Large pharmaceutical companies could cut research and delay new drugs if drug coverage means more generics: memo

OTTAWA – According to an internal badysis conducted by the federal government, brand-name companies could delay the introduction of new drugs in Canada and reduce their research here if the country is oriented significantly towards cheaper generic alternatives as part of a national pharmacare plan.

Concerns were included last year in an information document for federal Finance Minister Bill Morneau, who was reviewing the feasibility and costs of a drug benefit program.

Medicare is becoming a key campaign issue in the October election, especially for the Liberals.

The Department of Finance's badysis was completed a few days before Morneau's 2018 budget officially launched a Pharmacare Advisory Group across Canada, which the Liberals believe will reduce costs and improve Canadians' access to prescription drugs. The paper indicated that more information was needed to fully understand the impact of the national pharmacare on drug spending in Canada – and what that would mean for revenues and benefits. commercial operations of the national pharmaceutical industry.

In his badysis of Canadian industry, the information note to Morneau stated that the national drug plan could have a number of impacts on pharmaceutical companies' revenues. Among the possibilities, he said that a change in favor of more generic, mbad-produced drugs after the expiry of patent protections for new drugs, could help reduce costs.

But this could have a cost for the patients.

"For example, brand-name pharmaceutical companies can respond to a major shift to generic drugs by delaying the introduction of new drugs into the Canadian market or by reducing the amount of R & D they conduct in the country," he said. said the badysis, entitled ", obtained by The Canadian Press under the Access to Information Act.

t unfortunate, there is a little tension right now with the industry right now

"Innovative Drug Canada, which represents drug patent holders, warned that a national drug program focused on reducing costs could result in reduced access to drugs for Canadians."

The President of Innovative Medicines Canada stated that its members, including drug multinationals, fully support the role of generics. Some of the companies also produce generic drugs, said Pamela Fralick in an interview.

Fralick said the drug companies wanted more details on Canada's drug plan, but pointed out that a much bigger problem for the industry today is regulatory reform.

At the end of 2017, the Liberal government proposed to amend the regulations governing patented medicines to reduce drug prices. The update, which has not yet been put into effect, would be the first major change to these rules for more than two decades.

The proposal calls for an expanded list of countries that Canada can use to compare the prices of patented medicines. It also includes new factors to be taken into account by the Patented Medicine Prices Review Board, a quasi-judicial body independent of the government, to be taken into account when badessing the excessive price of a drug.

Fralick argued that the proposed reforms needed to be improved. If they proceed as they are written, companies could incur between 30 and 70% of their income.

"They make decisions about drug launches, investments, etc., based on what's happening in that particular environment."

Fralick added that, despite all this uncertainty, companies were reluctant to invest in Canada until regulation was stabilized.

In addition to the risk of losing dollars in investment, she said that if hostile conditions prompt companies to look elsewhere, new drugs may be delayed years before they arrive in Canada.

According to the briefing at Morneau, Canadian pharmaceutical companies were already investing much more in research and development than in other countries of the Organization for Economic Co-operation and Development, a group of 34 advanced economies.

The ratio of sales to R & D for all patentees declined further in 2017 to 4.1%. That's a 65% drop from its peak of 11.7% in 1995, according to the price review committee's numbers. The industry has invested $ 870 million in 2017 and employs 29,870 people, the council said.

"Since 2003, industry investment in research and development has accounted for less than 10% of sales – the goal that the pharmaceutical industry had committed in exchange for more favorable patent conditions in Canada." said the briefing to Morneau.

Fralick challenged the argument that innovative pharmaceutical companies have missed out on investments. The PMPRB's formula does not capture the industry's major investments in university research chairs and venture capital channels, she said.

"A lot of research going on in Canada is not counted," she said, stressing that many of her members are "well above" the 10% target. "It's unfortunate, there is a bit of tension right now with the sector."

The cost of the national drug benefit should be high.

An badysis by the Parliamentary Budget Officer estimated that a broad coverage regime would have a price of $ 20 billion a year. Recent work by the Canadian Institute for Health Information revealed that Canadians spent $ 39.8 billion on drugs in 2018, including $ 33.7 billion in prescription drugs.

This is the fastest growing component of health spending as Canadians live longer and spend more time with chronic diseases.