Updated: Nov 16, 2021
On April 19th, 2021, the Liberal government tabled the federal budget. This was the first budget proposed in two years as a result of the COVID-19 pandemic.
In 2018, the Liberal government had established the Advisory Council on the Implementation of National Pharmacare. In 2019, the Council had released its final report. Unsurprisingly, the report detailed many of the same problems health and public policy scholars have been highlighting in their research. Canadians had spent 34 billion dollars on prescription drugs in 2018 (Advisory Council on the Implementation of National Pharmacare, 2019). Moreover, the report also found that three million Canadians do not fill their prescriptions due to cost-related factors (Advisory Council on the Implementation of National Pharmacare, 2019). The advisory council recommended a national, single-payer pharmacare model. A system that operates much like Medicare, following the five tenets of the Canada Health Act.
Despite the report from the advisory council, public support for Pharmacare at an all-time high, and the Liberal government continuously promising lower drug prices, it was rather strange to see this glaring omission in the 2021 federal budget.
The 2021 budget contains language which does not instill confidence that Pharmacare will be implemented before the end of the current administration. Currently, 500 million dollars has been allocated for high-priced drugs to treat rare diseases (Government of Canada, 2021). However, an additional 2.2 billion dollars has been earmarked for “strengthening Canada’s biomanufacturing and life sciences sector”. The government has created a highly favourable and well-protected market for the pharmaceutical industry since the late 1980s. The pharmaceutical sector already enjoys tax incentives for R&D investment and robust patent protection. The patents on pharmaceuticals are somewhat unique (Mohamed & Chaufan, 2020). Since the patent is granted for the drug itself, patents in this industry are more protective compared to other industries such as semiconductor manufacturing.
The conventional R&D model for pharmaceuticals has heavily relied on the industry, which has been influenced by market demand. The price of treatment per patient for orphan drugs can be astronomical. Soliris, for instance, was approved to treat a rare blood disorder in 2007. The treatment can cost upwards of $700,000 CAD (Crowe, 2015). Exorbitant prices for orphan drugs are not the exception, they have become the norm. The traditional R&D model relies on private, for-profit companies, to operate drug trials and market these drugs, resulting in = high-priced drugs, particularly for rare diseases. These prices are an attempt for the pharmaceutical company to recuperate the costs they have invested in bringing the product to market. With this model, the focus is the return on investment – not drug accessibility for patients.
There are alternative forms of R&D that can be utilized to reduce drug prices. Public entities such as health agencies, research institutions, and academia do not have the same goal of being profitable and returning dividends to their shareholders. These institutions can be used as part of the R&D process. Currently, BioCanRx is engaged in hospital site manufacturing of CAR-T cells for the treatment of specific cancers. The usage of hospital site manufacturing does not require each site to be profitable, the main goal is to provide treatment to a specific subset of patients. This is a gap in R&D in which the federal government, provinces, hospitals, and other organizations have pooled together resources to create a made-in Canada CAR-T network. This is paving the road to making a viable treatment. Furthermore, a key difference between public institutions and private entities is transparency. It is extremely difficult to find accurate data on how much a particular company has spent on the R&D process of a given drug. However, initiatives such as BioCanRx’s CAR-T clinical trial, prove that it is possible to reply on public sector funding despite the required levels of financial transparency and accountability.
Historically, the government has also provided increased protection to the industry by hindering generic drugs from entering the market. The patent exclusivity period was extended in 1987 and compulsory licensing was removed from Canadian patent law in 1993.
Despite the creation of more favourable market conditions, industry R&D investments have reached an all-time low. R&D investment in Canada has been declining since the late 1990s (Patented Medicine Prices Review Board, 2020). According to the Patented Medicine Prices Review Board (PMPRB), the pharmaceutical industry spent only 4% of its sales revenue on R&D in Canada in 2018.
The language used in the 2021 budget is rather vague and concerning. The lack of specificity in the budget on where these billions of dollars will end up should at least raise some questions from the public. The current R&D model centered around supporting the for-profit industry has failed to deliver drugs to patients who require them.
Furthermore, the 2021 budget also does not contain any information about the implementation of pharmacare. The reports calling for Pharmacare in Canada go back over 55 years since the Hall Commission in 1964. Yet despite these reports, commissions, academic research, rising drug expenditures, clear and measurable health inequities, the Liberal government still has not committed to an actual Pharmacare plan.
The focus of any equitable health policy initiatives should be on treating the greatest number of patients. Our project on social pharmaceutical innovation for unmet medical needs (SPIN) aims to better understand how this objective can be best attained through alternative forms of R&D. Canadians have been down this road of “investment” in the pharmaceutical industry before. The question remains, how will this be any different?
Advisory Council on the Implementation of National Pharmacare. (2019). A Prescription for Canada: Achieving Pharmacare for All. Retrieved from https://www.canada.ca/en/health-canada/corporate/about-health-canada/public-engagement/external-advisory-bodies/implementation-national-pharmacare/final-report.html
Crowe, K. (2015, June 25). How a pharmaceutical firm priced its life-saving drug at $500K a year. CBC. Retrieved from: https://www.cbc.ca/news/health/how-pharmaceutical-company-alexion-set-the-price-of-the-world-s-most-expensive-drug-1.3125251
Government of Canada. (2021). Budget 2021: A Recovery Plan for Jobs, Growth, and Resilience. Ottawa, ON Retrieved from https://www.budget.gc.ca/2021/home-accueil-en.html
Mohamed, F. A., & Chaufan, C. (2020). A Critical Discourse Analysis of Intellectual Property Rights Within NAFTA 1.0: Implications for NAFTA 2.0 and for Democratic (Health)
Governance in Canada. International Journal of Health Services, 50(3), 278-291. doi:10.1177/0020731420902600
Patented Medicine Prices Review Board. (2020). Annual Report 2018. Retrieved from https://www.canada.ca/en/patented-medicine-prices-review/services/reports-studies/annual-report-2018.html
Written by: Faisal Ali Mohamed (PhD Student)
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