As British Columbia’s health minister, Mike de Jong has seen it time and again: A pharmaceutical manufacturer launches an expensive new drug, brings forward a patient who desperately needs the medicine but cannot afford it, and pressures the province to cover the cost.
Suddenly, though, the balance of power in Canada’s multi-billion-dollar prescription-drug system is shifting, as provinces and territories begin an historic push to combine their buying power and jointly bargain down the high cost of pharmaceuticals.
Not unlike department-store chains bulk-purchasing washing machines or televisions, all the jurisdictions but Quebec have combined forces to negotiate the price of a series of new medicines to be covered by their drug plans, and hope to make the process routine in future.
Analysts call it a unique case of cross-border collaboration between governments that typically run their health-care systems as distinct fiefdoms.
“The territorialism that we see has developed over the years, if not the decades,” said Mr. de Jong. “It is a remarkable feature of the Canadian federation that something that would seem so eminently logical has taken this length of time to become a reality. But it has, and that’s good news.”
The minister said he wants to push for another concession from the pharmaceutical firms, too. Industry now insists that the price produced by the haggling be kept secret, but taxpayers have a right to know, Mr. de Jong said.
Canada spends about $26-billion annually on prescription drugs, making them the third-largest health care cost after hospitals and doctor services. Provincial drug plans for senior citizens and others pay 46% of that total, private insurance and workplace health plans 36%, and uninsured patients 18%, according to the Canadian Institute for Health Information.
The bulk-pricing talks began last year after premiers instructed their health ministers to negotiate jointly for Soliris, the only drug available to treat PNH, a rare and often-fatal blood disease that affects just 90 people across Canada.
The price tag of about $500,000 per year makes it the world’s most expensive medicine, according to Forbes magazine. Working together, though, the provinces managed to secure a deal “significantly less than what the company had started with,” said Judy McPhee, pharmaceutical-services director with Nova Scotia’s Health Department.
Driving the negotiations in part was the discovery that Alexion Pharma, the Connecticut-based manufacturer, was selling Soliris to the U.S. Department of Veterans Affairs for about half the price it was offering Canadian buyers, said Mr. de Jong.
A deal has also just been completed on Pradax, a blood thinner, while a third set of talks is underway on an undisclosed product and others are being eyed, provincial officials said.
“As drugs are added to the formulary, we want to negotiate a common [national] price,” said Deb Matthews, Ontario’s health minister. “If we can work together and get a better price, that’s what we need to do.”
Walter Robinson, a vice president of Canada’s Research-based Pharmaceutical Companies, the main industry trade group, struck a more cautionary note, though, saying the provinces have to consider more than cost when they choose which medications to cover.
“It’s not just a question about price,” said Mr. Robinson. “We must ensure we don’t limit choice or therapeutic options … and ensure that the prescribing doctor can still prescribe what they consider most important.”
Until a few years ago, the companies actually offered only one firm price, with no back and forth; then individual provinces and other buyers began negotiating for discounts in the form of confidential rebates.
It makes total sense for jurisdictions to band together to gain more leverage and also to prevent “whip-sawing” – using one province’s decision to pay for a drug to put political pressure on others, said Steve Morgan, a pharmaceutical-policy expert at the University of British Columbia.
Still, such “horizontal integration” between provincial governments is highly unusual, he said.
Soliris — the test case for national negotiations — was approved by Health Canada in May 2009, but most provinces initially chose not to cover its huge cost. By 2010, media stories began appearing about patients who said they faced suffering and possible death if their governments did not foot the bill. Studies suggest that the compound does prevent dangerous blood clots, organ damage and other symptoms.
The lobbying for government coverage was led by the Canadian Association of PNH Patients, launched in the same year Soliris hit the market and funded by “unrestricted educational grants” from Alexion, according to the group’s web site.
Mr. de Jong said he understands the need for pharmaceutical companies to exact the best price they can to recoup large R&D investments, but questioned some of their strategies.
“The practice has become fairly refined by some of the drug producers: come into a jurisdiction, find a patient, a very compelling case, highlight that case in a way that attracts the sympathy of people … and force the politicians, on behalf of the taxpayers, to pay whatever rate the drug company decides is fair,” said the B.C. minister. “That’s not acceptable.”
National Post
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