than Meets the Eye? - National Academy of Social Insurance
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Transcript 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
[email protected]