Regulatory Reform
Fasken / Canada
An insight into upcoming regulatory reforms affecting Canadian pharma. Prepared in association with Fasken, a leading global law firm, this is an extract from The Pharma Legal Handbook: Canada, available to purchase here for USD 99.
1. Are there proposals for reform or significant change to the healthcare system?
There are three significant changes which may affect or impact healthcare in Canada.
NATIONAL PHARMACARE
Currently, Canada is the only member country of the Organization for Economic Co-operation and Development with universal public health care that does not also have a national drug insurance plan, i.e. a single system of public insurance coverage for prescription drugs.
The Canadian government is currently exploring the implementation of a national pharmacare system. In Budget 2018, the government established an Advisory Council on the Implementation of National Pharmacare to provide independent advice on how to best implement national pharmacare in a manner that is affordable for Canadians and their families, employers and governments.
TRANSPARENCY LAWS
Although Canada does not currently have federal legislation equivalent to the US Physician Payments Sunshine Act, various initiatives have been undertaking over the last two years to increase transparency of financial relationships between the pharmaceutical industry and healthcare professionals as well as health care organizations.
Currently, there is a voluntary disclosure framework implemented by 10 Canadian subsidiaries of global brand drug manufacturers. These companies report each June the aggregate amounts provided to healthcare professionals and health care organizations.
In parallel, some Canadian provinces have shown some appetite to regulate disclosure of these payments. Ontario adopted the Ontario’s Health Sector Payment Transparency Act in September of 2017 and subsequently published draft regulations which provide additional information on the reporting parameters.
DRUG PRICING
On December 1, 2017, the federal government published proposed changes to the Patented Medicines Regulations in order to provide the PMPRB with additional tools to control the prices of patented drugs.
In this context, the federal government has proposed the following regulatory changes:
- Introduce new, economics-based price regulatory factors to enable the PMPRB to ensure non-excessive prices that reflect value and Canada’s willingness and ability to pay for patented medicines;
- Update the schedule of countries used by the PMPRB for international price comparisons (now the PMPRB 7) to include countries with similar consumer protection priorities, economic wealth and marketed medicines as Canada; and,
- Requiring patentees to report price and revenue information net of all price adjustments such as direct or indirect third party discounts or rebates, including notably product listing agreements. This would ensure that the PMPRB is fully informed of the actual prices for patented medicines in Canada and enhance the relevance and impact of domestic price comparisons.
The proposed amendments to the drug pricing framework have the potential to significantly impact the business of patentees in Canada. According to the cost-benefit statement, lost revenues to industry are estimated to be $8.6 billion present value over 10 years.
2. When are they likely to come into force?
It is not clear if and when a national pharmacare system would come into effect.
Initially, the final regulations under Ontario’s Health Sector Payment Transparency Act were expected to come into effect on January 1, 2019 with first annual reporting to the Ministry from payors by June 30, 2020. However, due to a change in government in Ontario, the regulations will likely be revisited in the in the fall of 2018 and the timeline for reporting will likely be delayed.
The federal government’s proposed amendments to the drug pricing framework are expected to come into force on January 1, 2019.
