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Unveiling Drug Price Disparities: Canada vs. the US

Explore the complexities of pharmaceutical pricing, government regulations, and market trends in Canada and the US. Discover the impact on public payers and the pharmaceutical industry.

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Unveiling Drug Price Disparities: Canada vs. the US

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  1. This presentation will probably involve audience discussion, which will create action items. Use PowerPoint to keep track of these action items during your presentation • In Slide Show, click on the right mouse button • Select “Meeting Minder” • Select the “Action Items” tab • Type in action items as they come up • Click OK to dismiss this box • This will automatically create an Action Item slide at the end of your presentation with your points entered. Drug Prices inCanada and the US:More Than Meets the Eye? National Academy of Social Insurance Annual Conference Wayne Critchley Executive Director, PMPRB January 27, 2005

  2. Outline of Presentation • Pharma Market: Canada and the US • Federal Price Controls in Canada • Influence of Public Payers • Sales and Price Trends in Canada • Price Differences: Canada and the US

  3. Canada & US Pharma Markets • Role of government in health care • Regulatory environment • Structure and conduct of the pharmaceutical industry

  4. Pharmaceutical SalesShare of World Market, 2003 Source: IMS Health

  5. Pharma Policy: A Balance • Intellectual Property • Investment in Research and Development • International Relations • Health Care • Consumer Protection

  6. Federal Price Controls • Direct price controls introduced in 1987 to replace indirect controls through compulsory licensing • Prices for patented drugs may not be excessive • The PMPRB is a quasi-judicial tribunal • Sets price guidelines • Power to roll back excessive prices

  7. Policy Objectives • Canadians should pay no more than their fair share of the international cost of researching and developing new medicines • Prices for patented medicines, on average, should not exceed the median of prices in seven major industrialized countries

  8. Role of Public Payers • Provincial drug programs account for close to 50% of total spending on prescription drugs • Costs for many plans have been increasing at rates three times the growth in the economy

  9. Average Rates of GrowthMajor Public Drug Plans & GDP, 1998 - 2003

  10. Prices to Public Drug Plans • Like programs in other countries, public plans employ a wide range of cost-containment measures including: • generic substitution • price freezes • restricted formularies • Prices to public and private plans tend to be uniform in Canada

  11. F/P/T Collaboration • National Pharmaceuticals Strategy: “No Canadians should suffer undue financial hardship in accessing needed drug therapies” • Common Drug Review – moving to a national formulary? • National Prescription Drug Utilization Information System (NPDUIS)

  12. Pharma Sales Growth • From 1993 to 2003, total manufacturers’ sales in Canada increased almost 11% per year, from $5.4 billion to $15.0 billion • Sales of patented drugs: • Increased more than 15% per year • From $2.4 billion in 1993 to $10.1 billion in 2003 • From 44.4% of total sales to 67.4%

  13. Manufacturers’ Sales: CanadaPatented and Non-Patented Drugs, 1993-2003

  14. Pharma Price Trends • Price increases limited by PMPRB guidelines, based on CPI, for patented drugs and by provincial policies • Since 1993, prices have been stable, in line with European trends • Prices for patented drugs declined 1.1% in 2003

  15. Price Trends: Patented DrugsAverage Annual Rates of Change, 1998-2003

  16. International Comparisons • The PMPRB compares prices for patented drugs in Canada to seven industrialized countries with pharma industries • Since 1993, Canadian prices, on average, have been just below the median of foreign prices • Prices for generic drugs in Canada appear to be higher relative to foreign median

  17. Ratio of Canada/Median Int’l PricesPatented Drugs, 1987 - 2003

  18. Foreign/Canada Price RatiosPatented Drugs, 2003 Source: PMPRB

  19. Comparisons with US • Complicated by methodological questions, including lack of a single price in US and lack of transparency on discounts • BUT, consider impact of exchange rates • AND prices paid by public programs

  20. Canada to US Price RatiosPatented Drugs, 2003

  21. Conclusions • Major differences in pharma markets • Canadian price controls part of balanced policy • Canadian prices in line with major markets; US is exception • But, prices to large public purchasers in both countries are similar • Price differences within US

  22. Contact wcritchley@pmprb-cepmb.gc.ca

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