Picture of Nigel RawsonNigel Rawson is President at Eastlake Research Group


The 2019 federal budget announced that the federal government will take initial steps towards implementing national pharmacare to improve the affordability and accessibility of prescription drugs across Canada. The government’s plan includes the development of “three foundational” elements – a national Canadian Drug Agency (CDA), a comprehensive national drug formulary, and a national strategy for high-cost rare-disorder medicines.

The CDA will assess the cost-effectiveness of new prescription medicines and negotiate prices on behalf of public drug plans to recommend those that represent the best value-for-money. In other words, it will merge the present health technology assessment (HTA) agencies – the Canadian Agency for Drugs and Technologies in Health (CADTH), and INESSS, Quebec’s equivalent – and the pan-Canadian Pharmaceutical Alliance (pCPA), which currently negotiates prices for all public drug plans.

The government intends for the CDA to be a powerful tool in reducing drug costs (currently $33.7 billion) by an estimated 3 billion dollars per year. This projected reduction in cost aligns with the government’s commitment to provide affordable, accessible and appropriate prescription drug coverage for all Canadians.

The federal budget, as usual, was long on generalities and short on details, leaving thought-provoking, important questions unanswered.

The first is, would Quebec relinquish some of its provincial jurisdiction and allow INESSS to be combined with CADTH? If not, different reimbursement recommendations for Quebec will likely continue.

The budget failed to specify if the CDA will assess the value of new medicines and negotiate prices for public drug plans, as CADTH and INESSS currently do. The Canadian Life and Health Insurance Association, which represents organizations that provide life and health insurance to 80% of Canadians, has wanted to be part of the pCPA for some time. If the government intends for the CDA to negotiate prices on behalf of both public and private drug plans, it would have greater leverage with drug companies to bargain for lower prices. This would be a historic change that could improve the affordability of prescription drugs in Canada.

The budget conspicuously didn’t mention the Patented Medicine Prices Review Board (PMPRB), which currently regulates patented drug prices to ensure they are not excessive. In 2018, the government proposed substantial changes in the PMPRB’s guidelines to further reduce drug prices. However, these proposed changes could have far-reaching impacts for drug manufacturers that could delay or prevent the timely introduction of new medicines, denying Canadians with unmet pharmaceutical needs access to innovative therapies. The proposals have led to some serious concerns among patients.

Since the pCPA has achieved prices lower than the legal maximum for a growing number of drugs, the PMPRB’s pricing role has become less relevant to government drug plans. Combining the HTA agencies and having the CDA negotiate drug prices will only further isolate the PMPRB. This raises the question, has the government decided to avoid the problems arising from its proposed changes by removing the PMPRB from the picture?

Other questions relate to what is meant by a “comprehensive” national formulary and how it would be implemented across Canada. According to the budget, the development of a comprehensive, evidence-based list would “provide the basis for a consistent approach to formulary listing and patient access across the country.” Does this imply that the formulary would include the several thousand of medicines that many private insurance plans cover? Or would it be restricted to, for example, the 125 so-called essential medications proposed by some academics? Or, perhaps, it would resemble New Zealand’s formulary which, excluding vaccines, diagnostic products and oncology drugs, includes approximately 550 medicines (the often-criticized Ontario public plan has about 750 medicines)?

The provincial governments are protective of their autonomy in deciding which medicines are listed in their formularies, as these decisions are based on the perceived needs and priorities of residents and provincial budgets. Having provinces list all the medicines recommended for reimbursement by the CDA would likely be interpreted as federal interference and, thus, resisted, unless the federal government provided funding for the coverage of additional medicines. But, until all drug coverage plans are required to include every drug in the national formulary, inequity is likely to continue across Canada. The alternative, of course, is to recommend fewer drugs for reimbursement

A national strategy to regulate high-cost rare disorder medicines is long overdue. Some CADTH staff recognize that the current rigid methods of the HTA do not work for rare disorder drugs and that a unique approach to assess their value is required. A relevant question here is, will a national strategy include more flexible HTA methods for these types of drugs? If so, will public and private drug plans accept the recommendations, or will they continue to impose restrictive clinical criteria that limits drug access to highly specific patient types?

Without answers to these questions, Canadians will not know whether the federal government’s plan is to create a truly comprehensive national pharmacare program, to rearrange the current public-private insurance hodgepodge, to mirror New Zealand’s tight cost-containment drug coverage system, or to develop something completely different. How can Canadians who require access to new costly innovative drugs ensure that they are not forgotten in the government’s ongoing plans for national pharmacare?