How US Health Reform Is Hitting Canada - Pharmaceutical Executive

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How US Health Reform Is Hitting Canada


Pharmaceutical Executive


PE: The innovative segment of pharma faces a stiff challenge in Canada due to the strong influence of domestic generic manufacturers at the provincial level. What is your strategy to counter this intrasectoral rivalry and ensure innovation remains at the top of the country's policy agenda in life sciences?

RW: Our competitive advantage is to demonstrate how innovation delivers value to the health system and spurs life science research. The future depends on it because every generic drug in use today was once someone's innovation. The difference against our generic colleagues is that we are expected to prove that value repeatedly throughout the product cycle. This requires that our companies furnish the right evidence linked to improving outcomes and driving advances in efficiency, at every stage of a healthcare intervention.

It is also vital that we frame this argument as broadly as we can. Appropriate utilization of innovative drugs not only cuts hospitalization costs, but frees providers to focus on the most critical clinical tasks and helps put sick people back to work too.

One fact that irks me is that because the Canadian payment structure is so siloed, companies continue to struggle in making the case that newer innovative drugs are the most cost-efficient part of the health system. We know this to be true but the data is often incomplete or missing. The contribution our industry brings to research and innovation in our health institutions and universities must also be factored in when setting policy.

PE: The cost of running Canada's medicare program is high and the debate is essentially the same as in all industrialized countries. Is the status quo on financing care for every citizen sustainable?

RW: Medicare has to adjust to a set of changed circumstances, some of which are demographic—our population is aging, though not as fast as most other industrialized countries—while others relate to things like the underlying rate of economic growth, which determines the public resources available for investment and consumption of health services. We've also done measurably better on that score than elsewhere. In most of the 10 provinces, health spending already consumes nearly half of the health budget. We have been making the case that healthcare should be looked upon not only as a cost but also as an investment. Vaccines, for example, can save our healthcare system money by preventing the outbreak and spread of disease in addition to saving lives. Furthermore it is clear that better access and appropriate utilization of innovative medicines will reduce costs in other sectors and should be considered part of the solution in the debate about the sustainability of healthcare in Canada.

PE: How is Rx&D working to prevent medicines from becoming the biggest target of budget-cutters?

RW: By publicly recognizing the dimension of the challenge, acknowledging industry's responsibility to act with restraint and consultation on sensitive issues linked to reimbursement, and contributing to solutions. To do that, we must act as a credible partner and information source with government and other key stakeholders.

A major element of this latter point is to highlight regulations that lead to higher costs than might be the case if market competition was allowed to exist. The provinces pay way too much for generic medicines. Studies have shown that the cost of overpaying for generic drugs adds some C$800 million (US$817 million) annually to provincial drug budgets. A number of provinces are beginning to address what amounts to a tacit industrial subsidy for generic suppliers, but more can be done.

PE: How would you characterize the overall level of support in Canada for medicines innovation?

RW: There is strong support for innovation as a concept and a goal but the practical application remains very uneven. First, evidence we have compiled over the past few years indicates the patient in Canada lacks access to modern drugs that are commonly available in other countries with similarly high per capita incomes. Patients in Canada fare better in the access they obtain through private, employer-based drug benefit plans than from the various subsidized provincial programs. The conclusion we draw? There is little value in having innovation if the customer base does not have access to it. A government that purports to support innovation yet does not have policies that make that innovation available to its citizens has an incomplete and less-than-effective policy.

Finally, given the fact that there is a roughly 60/40 split in the share of drug spending between public and private benefit programs, cost factors shaped by high government deficits usually prevail in discussions on funding future innovation. This is probably the most challenging part of the picture: How do we invest wisely—for the next generation of patients—knowing that the political environment is focused solely on the next budget cycle?


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