When Canada’s health ministers met in Vancouver 10 days ago, they agreed, among other things, to tackle rising drug prices. Unfortunately, there is no sign they are serious.
The main outcome of their discussion was an agreement to pursue bulk purchasing more aggressively. But we’ve been banging that drum for years.
It certainly can’t hurt to pool buying power, but it won’t come anywhere close to resolving the real problem — a power imbalance that massively favours the industry.
Two examples. In 2013 Gilead Sciences Inc. introduced a new medication for hepatitis C, a disease that progressively destroys liver tissue. The drug — Sovaldi — is remarkably effective, ensuring a cure in nine out of 10 patients.
Unfortunately, the company set a price in the region of $58,000 for a 12-week treatment in B.C., and there are more than 50,000 British Columbians with the disease. Giving all of them the drug would triple the Fair Pharmacare budget.
Then late last year, an ex-hedge-fund manager named Martin Shkreli bought a small drug company south of the border. Overnight, Shkreli raised the price tag for one of its products — Daraprim — from $13.50 per pill to $750, a 5,450 per cent hike.
As part of the takeover deal, Daraprim was removed from the shelves of regular wholesalers and pharmacies, giving Shkreli, in effect, a monopoly.
In one sense, these are two entirely different situations, and yet they raise the same issue. Drug companies with a patent in hand (Gilead) or a monopoly (Shkreli) are in a powerful bargaining position. If the treatment in question is life-saving — as the hepatitis C drug can be — that power increases by several orders of magnitude.
The question is: What should be done? As genetically engineered drugs multiply, we’re going to see a lot more Sovaldis.
Suppose someone comes up with a cure for multiple sclerosis, or Lou Gehrig’s disease, or Alzheimer’s. I think it’s an even bet we’ll see that happen over the next decade or two.
But now, consider the leverage those manufacturers would enjoy. How could any politician say no to them, whatever price they asked?
And that’s just it. You can only negotiate on even terms if you know, within a reasonable margin of error, what the actual cost of the drug is.
But you don’t. Most pharmaceutical firms go to great lengths to withhold such information.
Maybe a new treatment cost its manufacturer millions of dollars in research and development. Then again, maybe 90 per cent of the costs were borne by publicly funded laboratories. Who is to say?
Canada does have a Patented Medicine Prices Review Board, which can set price limits on any given drug. But the board is hamstrung by its lack of knowledge about industry costs.
The real solution is legislation requiring drug firms to show government agencies their books. Granted, we would need some allies abroad to make such a scheme stick.
If we go it alone, the manufacturer of a life-saving new drug could simply refuse to do business in Canada. We are not a large enough player, on our own, to scare anyone into compliance.
So fine, let’s recruit some allies, starting in the U.S. at the state level. Lawmakers in Massachusetts, California and North Carolina have all expressed a desire to use this approach. And the pressure is growing on other states to follow suit.
This is where our health ministers should focus their attention. If we had some real leadership from Health Canada — and wouldn’t that be a change — this is a doable mission.
For governments here and elsewhere are all in the same boat. They either compel the drug industry to be more open about its costs, or predatory pricing will eat us alive.
