Drug pricing and reimbursement: Canada

Canada is subject to a patchwork of laws and policies relating to the pricing and reimbursement of drug products. The price of Canadian drugs through the supply chain from manufacturer to wholesaler to pharmacy, and at the retail level, is subject to complex regulations under both federal and provincial laws. Prescription drugs are subject to both public and private reimbursement in Canada, and the price negotiated between manufacturers and payors will depend on the specifics of the drug in question. A drug’s price and reimbursement can differ within jurisdictions of Canada and may change over the life cycle of the drug. 

The proximity of Canada’s market to the U.S. creates another area of complexity, relating to the impact of pricing of Canadian drugs and the potential availability of those drugs for the U.S. market. Success in the Canadian market requires a deep understanding of the complexities of the healthcare system, the laws affecting the pricing of those drugs and the channels through which drugs are made available.

The PMPRB, a federal board whose jurisdiction over excessive pricing is founded on patented medicines, does not have a corollary in the United States or Europe. It is a Canadian specific pricing board that has complex regulations and guidelines in assessing whether a price for a patented medicine is excessive. The government has indicated that drug pricing reform is needed in order to provide the PMPRB with more relevant and effective regulatory tools to better protect Canadians from excessive prices.

After various rounds of stakeholder consultation and publication of draft regulations in late 2017, “final” amendments to the Patented Medicines Regulations (PMR) were formally published on August 21, 2019. The amended PMR which are set to come into force on January 1, 2021, would introduce significant changes to the current regime, including: price regulatory factors; a basket of comparator countries; reporting requirements and assessment of rebated prices; and application to certain non-prescription drugs.

PMPRB has been adamant that overhaul of the federal pricing regime is necessary for sustainability of the Canadian healthcare system. The Canadian innovative drug industry tends to be less outspoken and litigious than counterparts of other jurisdictions; however, the PMR faces challenges before the court.

This article was first published in Global Legal Insights - Pricing & Reimbursement 2020. For more information, read the full publication on drug pricing, reimbursement and regulation in Canada here.

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