The Fraser Institute

The Fraser Institute

June 29, 2011 06:32 ET

The Fraser Institute: Canadians Waiting More Than Two-And-A-Half Years for Governments to Approve New Medicines

TORONTO, ONTARIO--(Marketwire - June 29, 2011) - Federal and provincial government bureaucracies are taking more than two-and-a-half years on average to approve new prescription drugs, thereby depriving many Canadians of the latest in new medicines, finds a new report from the Fraser Institute, Canada's leading public policy think-tank.

"On average, it takes Health Canada nearly 16 months to approve new drugs as safe and effective. After that, the provinces typically spend another 15 months or more deciding whether new medicines will be eligible for public reimbursement under provincial drug plans," said Mark Rovere, Fraser Institute associate director of health policy studies and co-author of Access Delayed, Access Denied: Waiting for New Medicines in Canada.

Canada's drug approval process involves two separate stages: First, Health Canada must certify a drug is safe and effective, then provincial governments decide if the drug will be reimbursed under their public drug programs. This combination of federal and provincial decision-making creates delays or, more often, deprives patients of access to new medicines.

The study found that only 23 per cent of new drugs approved as safe and effective by Health Canada in 2004 had been approved for either full or partial reimbursement under provincial drug plans as of June 9, 2011, compared to 98 per cent that had been covered by at least one private insurer.

In addition, the study shows that, compared to its international counterparts, Health Canada takes longer to certify new drugs. From 2006 to 2009, Health Canada's performance was worse than that of the EMEA, Health Canada's European equivalent. Similarly, Health Canada's performance was worse than that of the American FDA in five of the last six years studied (2004 to 2009).

In the report, the authors suggest two specific policy changes to make new medicines more quickly available to Canadians:

Mutual recognition of drug approvals and cooperation with other jurisdictions

Canada could speed up its regulatory process by taking advantage of the regulatory knowledge and capacity of other jurisdictions, rather than attempting to duplicate the process of the FDA in the United States. If Canada entered into agreements of "mutual recognition" with other countries, new medications already approved in those jurisdictions could be introduced into the Canadian market far more rapidly, and vice-versa.

Replace government drug programs with means-tested subsidized access to private insurance

One way to make new medicines more readily available without increasing the burden on taxpayers is to replace existing public drug plans with a properly regulated and competitive private-sector insurance market in which universal access to catastrophic drug insurance would be facilitated through means-tested subsidies for those with low incomes.

Research shows that a very small percentage of Canadians actually face exorbitant drug costs. Between 1997 and 2002, only three per cent of Canadian households spent more than five per cent of their annual income on prescription drugs.

"Means-tested subsidies provided to those with low incomes, regardless of age, to purchase catastrophic drug insurance in a private, competitive insurance market benefits recipients by giving them the choice of selecting the drug plan that meets their individual medical needs and financial abilities," Rovere said.

Unlike the majority of public drug plans that have small, flat co-payments, most private drug insurance plans include co-payments that are linked to the full cost of the prescription, which encourage patients to make cost-efficient choices between alternative treatments. Consumer sensitivity to prices in turn creates incentives for physicians to prescribe treatment more efficiently and for drug manufacturers to invest efficiently in the development of new drugs.

"Allowing the private insurance market to compete through price and service, thus eliminating government monopolies on drug prices and coverage, is the best policy choice for improving access to the newest prescription drugs," Rovere said.

Follow the Fraser Institute on Twitter | Become a fan on Facebook

The Fraser Institute is an independent Canadian public policy research and educational organization with offices in Vancouver, Calgary, Toronto, and Montreal and ties to a global network of 80 think-tanks. Its mission is to measure, study, and communicate the impact of competitive markets and government intervention on the welfare of individuals. To protect the Institute's independence, it does not accept grants from governments or contracts for research. Visit

Contact Information