Over the past several years, the federal government has consulted widely in formulating new rules for the regulation of brand-name drug prices through the Patented Medicine Prices Review Board (PMPRB) and a long-delayed set of rules that are expected to result in large price reductions, now slated to come into force in January 2022. But in designing policies and institutions to reduce drug prices, one must keep in mind the obligations that Canada has as a member of the international community that shares in the financing of pharmaceutical R&D under the current global patent system. In this Commentary, we first review the way drug prices have been negotiated and regulated under current policies and discuss how reforms that are in our national interest must reflect both our desire for controlling healthcare costs and the expectation that we should carry our fair share of the global pharmaceutical R&D burden. We briefly consider the proposed reforms of rules governing the PMPRB’s regulation of brand-name drug prices. While we think these reforms reflect reasonable principles, we question whether direct price regulation is the best way of resolving the tension between these two objectives. In the concluding section, we outline an alternative arrangement under which prices of patented drugs sold in Canada would instead be established through negotiations between manufacturers and the new Canadian Drug Agency that is currently being established, with a diminished role for direct price regulation. In framing a new drug-pricing policy, we believe Canada should pursue a two-track strategy. On one hand, Canada should participate actively in strengthening the international agreements and institutions that deal with new drug and vaccine development and other aspects of the global commons. On a parallel track, the federal government should, in collaboration with the provinces, pursue policies that try to reduce the cost of drugs subject to the constraint that we pay our fair share of global R&D costs. Specifically, Canada should seek to: Improve the international burden-sharing system. In the area of patent legislation that relates to pharmaceuticals, the federal government should do what it can to support efforts by multilateral institutions such asthe World Health Organization, the World Trade Organization (WTO) and the UN to promote such negotiations. Strengthen the federal role through the Canadian Drug Agency. A natural way to strengthen the federal role in pharmaceutical pricing would be for the CDA to take over the pCPA’s (Pan-Canadian Pharmaceutical Alliance’s) current role. The plans for the CDA were first announced in the 2019 federal budget, where it was stated that it would “negotiate drug prices on behalf of Canada’s drug plans.”Redefine the role of the PMPRB. The need for expertise in comparing Canadian and foreign drug prices, and our other contributions to global R&D financing, will continue to be important in informing the CDA’s negotiating strategy. As part of its past regulatory mandate, the PMPRB developed a great deal of expertise in this area, and even if it no longer had a price regulatory mandate, it could continue to collect and report data on Canada’s contribution to global financing
