canada, our existing level of protection is competitive with regimes in the US and Europe. Moreover, the argument that stronger IP systems lead to more domestic innovation and timelier access to the fruits of that innovation is fundamentally flawed, as international trade rules require that countries provide the same level of patent or data protection to innovation regardless of its country of origin. In other words, Canada could choose to offer double the length of patent term that the US currently provides, but that would not incentivize innovators in the US to relocate their R&D operations to Canada or launch their innovation here first. Other factors, such as head office location, research infrastructure and scientific clusters, appear to be much more influential determinants of where pharmaceutical investment takes place in a global economy. Market size is by far the biggest determinant of where products are first launched.

The article appears to concede that Canada does not compare favourably with some other countries in terms of the number and timing of drug launches, but maintains that this is not necessarily problematic because international evidence shows that only a minority of new drugs offer major therapeutic gains. Assuming that to be true, two key questions emerge from that line of argument. First, to what extent are patients in Canada able to access those drugs that do offer significant therapeutic improvement? Second, what are the consequences of not being able to access the drugs that do not come to Canada, and what, if anything, should be done about it?

On the first question, research undertaken by the National Prescription Drug Utilization Information System finds that roughly one-third to one-half of new drugs do ultimately enter the Canadian market, which is consistently in line or better than the OECD median (Patented Medicine Prices Review Board 2019). More significantly, the new drugs that eventually come to Canada account for 80–90%-plus of OECD sales of all new drugs, which is also consistently higher than the OECD median, suggesting that the highest-impact drugs, including specialty, orphan and oncology products, are available domestically (Patented Medicine Prices Review Board Canada 2020). On the whole, Canada appears to be in the mid-range among OECD countries in terms of timing and extent of access to new drugs, which is not terrible but certainly leaves room for improvement.

On the second question, while it may be true that most of the drugs that do not make their way to Canada are not commercially or therapeutically significant, there are sure to be important exceptions to that rule. Moreover, one should be careful not to discount the significance of genetic variability in drug metabolism and receptor sensitivity and the fact that patients often need to try multiple agents within the same therapeutic class to find the one that provides optimal efficacy and tolerability (Brown 2003). Similarly, there must be instances where Canadian patients suffering from very rare diseases do fall through the cracks. Certainly, the advocacy groups that represent this class of patients feel very strongly that this is currently the case in Canada and have been calling on the government to develop special regulatory pathways and incentives for rare disease drugs (Canadian Organization for Rare Disorders 2018). To date, those efforts have generated a relatively lacklustre response from the federal government.

It is also important to reflect on what innovation really means in this context. Major advancements in biopharmaceutical research have and always will be a rarity. Intelligence, hard work and intuition are important variables in the equation necessary to produce it, but so too are scale and luck. To what degree is it necessary to encourage the full spectrum of pharmaceutical research to achieve the critical mass necessary to generate the next lucky break? What is perverse about the current system is that me-too drugs often command the same price point as the breakthrough drug they seek to emulate.

Whether one agrees with the claim that most of the drugs that are not coming to Canada currently are therapeutically unimportant, there is no doubt that exceptions exist. The questions are how many, how often and what is the impact on patients. As the article points out, this remains an open question, and further research is needed before coming to a definitive view of the matter.

While industry arguments around substandard pricing and IP are not compelling, their more qualitative complaints about the complexity and dysfunctional nature of the Canadian regulatory and reimbursement system are not so easily dismissed. The fact that Canada is a federation, with multiple, overlapping federal, provincial and territorial participants in the regulatory and reimbursement process for new drugs, makes for a very cumbersome and onerous process that has been unflatteringly likened to a relay race. One result of this process is that Canada ranks last in the G7 countries in terms of the time it takes for a new drug to be publicly reimbursed after it has been approved for sale (20Sense 2025).

There is little doubt that Canada would become a much more attractive place for the pharmaceutical industry generally if these processes could be consolidated and a singular gateway conceived to access the entirety of the Canadian market. The irony of this situation is that it is the very policy that most perturbs the industry – national pharmacare – that, if done right, would best address their legitimate concerns with the complexity and dysfunction of the current system, not to mention payers' concerns with sustainability. Until government and stakeholders can acknowledge and agree on the core problems and summon the courage to let go of their perceived advantages under the current system, nothing of significance will change, and Canadian patients will continue to suffer the consequences.