Download than Meets the Eye? - National Academy of Social Insurance

Drug Prices in
Canada and the US:
More Than Meets the Eye?
National Academy of Social Insurance
Annual Conference
Wayne Critchley
Executive Director, PMPRB
January 27, 2005
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
Canada & US Pharma Markets
 Role of government in health care
 Regulatory environment
 Structure and conduct of the
pharmaceutical industry
Pharmaceutical Sales
Share of World Market, 2003
US
45%
Other
Countries
53%
Canada
2%
Source: IMS Health
Pharma Policy: A Balance





Intellectual Property
Investment in Research and Development
International Relations
Health Care
Consumer Protection
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
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
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
Average Rates of Growth
Major Public Drug Plans & GDP, 1998 - 2003
M ajor P u b lic P lan s
20
18.2
G DP ( Can ad a)
18
15.2
16
Percentage
14
13.8
14.0
13.3
12
9.5
10
7.4
8
6
4
4.3
3.7
3.0
2
0
1998-99
1999-00
2000-01
2001-02
Source: ODB, RAMQ, and Statistics Canada
2002-03
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
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)
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%
Manufacturers’ Sales: Canada
Patented and Non-Patented Drugs, 1993-2003
16
15.0
14
13.1
Generic
12
Non-Patented Brand Name
11.5
$ Billions
Patented
10.0
10
8.9
7.8
8
6
4
5.4
0.4
2.6
5.9
6.0
0.6
0.6
2.9
2.8
2
6.6
0.7
2.9
2.4
2.4
2.6
3.0
1993
1994
1995
1996
7.0
0.8
1.4
3.2
2.9
2.9
2.8
0.8
2.7
0.7
2.6
0.9
1.0
1.7
2.7
8.8
3.7
4.3
1997
1998
5.4
6.3
10.1
7.5
0
1999
Source: PMPRB and IMS Health
2000
2001
2002
2003
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
Price Trends: Patented Drugs
Average Annual Rates of Change, 1998-2003
7.0
6.5
6.0
5.0
Percentage
4.0
3.2
3.0
2.0
1.3
-0.2
1.0
0.0
-1.0
-0.6
-2.0
-0.4
-0.3
Sweden
Switzerland
-1.0
-1.7
-3.0
Canada
France
Germany
Italy
Source: PMPRB
UK
US (no n
FSS)
US (FSS)
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
Ratio of Canada/Median Int’l Prices
Patented Drugs, 1987 - 2003
1.4
1.2
1
0.8
0.6
0.4
0.2
0
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Foreign/Canada Price Ratios
Patented Drugs, 2003
1.9
1.75
1.7
1.5
1.3
Ratio
1.1
0.9
0.94
0.80
0.84
Italy
France
1.00
1.01
1.07
1.11
UK
Sw itzerland
0.7
0.5
0.3
0.1
-0.1
Sw eden
Canada Germ any
Source: PMPRB
US
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
Canada to US Price Ratios
Patented Drugs, 2003
1
0.94
0.81
0.67
Ratios
0.57
0
PMPRB
Methodology
Current $ Year
end
Source: PMPRB
FSS Only,
PMPRB
Methodology
FSS Only,
Current $, Year
end
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
Contact
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