LSO Submission to the HESA study on PMPRB

Subject: HESA study on the reforms of the Patented Medicine Prices Review Board (PMPRB)

Dear Honourable Members,
Life Sciences Ontario (LSO) is a not-for-profit organization that represents and promotes Ontario’s vibrant and diverse life sciences sector. Members of LSO include life sciences companies, entrepreneurs, members of academia, and service providers from many different areas of the life sciences ecosystem, including biopharmaceuticals, agriculture, agri-food, the
bioeconomy, medical devices, animal health, environmental technologies, and more.

From the outset of the PMPRB reform process, LSO has actively monitored relevant developments and engaged with government officials and other stakeholders out of concern for the potential impacts of the new rules on Canada’s diverse life sciences ecosystem. As the unprecedented COVID-19 pandemic has clearly demonstrated, having a strong life sciences sector is not only good for Canadians and the economy when times are good, but also absolutely critical when they are not. Moving forward, the life sciences sector represents a tremendous opportunity to drive Canada’s post-COVID economic recovery, while also contributing to global efforts to develop vaccines, antivirals, and other treatments needed to stem the tide of this crisis. Here in Ontario, the government has identified life sciences as one of
three sectors for COVID-19 recovery where the province has a globally competitive advantage.

In this increasingly challenging context, we remain deeply concerned about the federal government’s patented medicine price controls, which will make it more challenging for our sector to commercialize new medicines and vaccines and invest in health research in Canada. To
put it simply, this undermines our sector’s efforts to support the health and wellbeing of Canadians and our economy.
Earlier this year, to help measure the impacts of the new price controls in Canada, LSO commissioned a survey of pharmaceutical and other life sciences leaders to see how they believe the PMPRB changes will impact their operations in Canada. Respondents were unanimous on the negative impacts, including fewer new medicine launches (i.e., commercialization of new medicines), investments in clinical research, and life sciences jobs in
Canada. These are the leaders who make decisions based on the commercial prospects on the ground in Canada, and their warnings are in contrast to the PMPRB’s continued assertions that prices do not affect decisions on launches and research investments. We have attached a copy
of this report for your review as part of our submission.

As a science-based organization, LSO wanted to further examine whether and to what extent the PMPRB reforms have impacted companies’ commercialization plans in Canada. For this, we commissioned IQVIA, a health data and analytics firm, to look at medicine launch trends in
Canada and globally over the past 20 years to see if anything had changed in recent years.

Unfortunately, the results largely substantiate what we heard from companies in our survey and we have attached a copy of the IQVIA report to this submission for your reference.
The report highlights a number of concerning developments, including
• Until recent years, Canada was gradually getting faster and more extensive access to new
therapies relative to other countries.
• In 2019, the year the drug price controls were adopted, there was a dramatic 40% drop in the number of new globally launched drugs commercialized in Canada – this despite the overall number of global launches rising during the year.
• By mid-2020, Canada benefitted from less than half of the new therapies launched globally in 2018 (16 of 37). The majority of the medicines still not commercialized in Canada are for rare diseases and cancer.

From the outset, the federal government’s approach to drug price regulation has been rife with problems. It is also telling that the federal government has decided to exempt COVID vaccines and therapeutics from the new pricing regime, demonstrating that the federal government
knows the new regulations are a regulatory barrier, despite their dozens of claims over the past three years to the contrary.
By far the most problematic and contentious aspect of the reforms has been the proposed use of economic factors to control drug prices. The proposed system for applying the economic factors has introduced a labyrinth of complex formulas and processes that must be followed by companies, with no real certainty about how they will be applied in practice. Without certainty around pricing or the potential return on investment, it is very difficult for companies to make a compelling business case to prioritize the Canadian market for new medicine launches and investments in clinical research, patient support programs, compassionate funding or even
Special Access Programs.

While the PMPRB’s final guidelines, released on October 23, 2020, have temporarily paused the systematic application of the economic factors to determine maximum price ceilings in light of an ongoing legal challenge, the PMPRB plans to use them on a case-by-case basis in the event of
a complaint. It can also reinstate their full application at a later time depending on the outcome of the legal case. All of this continues to perpetuate uncertainty and impact commercial decisions for companies.
In the context of the present HESA study, LSO’s one and only recommendation is to remove the economic factors from the Patented Medicines Regulations. This will remove the cloud of uncertainty over the pricing system and has to be done immediately to avoid further damage to our life sciences ecosystem.

Read the official submission here.