Is Price Capping an Answer for Expensive Drugs for Rare Diseases in Canada?
Updated: Dec 4, 2020
The price tag on many drugs for rare diseases (DRDs) is a significant sticking point for both public and private payers as they attempt to balance the needs of patients against the efficacy of drugs and the sustainability of healthcare systems. In an attempt to regulate pricing, the Government of Canada established the Patented Medicines Prices Review Board (PMPRB) in 1987 to “protect[s] and inform[s] Canadians by ensuring that the prices of patented medicines sold in Canada are not excessive and by reporting on pharmaceutical trends" (Patented Medicines Prices Review Board, 2020). With escalating prices the PMPRB announced on November 21st, 2019, that it had released new draft guidelines on limits to prices for drugs that would take effect July 1, 2020 (Patented Medicine Prices Review Board, 2019). As part of the preparation process, the PMPRB underwent a 60-day consultation period with stakeholders in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, New Brunswick, and Nova Scotia (Patented Medicine Prices Review Board, 2019). Originally, all written feedback submissions were due by January 31st, 2020; however, as a result of the evolving COVID-19 situation, they extended this deadline to March 18, 2020, with the new PMPRB guidelines now set to take effect on January 1, 2021 (Patented Medicine Prices Review Board, 2020). That is in less than sixty days from now.
The new guidelines outline significant changes with one of the most notable being a proposed introduction of a cost-effectiveness assessment that would set legally binding rebated prices for new drug launches (Patented Medicine Prices Review Board, 2020). The cost-effectiveness assessment is meant to inform the price negotiation process (Patented Medicine Prices Review Board, 2020), which is how cost-effectiveness assessments are used all around the world. However, the new PMPRB guidelines are instead proposing that the price calculated through the cost-effectiveness assessment be the final offer. These new guidelines also propose the introduction of the universal “value” index and are set to recommend the implementation of an incremental cost-effectiveness ratio (ICER) of $60k per quality-adjusted life-year (QALY) for drugs for common conditions or $90k per QALY for a drug intended for a rare disease population (Patented Medicine Prices Review Board, 2020). While other international bodies have proposed such evaluations, Canada would be the first to set these as legal limits (Canadian Organization for Rare Disorders, 2020). As a consequence, the new guidelines stand to require a steep price reduction for many new medicines entering Canada (Patented Medicine Prices Review Board, 2020). For some specialized medicines, such as the ones used to treat rare diseases, this would require a price reduction greater than 50% (Canadian Organization for Rare Disorders, 2020).
It would seem that with these new guidelines that the Canadian Government starting to play some hardball with pharma on the cost of drugs – specifically expensive ones for rare diseases, which has raised significant concerns for the Canadian Organization for Rare Disorders (CORD) that advocates for access to medicines on behalf of rare disease patients. They argue that this type of assessment is disadvantageous for innovative drugs, specifically those used to treat rare diseases as their cost-effectiveness assessments are often very unbalanced (Canadian Organization for Rare Disorders, 2020). Furthermore, they see the sharp reduction required on prices as an unattainable goal for many rare disease treatments, which would in turn significantly impact the commercial activities of pharmaceutical companies in Canada and would make it even more challenging for those with rare disease to access the treatments they depend on (Canadian Organization for Rare Disorders, 2020). Finally, CORD is arguing that despite an extensive consultation process, very few proposed changes have been implemented (Canadian Organization for Rare Disorders, 2020). To be sure, the dynamics of consultation processes and the results of their outcomes are a contentious issue that has garnered plenty of scholarship - even in the specific area of DRDs (Douglas, Wilcox, Burgess, and Lynd, 2014).
The full details of the new PMPRB guidelines, and the changes of the reference countries upon which prices for Canadian drugs are meant to be set, are really outside the scope of this blog post, but it is highly advised that you see them for yourself at https://www.canada.ca/en/patented-medicine-prices-review/services/consultations/draft-guidelines.html
The president and CEO of CORD writes that “we have consistently warned that the proposed framework would unduly and unreasonably limit access to life-saving and life-improving medicines for patients with rare disorders, who are already disadvantaged under our current, complex system” (Canadian Organization for Rare Disorders, 2020). However, it is yet to be seen as to whether or not such caps will result in reduced access. What is more, it is already the case that certain DRDs are not made available to Canadian (via the provincial or territorial drugs plan) due to the negative Health Technology Assessments at either the federal or provincial level.
What these guidelines, and the CORD response, illustrate for us in the SPIN project is the intractability of pricing issues as they pertain to DRDs. Will it be possible to cap prices? Will this have a negative effect in terms of the number of drugs that are then available for rare disease patients to access? We simply do not know. What we do know is that there are various research and development processes taking place in Canada -as well as many other countries around the world that include our partners in Brazil, France, and the Netherlands- that are producing treatments for rare diseases that are not necessarily market-driven. What this means is that price becomes less of an issue and the prospects for the availability of treatments increases. It is these cases of social pharmaceutical innovation that we are interested in studying, and it is this process of social pharmaceutical innovation that we aim to contribute to.
Canadian Organization for Rare Disease. (2020, August 4). Patented Medicine Prices Review Board guideline feedback. Retrieved October 2, 2020 from the Canadian Organization for Rare Disease: http://www.raredisorders.ca/content/uploads/CORD-comments-on-PMPRB-June-2020-guidelines-Aug-3-20.pdf
Canadian Organization for Rare Disorders. (2020, February 14). PMPRB Response. Retrieved November 2, 2020 from Canadian Organization for Rare Disorders: http://www.raredisorders.ca/content/uploads/CORD-draft-PMPRB-Guidelines-Submission-Feb-14_2020Combined.pdf
Douglas, C.M.W. Wilcox, E. Burgess, M. and Lynd, L. (2015) Why orphan drug coverage reimbursement decision-making needs patient and public involvement. Health Policy, 119 (5), 588-596.
Patented Medicine Prices Review Board. (2019, November 21). PMPRB draft guidelines consultation. Retrieved November 2, 2020 from Government of Canada: https://www.canada.ca/en/patented-medicine-prices-review/services/consultations/draft-guidelines.html
Patented Medicine Prices Review Board. (2020, March 12). PMPRB draft guidelines consultation. Retrieved November 2, 2020 from Government of Canada: https://www.canada.ca/en/patented-medicine-prices-review/services/consultations/draft-guidelines.html
Patented Medicine Prices Review Board. (2020, October 23). PMPRB Guidelines: January 1, 2021. Retrieved November 2, 2020 from Government of Canada: https://www.canada.ca/en/patented-medicine-prices-review/services/legislation/about-guidelines/guidelines.html
Written by: Conor Douglas (PhD) and Shir Grunebaum (MA)
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