drug prices in canada and the us: more than meets the eye?
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Drug Prices inCanada and the US:
More Than Meets the Eye?
National Academy of Social Insurance Annual Conference
Wayne CritchleyExecutive 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 SalesShare of World Market, 2003
US45%
Canada2%
Other Countries
53%
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 GrowthMajor Public Drug Plans & GDP, 1998 - 2003
13.8 14.0
18.2
15.2
13.3
3.7
7.4
9.5
3.04.3
0
2
4
6
8
10
12
14
16
18
20
1998-99 1999-00 2000-01 2001-02 2002-03
Source: ODB, RAMQ, and Statistics Canada
Per
cent
age
Major Public Plans
GDP (Canada)
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: CanadaPatented and Non-Patented Drugs, 1993-2003
2.4 2.4 2.6 3.0 3.7 4.35.4
6.37.5
8.810.1
2.6 2.9 2.82.9
2.62.7
2.72.8
2.9
2.9
3.2
0.4 0.6 0.60.7 0.7
0.8
0.8
0.9
1.0
1.4
1.7
5.45.9 6.0
6.67.0
7.8
8.9
10.0
11.5
13.1
15.0
0
2
4
6
8
10
12
14
16
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Source: PMPRB and IMS Health
$ Bi
llion
s
Generic
Non-Patented Brand Name
Patented
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 DrugsAverage Annual Rates of Change, 1998-2003
-0.6
1.3
-1.0-0.4 -0.3
6.5
3.2
-0.2
-1.7-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
Canada France Germany Italy Sweden Switzerland UK US (nonFSS)
US (FSS)
Source: PMPRB
Per
cent
age
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
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Foreign/Canada Price RatiosPatented Drugs, 2003
1.011.07 1.11
1.75
1.000.94
0.840.80
-0.1
0.1
0.3
0.5
0.7
0.9
1.1
1.3
1.5
1.7
1.9
Italy France Sweden Canada Germany UK Switzerland US
Rat
io
Source: PMPRB
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
0.57
0.67
0.81
0.94
0
1
PMPRBMethodology
Current $ Yearend
FSS Only,PMPRB
Methodology
FSS Only,Current $, Year
end
Source: PMPRB
Rat
ios
Canada to US Price RatiosPatented Drugs, 2003
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
