New Brunswick Tribune

Tuesday, February 27, 2024

New regulations have the potential to save billions of dollars

Billions of dollars might be saved if new regulations are implemented.

Key Takeaways:

  • In the long run, new pharmaceutical price regulations set to take effect next month might save billions of euros by reducing spending on patented drugs by roughly 7%.
  • When a breakthrough drug is released to the market, its price is set at the median sticker price of seven comparable countries.

According to the parliamentary budget officer, new medication price regulations slated to take effect next month might reduce spending on patented drugs by around 7% in the long run, saving billions of euros.

In 2019, Health Canada announced that the Patented Medicine Prices Review Board would revise how it sets a price cap on medicines in Canada to lower excessively high medication costs by changing the nations with which Canada analyses prices.

After being postponed four times throughout the pandemic, the adjustments will take effect on July 1.

The PMPRB is responsible for ensuring that drug prices do not become unreasonably high, and one of the ways it accomplishes so is by comparing drug prices with those in other nations.

The price of a breakthrough drug is fixed at the median sticker price of seven comparable nations when it is released to the market.

Drug pricing has become less open in other countries over time, and the cost of pharmaceuticals in the United States, particularly, has risen dramatically compared to Canada.

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To address the issue, Health Canada proposed modifying the nations with which it compares costs, proposing a list of 11 nations with comparable GDP per capita that does not include the United States.

According to parliamentary budget officer Yves Giroux and his team, if the modifications had been implemented in 2018, Canada would have spent 19% less, or $2.8 billion less, in 2018.

The degree of the impact was comparable in 2021, albeit data from that year was less trustworthy due to the epidemic.

According to the report, future savings are difficult to estimate, especially when dealing with something as uncertain as medication development.

“The fundamental goal of the exercise is not to produce an exact measurement, but to assess the significance of the shift,” Giroux wrote in the study.

A 19% reduction would be enormous, but whether those advantages are realized is contingent on more specific criteria that the govt has yet to settle on, such as whether existing pharmaceuticals would be grandfathered in at current costs or renegotiated under the next regime.

Billions of dollars might be saved if new regulations are implemented.
Billions of dollars might be saved if new regulations are implemented. Image from Pique Newsmagazine

“We infer that the proposed adjustment might reduce spending on patented pharmaceuticals by 7% in the long run, rising to 19% if price reassessment occurs more regularly,” the paper concluded.

The government had planned many more regulatory reforms to decrease medicine costs, but they were shelved after pharmaceutical corporations and the Quebec government successfully contested them in court.

The decision to change the nations with which Canada compares costs has sparked opposition from industry and patient groups, concerned that the changes may limit access to new drug therapy in Canada.

Lower costs, they believe, will limit companies’ incentives to introduce breakthrough new pharmaceuticals to the country.

That option was not included in the analysis, but the PBO points out that pharmaceutical companies spend a lot of money developing new treatments, which are often unsuccessful.

They put out the effort because of the potential profits if they uncover a treatment that works, especially in the high-priced US market.

“At the moment, the United States does more of that (research and development) than the rest of the world,” Giroux added. “Canada’s policy of free-riding on R&D expenditures in the United States and abroad is untenable.”

Source: Global News

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