The Drug Reimbursement Environment in Canada: An Overview

The Canadian environment is a key opportunity for pharmaceutical manufacturers to launch therapies. The value of total pharmaceutical sales (including non-patented, over-the-counter medicines) in Canada has increased by 35.3% from 2011 to 2019 to Can$29.9 billion, with 86.7% sold to retail drug stores and 13.3% sold to hospitals. However, to gain drug reimbursement from public and private payers, there are many stakeholders along the commercialization pathway who need to be proactively engaged. In addition to successfully managing the regulatory file, there is also a need for biopharmaceutical companies operating in Canada to demonstrate product value to health technology assessment agencies (HTAs) and public and private payers to gain and maintain access. This is especially important as healthcare allocation is being constantly challenged for funding of specialty medications.

This article considers the various stakeholders and elements that need to be considered when launching a specialty medication in Canada (Figure 1). 

Figure 1. Drug regulatory and reimbursement in Canada

For a drug to be viable for commercial use, it first needs to be approved by the Canadian federal regulatory agency Health Canada, which is responsible for determining efficacy, safety, and quality. Drug reimbursement goes beyond the regulatory process and focuses on value. The good news for manufacturers is that there have been several improvements over the past few years. Regulatory and reimbursement processes now undergo an “aligned” process, which is designed to reduce duplication and move files along a little faster. This alignment also includes regulatory cooperation with other countries and appears to be working well. 

Drug pricing is regulated in Canada at the “top end.” The Patented Medicine Prices Review Board (PMPRB), a federal agency, determines the maximum price at which a drug can be sold in Canada. This price must not be “excessive.”

The role of PMPRB is a topic that is continuously debated and discussed amongst healthcare stakeholders. The Canadian federal government passed regulations in 2019 that change how PMPRB will regulate maximum prices for patented medicines. These changes include revisions to the basket of comparator countries (removing the US and Switzerland and adding six jurisdictions with lower-than-Canadian-average list price) and mandating the PMPRB to use new economic factors in its determinations (cost-per-quality-adjusted life-year thresholds and price reductions based on market size). These proposed changes were scheduled to be implemented on January 1, 2022, which is the third time the regulations have been delayed illustrating the intensity of the debate. However, these regulations will now come into force on July 1, 2022. This delay provides additional time for impacted stakeholders, including industry, governments, and other parties within the drug reimbursement and distribution system to continue to focus their efforts on responding to the unprecedented challenges presented by the COVID-19 pandemic. The delay again has caused some uncertainty and potentially has had an impact on the attractiveness of Canada being a top-tier launch country, although Canada is still a top-10 country in the world when it comes to pharmaceutical spending. 

There are two main publicly funded HTA bodies in Canada: the Canadian Agency for Drugs and Technologies in Health (CADTH), operating in all provinces except Québec, and the Institut National d’Excellence en Santé et en Services Sociaux (INESSS), which is solely focused on the province of Québec. These agencies work collaboratively on submissions to provide a comprehensive evaluation of the clinical effectiveness, cost effectiveness, and the ethical, legal, and social implications of health technologies on patients’ health and the healthcare system. 

One benefit of launching in Canada is the potential to engage with the HTA bodies in an aligned review process with Health Canada. This Regulatory Review of Drugs and Devices (R2D2) program was launched in 2018, with the goal to accelerate the regulatory and public reimbursement process and issue a Notice of Compliance (NOC) with the CADTH/INESSS recommendation, reducing duplication for all parties involved. An NOC is issued to a manufacturer following the satisfactory review of a submission for a new drug, which signifies compliance with the Food and Drug Regulations. In the future, they will be enhancing this program to examine life-cycle management approaches, pharmacovigilance and utilization of real-world evidence (RWE).

The HTA bodies provide recommendations to public payers in Canada—all provinces and territories plus federal drug plans which cover indigenous, veteran populations, etc. The recommendations are not fully binding but are followed very closely. In essence, the HTA bodies establish clinical criteria for the public drug plans. Assuming a positive clinical recommendation, the process moves to the pan-Canadian Pharmaceutical Alliance (pCPA).

The pCPA is an alliance of the provincial, territorial, and federal governments that collaborates on a range of public drug plan initiatives to increase and manage access to clinically effective and affordable drug treatments.

One of pCPA’s key roles is to conduct joint negotiations with the manufacturer for brand name and generic drugs in Canada to achieve greater value for publicly funded drug programs and patients through its combined negotiating power. Its objectives are to:

• Increase access to clinically effective and cost-effective drug treatment options
• Achieve consistent and lower drug costs for participating jurisdictions
• Reduce duplication of effort and improve use of resources
• Improve consistency of decisions among participating jurisdictions

All public drug plans in Canada, including Québec, now participate.

For branded drugs, once a recommendation is ready from an HTA body such as CADTH, the provinces determine if a negotiation should take place and which province will voluntarily lead the pCPA negotiation. If negotiations come to a successful conclusion, a Letter of Intent (LOI) is issued and forms the basis for contracts executed by each jurisdiction under that jurisdiction’s legislation, regulations, and contract language, following which reimbursement is put in place. As of December 2021, 461 active negotiations have been completed under this process, with 400 LOI and 61 without agreement.

Under Canada’s constitution, delivery of health services is the responsibility of the provinces. Every province therefore has its own way of providing and allocating drug benefits. Accordingly, each province has multiple drug programs, some being administered out of provincial offices, while others are administered out of hospitals. Some programs are in place for just one class of drugs, while other programs list thousands of drugs. In addition, the federal government provides drug benefits to specific groups, such as its employees, native Canadians, and the Canadian veterans/forces. As a result, there are hundreds of public drug plans across Canada.

Eligibility for these public plans is also diverse. Some provinces have main plans that focus on seniors and those on social assistance. Other provinces provide drug coverage for all eligible residents of a province; these are the so-called “universal plans.” Most of these types of plans come with a combination of premiums, deductibles, and co-pays. Yet other plans may provide first dollar coverage for certain types of drugs and/or medical conditions. New specialists, called “reimbursement navigators,” are now in place at several public and private institutions to sort out these obstacles for patients.

Employers often sponsor private drug plans as part of employee benefit packages. This is a tax-efficient means of providing benefits to employees, allowing employees to receive the benefits tax free, and are a full deduction for the employer.

Following a series of acquisitions several years ago, a few large insurance companies play a very prominent role in the private drug plan market, which accounts for approximately 40% of pharmaceutical sales. Other smaller insurance companies have carved out niche markets. Pharmacy Benefit Managers also play a key role in the evaluation of products for private drug plans, including the large insurance companies.

The perspective for private drug plans focuses primarily on productivity. This is a challenge to measure and is usually not included in the design of drug trials. This perspective differs from those of the HTA applied to the public drugs plans. For example, Québec’s INESSS takes a societal approach, which is a more holistic view of the patient experience. CADTH, on the other hand, takes a health system perspective in that it wants to know if a drug is going to reduce hospitalization or physician visits. The pCPA is more focused on the overall budget impact and compares the drug’s cost vs other drug therapies.

A growing trend in Canada is the uptake and utilization of RWE in potentially amending funding across the product life cycle. In this ever-changing and challenging market access environment, leveraging RWE is critical to ensure payers and HTA decision makers understand product value in a real-world setting. Leveraging RWE across the product life cycle enables manufacturers to fill the evidence gap beyond randomized controlled trials to help guide local post-authorization evidence requirements, market access, and commercial strategic planning. As these trends have taken shape, manufacturers have increased efforts to generate data from real-world settings through patient support programs (PSPs). However, there is an increasing need for manufacturers to collect real-world data from multiple sources across the care continuum to support reimbursement across the drug life cycle. 

Data that resides within the PSPs remain critical for fully understanding RWE. One way to ensure the PSPs are structured to support RWE collection is by creating a strategy that prioritizes patient-reported data. One aspect of PSPs that can be particularly useful is contacting the patients directly to gather information. As digital health solutions, such as apps and wearable devices increase in utilization, personal technologies represent another source of continuous data collection that should be considered. When setting up PSPs, it is also important to ensure the quality and accuracy of the data by investing in validated quality control systems to provide confidence in the credibility of the data collected. Successful commercialization strategies will incorporate RWE across the product life cycle, and link data to forecast and track outcomes over time. Especially in the new era of COVID-19, RWE will be critical in measuring and understanding the long-term impact of the disease, which in turn will help create a treatment roadmap and allow us to expedite launching therapies across the world. Challenges for payers continue because the data they require to make good decisions is often unavailable at the time a drug receives regulatory approval. 

Understanding how to navigate the reimbursement process in Canada, and the important roles that each stakeholder plays, will enable the manufacturer to develop and execute a successful market access strategy. 

Sources

• CADTH. Accessed January 28, 2022. https://www.cadth.ca/about-health-technology-assessment-service
• Government of Canada. Updated April 9, 2021. Accessed January 28, 2022. https://www.ic.gc.ca/eic/site/lsg-pdsv.nsf/eng/h_hn01703.html
• Government of Canada. Health Canada. December 23, 2021. Accessed January 28, 2022. https://www.canada.ca/en/health-canada/news/2021/12/statement-from-the-minister-of-health-on-the-deferral-of-coming-into-force-of-the-regulations-amending-the-patented-medicines-regulations.html
• Life Sciences Ontario. February 3, 2020. Accessed January 28, 2022. Impact of PMPRB Pricing Changes. https://lifesciencesontario.ca/wp-content/uploads/2020/02/Research-Etc.-PMPRB-Survey-02-03-20.pdf
• pCPA. Accessed January 28, 2022. https://www.pcpacanada.ca/node/30
• pCPA. Accessed January 28, 2022. https://www.pcpacanada.ca/activity-overview