Pharma Companies ‘Not Amenable’ to Lowering Drug Prices: Federal Memo

Prescription drugs sit on shelves at a pharmacy in Montreal on March 11, 2021. Ryan Remiorz/The Canadian Press

Health Minister Jean-Yves Duclos was told of the “hard reality” of getting pharmaceutical companies to lower their drug prices before he urged an independent federal agency to pause the discussion in favour of more consultation, a 2021 memo shows.

“After five years, myriad policy proposals and many hundreds of hours of consultation, it would appear the pharmaceutical industry is simply not amenable to any measures that would further constrain its ability to sell patented medicines in Canada at free market prices,” said the document, titled “Memorandum to the Minister of Health.”

Dated Dec. 8, 2021, the memo, obtained by the NDP through access-to-information and viewed by Blacklock’s Reporter, told Duclos that the pharmaceutical sector is not supportive of Ottawa’s plan to “advance reforms” over prescription drug prices.

“The hard reality is even wealthy countries like the U.S. and Canada find themselves at an increasing disadvantage in their dealings with a sophisticated, transnational trillion-dollar pharmaceutical industry when seeking to advance reforms that put long term sustainability over short term profitability,” wrote Melanie Bourassa Forcier, acting chair of the Patented Medicine Prices Review Board (PMPR) at the time.

PMPR, the agency responsible for monitoring drug prices, said members of the pharmaceutical industry “steadfastly refused to engage on the substance” even after 110 hours spent on meetings talking about the guidelines for the new rules.

Pushback

In 2017, the federal government announced changes to federal rules in an attempt to bring prices down. However, amendments related to “the new price regulatory factors” did not come into force last July due to pushback by the pharmaceutical sector and a series of court challenges between late 2020 and early 2022, as reported by The Globe and Mail.

The pharmaceutical industry has argued that the price control will cut revenue so much that it won’t be profitable to bring new drugs to Canada. Pharmacies have taken a similar position, saying if the prices get too low, it will affect their revenue, a major part of which consists of a percentage markup on drug price, plus a dispensing fee.

In November 2022, Duclos wrote to PMPR and suggested the process be paused to give drug companies, patient groups, provincial ministers, and himself more time to understand the changes.

Speaking at a press conference on May 11, NDP Leader Jagmeet Singh said the government is siding with drug companies, causing Canadians to pay “more right now” for their medications.

“This Liberal government has chosen to continue to protect the profits of these very profitable pharmaceutical industries,” he said. “And we’ve got real, concrete proof to back this up.”

$11 Billion

In March 2022, the NDP signed a Supply and Confidence Agreement with the Liberals to back the minority government till June 2025 with one of the conditions being that the government pass a bill on universal public drug insurance coverage by the end of 2023. No bill has been introduced to date.

Testifying before the Standing Committee on Health on April 27, Duclos said the government remained committed to “improve accessibility to medicines at more affordable prices.”

He reiterated that his letter to PMPR was to allow stakeholders to “fully understand the short- and long-term impacts” of the proposed new guidelines.

According to the Parliamentary Budget Office last March, the NDP’s plan for national pharmacare will cost about $11 billion a year.

While the concept of universal pharmacare receives “overwhelming public support,” a poll commissioned by the think tank Fraser Institute, and conducted by market research firm Leger in April 2022, indicated that over half of Canadians lose their enthusiasm for the program if it has to be paid for through an increase in taxes, particularly the goods and services tax.

The Canadian Press contributed to this report.