Decisions regarding public drug coverage are highly politicized and are largely based on budget constraints
By Mark Rovere : Associate Director of Health Policy Studies The Fraser Institute
Question: Should patients in Rome or Detroit have faster access to new prescription drugs than someone living in Victoria or Windsor? If your answer to that is “no,” then here is another query: Why do government agencies tasked to approve or deny new drugs in Europe and the United States (and which presumably have the same high standards as Canada) act quicker when compared to Health Canada?
According to the most recently available comparable data, when compared with the European Medicine Agency (EMA) and the American Food and Drug Administration (FDA), Health Canada took the longest to approve new medicines in most years observed. The Europeans were quicker in every year surveyed (between 2006 and 2010) as were the Americans in six of the last seven years studied (between 2004 and 2010).
Slow approval process leads to higher drug prices
In an ironic twist, Canada has occasionally followed the FDA’s lead by pulling a prescription drug ‘off’ the market because of safety reasons – which is surely favourable for Canadians. So if we trust the FDA to pull drugs off’ the market for safety reasons, why don’t we trust the FDA for drug approvals? There is no reason why Canadians must wait for a new medication already approved and available elsewhere in the developed world.
It is expensive for manufacturers to re-apply for approval every time they want to bring a new drug to market – which adds to the price of drugs that both individual Canadians and taxpayers must pay.
But more importantly, Health Canada’s slower approval process potentially harms patients who otherwise might be able to buy the new drugs. Thus, the federal government could speed up access by harmonizing with the Europeans and Americans on regulatory approvals. It would save companies and taxpayers money and help those in need of the newer drugs.
The problem is magnified by lengthy delays about provincial government reimbursements for new drugs, affecting those that rely on public drug plans. In this case, it absolutely depends on where you live.
Once a new drug has been approved as safe and effective by Health Canada, provincial regulatory agencies must decide whether or not the new medication will be publicly covered under their respective drug plans. This lengthy process significantly prolongs access to new medicines for those dependent on such plans.
For example, Canadians (averaged across all provinces) reliant on public drug plans waited an additional 17 months on average for access to new drugs, this after approval by Health Canada in 2009 (which itself took over 15 months on average to approve the new pharmaceuticals in the first place).
Overall, those eligible for public drug coverage were forced to wait almost three years before gaining access to new prescription medications that were approved in 2009.
In many cases, patients are denied reimbursement by their respective provincial drug plans. As of January 1, 2012, and averaged across all provincial public drug plans, only 19 per cent of the new drugs approved by Health Canada in 2009 were eligible for public reimbursement. But actual approvals vary dramatically among the provinces: for instance, 40 per cent of those drugs were approved for public reimbursement in Quebec compared to four per cent in Manitoba.
This should come as no surprise since decisions regarding public drug coverage are highly politicized and are largely based on budget constraints. Nevertheless, there is one way to improve access to new drugs for those dependent on public assistance to pay for their medication: get governments out of the drug insurance business.
Data show that private drug insurers in Canada approve new drugs far more rapidly than public insurance plans, and more importantly, cover more new drugs altogether. In contrast to public drug plans, on average across the provinces, 82 per cent of new drugs approved by Health Canada in 2009 were covered by at least one private insurer as of the beginning of 2012.
Replace public drug plans
Therefore, one practical solution is to replace public drug plans with means-tested subsidies for those with catastrophic drug costs relative to income; health consumers in need could then purchase a private drug insurance plan of their choice in a competitive market.
Critically, this sensible reform would reduce the delay to obtain new medicines, allow low-income patients to choose the drug plan that best meets their medical needs, and ultimately reduce government-imposed restrictions on consumer choice.
Through international cooperation of the drug approval process and by replacing bureaucratic public drug plans with private plans and targeted subsidies for those with low incomes, needed drugs could more quickly be made available to those in medical and financial need.
Mark Rovere is Associate Director of Health Policy Studies at the Fraser Institute and can be reached at email@example.com