Grant: Project Grant

Canadians pay some of the highest prescription drug prices globally. This translates to high and unsustainable costs for patients and our healthcare system. The Patented Medicine Prices Review Board (PMPRB), the federal agency charged with preventing the excessive pricing of patented prescription drugs, is modernizing its pricing rules in an effort to reduce drug prices. These changes include updating the set of reference countries against which the Canadian prices will be assessed, and introducing new criteria for determining if an expensive and top-selling drug is over-priced. To do so, it will assess each new drug's health impact relative to its cost ("value for money") and its overall budgetary impact. The modernized PMPRB regulations, which will come into effect in July 2021, have raised questions and concerns as to whether they will deliver the desired reduction in drug prices and not delay Canada's access to essential medicines, given historical trends and predictable responses by drug companies. Our research goal is to assess the impact of the new PMPRB drug pricing rules. Our approach will investigate how the new rules would have impacted drug pricing in previous years (as if they were already in effect) compared to the actual prices under the current rules. First, we will calculate how changing benchmark countries affects drug prices. Next, we will analyze factors that determine how expensive, top-selling drugs are valued and how these factors impact the price cap for drugs in this category. We will also estimate how drug companies will respond to the new regulations in terms of their decisions to launch new drugs in Canada and their investments on research and development. Finally, we will use models to predict the price cap for future drugs launched in Canada. Our work is timely and provides an important opportunity to independently evaluate and inform this new policy that will affect Canada's drug spending and access to new drugs.