The Fraser Institute

The Fraser Institute

August 17, 2009 06:00 ET

The Fraser Institute: Government Policies and Drug Plans Often Deprive Canadians of Access to New Medicines

TORONTO, ONTARIO--(Marketwire - Aug. 17, 2009) - After enduring lengthy waits for the federal government to approve new prescription drugs, Canadian patients all too often discover that their provincial drug plans will not pay for these new medicines, according to a new, peer-reviewed study from independent research organization the Fraser Institute.

Canada's drug approval process involves two separate stages: First, Health Canada must certify a drug is safe and effective for public use, then provincial governments must decide if the drug will be covered by public health plans. This combination of federal and provincial decision-making creates delays or, more often, results in new drugs being unavailable to some patients.

"It takes more than 14 months, on average, for Health Canada to approve new medicines as safe and effective. And while private insurers will immediately cover those medicines, the provinces can take up to another year to decide if they will pay for the same drugs," said Brett Skinner, Fraser Institute director of bio-pharma and health policy and author of Access Delayed, Access Denied: Waiting For New Medicines in Canada. The complete study is available at www.fraserinstitute.org.

"For the one third of Canadians who rely on provincial drug plans, this puts new medicines out of their reach for up to a year. What's more distressing is that the provinces often decide not to cover these new drugs at all."

On average, Health Canada took 453 days to approve new drugs for sale, while the provinces added another 314 days to approve new drugs for coverage under provincial drug plans in 2007. This is a significant improvement from the waits recorded in 2004, when Health Canada took an average of 839 days and the provinces took 552 days to approve new prescription drugs, a total of 1,391 days or almost four years.

But alarmingly, the study found that only 10.1 per cent of new drugs approved by Health Canada as safe and effective in 2007 were being fully or partially reimbursed under provincial drug plans by the end of 2008.

In Access Delayed, Access Denied, Skinner suggests three specific policy changes to improve the drug approval process in Canada and speed up access to new medicines:

Regulatory cooperation with other countries

Instead of attempting to duplicate the new drug approval process of the FDA in the United States, Canada should take advantage of the regulatory knowledge and capacity of other jurisdictions. If Canada entered into agreements of mutual recognition with other countries, new medications already approved in those countries could be introduced into the Canadian market far more rapidly.

Consolidating resources through the sharing of data, workload, and processes would benefit all participating countries.

Performance-based user fees

Establish strictly enforced targets that Health Canada must meet before the agency receives user fees from drug companies. Currently, these fees are not linked to performance. By contrast, in return for levying user fees, the U.S. FDA is required to meet a number of performance goals intended to speed up drug approvals. Research has shown that establishing user fees in the United States dramatically reduced drug approval times.

Replace government drug programs with subsidized access to private insurance

The most economically rational way to ensure that everyone has adequate drug insurance coverage without unnecessarily delaying consumer access or restricting consumer choice through central planning is to introduce means-tested, publicly subsidized access to private insurance for prescription drugs.

"Research suggests that premium-based financing and consumer cost-sharing is a better policy approach to achieving cost control, which also protects patient choice and respects physicians' clinical prescribing freedoms," Skinner said.

"Most private drug insurance plans have co-payments that encourage patients to make cost-efficient utilization and substitution choices regarding treatment alternatives. Consumer sensitivity to prices creates incentives both for physicians to prescribe treatment efficiently and for drug manufacturers to invest efficiently in the development of new drugs."

Follow the Fraser Institute on Twitter

Join our Facebook group

Check out our latest videos on YouTube

The Fraser Institute is an independent research and educational organization with locations across North America and partnerships in more than 70 countries. 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 www.fraserinstitute.org.

Contact Information