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August 19, 2021

Canada’s Efforts to Reduce Drug Prices Should Avoid “Free Riding”

  • Canada’s efforts to reduce pharmaceutical prices should not come at the cost of contributing our fair share to developing new treatment innovations, and should rely more on negotiations with manufacturers than regulation, according to a new paper released by the C.D. Howe Institute.
  • Authors Åke Blomqvist and Paul Grootendorst review the way Canadian drug prices have been negotiated and regulated, and discuss how new approaches must reflect both the desire to control healthcare costs and the expectation that Canada should not “free ride” on global pharmaceutical R&D.
  • Over the past several years, the federal government has consulted widely in formulating new rules for the regulation of patented 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, is now slated to come into force in January 2022. But in designing policies and institutions to reduce drug prices, say the authors, 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. The authors question whether direct price regulation is the best way of resolving the tension between these two objectives.
Åke Blomqvist

Health Policy Scholar, C.D. Howe Institute

Paul Grootendorst

Paul Grootendorst is Associate Professor at the Leslie Dan Faculty of Pharmacy, University of Toronto.