WATCHING PHARMACEUTICAL PRICES IN CANADA

UNCLAS OTTAWA 003059 SIPDIS ALCAN COLLECTIVE STATE FOR WHA/CAN, EB/DCT AND OES/EID USDOC FOR 4310/MAC/ONA STATE PASS USTR FOR MELLE AND CHANDLER STATE PASS HHS FOR STEIGER E.O. 12958: N/A TAGS: ECON ETRD CA SUBJECT: WATCHING PHARMACEUTICAL PRICES IN CANADA REF: (A) OTTAWA 2394 (CANADIAN HEALTH CARE PRIMER) (B) TORONTO 928 (B) 03 OTTAWA 3649 SUMMARY -------------- ¶1. PREVIOUS MESSAGES HAVE EXPLAINED WHY PHARMACEUTICAL PRODUCTS MAY SELL AT CONSIDERABLY LOWER PRICES IN CANADA THAN IN THE U.S. MARKET. IN ORDER TO TRACK EFFECTS OF THE CROSS-BORDER "INTERNET PHARMACY" TRADE ON CANADA'S PHARMACEUTICAL MARKETS, THIS MESSAGE CITES SOME KEY SOURCES OF DATA AND ANALYSIS. WHILE THERE IS NO FIRM STATISTICAL EVIDENCE YET THAT CANADIAN PHARMACEUTICAL MARKETS ARE BEING DISRUPTED, THE PHARMACEUTICAL PRICE REGULATOR HAS EXPRESSED CONCERN ABOUT REPORTS OF PRICE INCREASES. END SUMMARY. RECENT PMPRB CONCERN -------------- ¶2. THE CANADIAN REGULATOR, THE PATENTED MEDICINE PRICES REVIEW BOARD (PMPRB),COLLECTS AND ANALYZES DATA ON DRUG PRICES IN CANADA, AND COMPARES THEM WITH THE U.S. AND SIX EUROPEAN COUNTRIES IN ITS ANNUAL REPORT (SEE WEBSITE PMPRB-CEPMB.GC.CA). FOR 2003, IT SHOWS THAT PRICES FOR PATENTED DRUGS IN CANADA INCREASED BY LESS THAN THE CONSUMER PRICE INDEX, CONTINUING A TREND OF MORE THAN A DECADE. A PMPRB OFFICIAL TOLD US THAT LAGS IN COLLECTING PRICE DATA MEAN THAT CERTAIN CURRENT UPWARD PRESSURES MIGHT NOT BE MEASURED FOR SOME TIME. ¶3. IN OCTOBER, THE PMPRB'S CHAIRMAN WROTE: "OVER THE PAST YEAR, THE PMPRB HAS RECEIVED QUESTIONS CONCERNING PUBLISHED REPORTS OF PRICE INCREASES FOR PATENTED DRUGS. . . WE HAVE REMINDED PHARMACEUTICAL PATENTEES OF THE PMPRB'S RESPONSIBILITY TO ENSURE THAT PRICES FOR PATENTED MEDICINES ARE NOT EXCESSIVE IN ANY MARKET IN CANADA (EMPHASIS IN ORIGINAL). THE PMPRB HAS RECEIVED INFORMATION THAT MANUFACTURERS HAVE ADVISED THE TRADE OF PRICE INCREASES FOR CLOSE TO 35 PERCENT OF ALL PATENTED DRUG PRODUCTS IN 2004 (RAISING) THE QUESTION OF WHETHER WE ARE SEEING A CHANGE IN PRICING BEHAVIOR AND, IF SO, WHY. . . . THE PMPRB IS DOING FURTHER WORK TO ASSESS WHETHER THE REPORTS OF PRICE INCREASES IN 2004 REPRESENT A NEW TREND AND, IF SO, WHETHER THE CURRENT REGULATIONS AND GUIDELINES ARE STILL APPROPRIATE." OTHER SOURCES -------------- ¶4. A COMPREHENSIVE 2003 PAPER BY DANZON AND FURUKAWA OF THE WHARTON SCHOOL ("PRICES AND AVAILABILITY OF PHARMACEUTICALS: EVIDENCE FROM NINE COUNTRIES") FOUND THAT IN 1999 (WHEN THE CANADIAN DOLLAR WAS UNDERVALUED),AVERAGE CANADIAN PRICES WERE LOWER THAN THOSE IN OTHER MAJOR DEVELOPED MARKETS, AND 33 PERCENT LOWER THAN U.S. PRICES. DANZON'S WEBSITE AT HC.WHARTON.UPENN.EDU IS AN EXCELLENT SOURCE FOR SERIOUS WORK ON PHARMACEUTICAL MARKET ECONOMICS, BUT SUCH WORK IS GENERALLY BASED ON DATA WHICH IS AT LEAST TWO YEARS OLD. ¶5. THE CANADIAN INSTITUTE FOR HEALTH INFORMATION (CIHI) MAINTAINS VERY DETAILED DATA ON CANADIAN PRESCRIPTIONS (INCLUDING PATIENTS' POSTAL CODES). WHILE THIS DATA COULD BE HIGHLY REVEALING OF PRICE AND DEMAND TRENDS, FOR EXAMPLE IN BORDER AREAS, THE CIHI IS A SELF- FINANCING BODY AND ONLY SHARES THIS DATA ON A COMMERCIAL BASIS. HOWEVER, A CIHI EXPERT TOLD US IN EARLY NOVEMBER THAT SHE HAS YET TO SEE HARD STATISTICAL EVIDENCE OF ACCELERATING PRICES OR OTHER CHANGES IN THE MARKET. CELLUCCI