Canada Plans to Tackle High Drug Costs With New National Agency

To help citizens struggling with the high costs of prescription medications, the Canadian government announced it will create a national drug agency. The new agency, dubbed the Canada Drug Agency, is part of a large plan to expand the scope of Canada’s state-funded health-care program.

Canada is one of the few countries with universal health care that does not cover prescription drugs; instead, citizens rely on public and private insurance plans to pay for these medications.

Spending on prescription drugs in Canada has climbed in recent years, from CA$2.6 billion in 1985 to CA$33.7 billion in 2018. The Canada Drug Agency is designed to lower medication spending by up to CA$3 billion annually in the long term.

In its announcement, the Canadian finance ministry said that the new agency would “take a coordinated approach to assessing effectiveness and negotiating prescription drug prices.” The agency’s work is scheduled to begin in the 2022-23 fiscal year.

“These measures alone will not fully close the gap for people who need prescription drugs and can’t afford them. But they do mark important first steps on the way to a system that helps all Canadians get the medicine they need,” Finance Minister Bill Morneau said in a speech announcing the budget.

However, stakeholders expressed “cautious optimism” about the new measures. “We believe it leaves scope there for them to be negotiating on behalf of all Canadians, which includes private and public payers,” Stephen Frank, CEO of the Canadian Life and Health Insurance Association, told Reuters. “There’s no way to snap your fingers and cut the price of drugs,” he added.

Also, representatives from Innovative Medicines Canada, a Canadian lobby group for patented drug manufacturers, said it invites efforts to streamline the complex drug regulatory process, but questioned how the agency will realize CA$3 billion in annual savings.

Source: Reuters, March 19, 2019.