Any doubts that the pharmaceutical sector produces enormous value to the world were resoundingly silenced when innovative new vaccines to combat a novel coronavirus were developed in record time.
Such innovations, however, are seriously jeopardized here in Canada because of our drug price control regulations. It was not mere happenstance that the revolutionary new mRNA vaccine technology currently saving lives and releasing the world from lockdown was developed outside of our borders.
In this article for the Montreal Economic Institute, Pharmaceutical Innovation: The Undesirable Side Effects of Price Controls, Maria Lily Shaw and Krystle Wittevrongel argue that a new series of price control amendments adopted by the Patented Medicines Pricing Review Board, the federal agency which prevents medication from being sold at an excessive price, will have adverse unintended consequences. They write:
“We must not forget the impact these amendments may have on drug availability in Canada, and on pharmaceutical innovation more generally as we chip away at the industry’s profitability. For the sake of the health of all Canadians, the federal government must recognize the perverse effects of its actions and let the market function.”
A more sustainable way to reduce prices, they say, would be to scale back on overregulation altogether, which serves to inflate research and development costs, reducing incentives for companies to operate here, and ensures Canadians have to wait longer for life-saving drugs that are available elsewhere. This in turn increases costs elsewhere in the healthcare system.
