Canada’s misguided changes to drug regulation could expedite unproven drugs and divert funds from other healthcare needs

Canadian government proposes new Agile licensing framework to accelerate pre-market regulation of pharmaceutical products. While Health Minister Jean-Yves Duclos says this is part of the government’s strategy to give Canadians access to quality, affordable medicines, the policy is likely to cause more harm than good.

Adopting Agile Licensing would allow companies to market drugs up to six months earlier than the current system. Fewer premarket clinical trials would be needed as long as companies continue to study the effectiveness of their drugs after they are already in use.

The government suggests that this new approach will significantly improve the quality of life for Canadians, estimating the value of this improvement at $302 million over ten years. However, the assumptions underlying this estimate are incorrect.

Wrong assumptions

By design, Canada will have less information about the risks of new drugs if those drugs enter the market with less premarket clinical data. This will become a problem if a company fails to conduct promised post-market studies or if Health Canada does not remove unsafe or ineffective medicines from the market.

Unfortunately, experience in the United States shows that many fast-track drugs are not adequately studied after they are approved for sale and few are removed from the market, even if evidence shows that they do not work as well as their promising but incomplete pre-trial trials suggest. market.

Fast-to-market approval for new, less-studied medicines is not only potentially wasteful in the first place; it will inevitably divert money from other uses in the health care system to pay for expensive but unproven drugs.

A man in a striped suit and tie seated at a table behind a nameplate with the name of Health Minister Jean-Yves Duclos
Health Minister Jean-Yves Duclos waits to appear at the health committee April 27, 2023 in Ottawa.
THE CANADIAN PRESS/Adrian Wyld

New drugs are (and have long been) the primary driver of increased spending on prescription drugs, for both private and public drug plans. In terms of budget, new drugs don’t just replace older ones; they increase the overall drug budget, which necessarily means lost opportunities to use these funds in other areas of health care, such as improving access to joint replacements, nursing homes or mental health care.

There is a major flaw in Health Canada’s Agile Licensing cost-benefit analysis: it overlooks the fact that accelerated access and therefore spending on promising new drugs means less money for other forms of health care that Canadians have need.

Convenience

Despite the claims of the Minister of Health, the proposed framework does not contain any mechanism to make accelerated drugs accessible. This is extremely worrying given that the drugs that will be accelerated by this policy are proprietary and specialized medicines that are likely to be priced at unsustainable and possibly indefensible levels.

Patents are government-granted time-limited monopolies that can spur innovation. However, they can also allow manufacturers of specialty medicines to charge exorbitant prices due to the life-and-death situations faced by patients needing such treatments. Pharmaceutical companies are leveraging this market power to charge extraordinarily high prices with increasing frequency.

Prior to 2006, only four drugs approved in Canada had annual prices above $50,000 per patient, which is clearly a lot of money. Today, however, 67 drugs have such a price tag, costing Canadians over $3 billion a year in total. Seven drugs now available in Canada come at an astonishing $1 million per patient.

Higher drug prices no longer guarantee value or improvements to health and well-being. Studies show that it typically costs about $30,000 to produce a measurable improvement in one person’s health, for a year in health care systems like ours. However, new patented drugs often require hundreds of thousands of dollars for the same benefit.

The harm of high drug prices

This discrepancy between reasonable prices for generating health benefits and the prices charged for many newly patented drugs points to a failed system. It directly harms Canadians by denying access to treatments due to prohibitive prices, and it harms them indirectly by diverting funds from more effective investments that would produce greater health benefits per dollar spent.

Before speeding up drug approvals so manufacturers can boost sales, policymakers should develop and implement measures to ensure prices they charge are within reasonable limits. Unfortunately, the Canadian government recently backed down on reforms that would have done just that.

Without a policy that ensures reasonable pricing of fast-track drugs, the government’s proposed Agile licensing regulations will only expedite access to unproven therapies, drawing resources away from other forms of health care that Canadians need and offer a best value for money.

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