Prescription Drug Update

February 28th, 2018 

On December 1, 2017 the Canadian Federal Ministry of Health proposed changes to the drug pricing  regulations in an effort to protect Canadians from current and future excessive drug costs. Believe it or not,  Canadians are spending more per capita on drugs than any other country in the world except for the US! 

The Federal Ministry has determined that should their new regulations to lower costs be adopted, Canadians  could realize an estimated $12.6 Billion in net benefits over the next ten years. And as a drug receives a new  indication, drug prices as a whole will continue to decrease. We can look forward to January 2019 as that will be  the effective date should the new proposed regulations be adopted. 

The main aim of these proposed regulations is to protect plan sponsors and plan members from excessive costs  for patented medicine. Due to the unsustainable rise in cost to company drug plans as a result of the increasing  advent of chronic diseases and specialty drugs such as Biologics and Biosimilars, it has become imperative that  effective cost-containment strategies be implemented for all plans to assist those who do not have the  willingness or ability to pay as well as value to employers for their Pharma benefits. Should the Patented  Medicine Prices Review Board (PMPRB) be allowed to move forward with the proposed amendments, Canadians will be able to purchase lower cost drugs bringing financial value to both the employee and the sponsor! 

If adopted, the proposed set of amendments would include: 

Updating the list of countries used for comparing drug prices. 

• Only countries that are aligned with Canada’s current economic situation will be included on the list – all other will be removed. 

Introducing new economics-based factors such as: 

• When looking at Canada’s ability to pay for patented medicines, the gross domestic product (GDP) per capita should be taken into consideration. This could result in cost containment for patented medicines by putting more of the emphasis on a drug’s value for money. 

Quality-adjusted life year (QALY). 

• Should the PMPRB be successful at implementing a maximum cost per QALY, they would be able to set a maximum cost for the life of a drug that could then be used in whether and how much to pay for a new drug. 

Quality-adjusted life year (QALY) reporting. 

• The definition of the cost per QALY would need to be consistent with the Canadian Agency for Drugs and Technology in Health to uphold a standard of evidence and minimize regulatory burden on patentees. 

At Health Risk, we believe that should the proposed new regulations be adopted, this  will be GREAT NEWS for all of our clients and Plan Sponsors!! 

Lower cost drugs will help to minimize the exposure that sponsors have to the unknown and current rising costs within their Drug Plans. These new cost reductions will assist HRS as your Benefits Advisor, to ensure that your employee pharma plans are remaining sustainable for many years to come!

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