Canada’s model for regulating and negotiating drug prices is in a state of uncertainty as drug price controls being introduced by the Patented Medicine Prices Review Board are scheduled to take effect by January of 2022.
Additionally, the country is moving towards some form of universal drug coverage, and a new federal Canada Drug Agency is being established.
And now, U.S. President Joe Biden is looking to add an additional complication to the mix, signing an executive order calling on the Food and Drug Administration to work with state governments to encourage American buyers to import lower-priced pharmaceuticals from Canada into the United States.
As Åke Blomqvist and Paul Grootendorst recommend in this Intelligence Memo for the C.D. Howe Institute, the government of Canada should dissuade the president from following through with this proposal, well-intentioned though it may be.
This parallel trading, where lower-priced markets buy drugs to resell them to higher-priced markets, can ultimately introduce adverse effects on buyers in lower-priced markets, they write.
It reduces the incentive for pharmaceutical companies to develop new drugs in lower-priced countries like Canada, and may cause sellers of newly developed drugs to delay launching them here. Shortages may then arise, affecting those who need the drugs most.
Ultimately, this proposal will not benefit Canadian consumers and patients, and should be reexamined, conclude Blomqvist and Grootendorst.
“Canada should announce its opposition to it and push for a long-overdue negotiation of a new and more rational model of sharing the global burden of paying for pharmaceutical research and development.”
