For the third time running, federal Health Minister Patty Hajdu has delayed the introduction of new rules to reduce the price of drugs.
The reason for these rules, proposed by Ottawa’s Patented Medicines Prices Review Board, is to put an end of the scandalously high prices Canada pays.
Among 32 developed countries, we pay more for prescription medications than all but three. As a result, we now spend more on drugs than we do on physicians.
When the new pricing regime was first proposed in July 2020, pharmaceutical firms protested volubly, and gained a deferral. Then, when the deferral ran out and the new regime was poised to go, the industry offered Ottawa a $1-billion bribe to water down the rules. Although the bribe was refused, there was another deferral.
Now Hajdu has announced a third delay, till January 2022. The reason she gave is that the industry is too burdened with making COVID-19 vaccines to respond.
There’s a scene in the Brit comedy Yes, Minister where a memo written by Sir Humphrey is returned to him with “round objects” scribbled in the margin. At his pedantic best, Humphrey asks: “Who is Round, and to what does he object?”
So, round objects. First off, there are more than 100 major pharmaceutical companies, worldwide, and only a handful are making COVID-19 vaccines.
Second, no one is asking them to take on more work. What we’re telling them is that we’re cutting the median prices that Canada will pay.
Since they’ve known this for at least two years (work behind the scenes has gone on that long), they’ve had all the time they need to fire up their lobbying.
To sharpen the discussion, I want to focus on a specific category of drugs, and show why we should be concerned.
The medications in question are expensive drugs for rare diseases, or EDRDs. Expensive means annual treatment costs per patient of $100,000 or more for non-cancer medications (some can reach $2 million a year), and $7,500 a month or more for cancer drugs.
Rare means a disease with an incidence of less than one person per 100,000 population. In B.C., that translates to about 50 patients.
So if these cases are so rare, what is the concern?
First, there has been a huge expansion of EDRD drugs.
In Canada, only one such medication was approved for use in 1997. By 2018, that number had climbed to 40 for non-cancer, and 39 for cancer, and that trend is continuing.
EDRDs are now the fastest-growing segment in the pharmaceutical sector.
In part, this explains why less than one per cent of the Canadian population now accounts for 42 per cent of patented drug sales.
Pharmaceutical companies argue, of course, that since the market for these medications is small, they need high prices to recoup their R&D.
More round objects. A few excerpts from a report by the World Health Organization in 2018: “The price for lomustine — a treatment for brain tumours, lung cancer and Hodgkin Lymphoma — increased by 1,400 per cent between 2013 and 2017.”
Again, “In total, 99 cancer medicines generated … an average return of $14.50 US in sales income for every dollar invested.”
The WHO’s conclusion: “In summary cancer medications, through high prices, have generated revenues … in excess of R&D costs.” That’s one reason the pharmaceutical industry is the most profitable sector of the U.S. economy.
It was to rein in this overpricing that the Patented Medicines Prices Review Board proposed reforms.
It is these reforms that Hajdu has now three times kicked down the road.
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