The Fraser Institute: Slow Government Approval Policies and Provincial Drug Plan Delays Limit Canadians' Access to New Medicines

TORONTO, ONTARIO--(Marketwire - March 17, 2010) - Many Canadians are unable to take advantage of new prescription medicines as a result of Canada's slow drug approval process and delays by provincial drug plans in approving new medicines for reimbursement, according to a new, peer-reviewed study from the Fraser Institute, one of Canada's leading public policy think-tanks.

"It takes about 13 months, on average, for Health Canada to approve new drugs as safe and effective. Once approved, many private insurers will immediately pay for these medicines. The provinces, on the other hand, take up to an additional year to make a decision about reimbursement," said Mark Rovere, Fraser Institute senior policy analyst and co-author of Access Delayed, Access Denied: Waiting for New Medicines in Canada.

"In the end, the provinces usually choose not to cover these drugs, leaving the one third of Canadians who rely on provincial drug plans without access to most new medicines."

Canada's drug approval process involves two separate stages: First, Health Canada must certify a drug is safe and effective for public use, then provincial governments must decide if the drug will be reimbursed under public drug programs. This combination of federal and provincial decision-making creates delays or, more often, deprives patients of access to new medicines.

In 2008, Health Canada took on average 388 days to approve new drugs for public use, while the provinces added another 316 days to approve new drugs for coverage under provincial drug plans. This is still a significant improvement from the waits recorded in 2004, when Health Canada took an average of 839 days and the provinces took 648 days to approve new prescription drugs-a total of 1,487 days or more than four years.

But alarmingly, the study found that only 23 per cent of new drugs approved as safe and effective by Health Canada in 2004 had been approved for either full or partial reimbursement under provincial drug plans by the end of 2009.

The full study is available at www.fraserintsitute.org.

In Access Delayed, Access Denied, the authors suggest two specific policy changes to improve the drug approval process in Canada and speed up access to new medicines:

Regulatory cooperation with other countries

Canada should take better advantage of the regulatory knowledge and capacity of other jurisdictions instead of attempting to duplicate the drug approval process used by the FDA in the United States. By entering into agreements of mutual recognition with other countries, new medications already approved in those countries could be introduced into the Canadian market far more rapidly, and vice versa.

Canada is currently an observing member of the International Conference on Harmonization (ICH), which represents pharmaceutical industry associations and regulatory agencies in the United States, Japan, and Europe with the goal of streamlining procedures for drug development and marketing approval. Canada has implemented a number of the ICH guidelines but still lags behind its international counterparts on harmonization efforts.

Replace government drug programs with means-tested subsidized access to private insurance

The most economically rational way to improve access to new medicines-without increasing the burden on taxpayers-is to replace existing public drug plans with a properly regulated, competitive private-sector insurance market. Under this system, universal access to catastrophic drug insurance could be achieved through means-tested subsidies for low-income Canadians.

Research shows that a very small percentage of Canadians actually face exorbitant drug costs. Between 1997 and 2002, only three per cent of Canadian households spent more than five per cent of their annual income on prescription drugs.

"Offering means-tested subsidies for private drug insurance would allow low-income patients to choose a drug plan best suited to meet their medical and financial needs. This approach would generate significant annual savings for Canadian taxpayers," Rovere said.

Most private drug insurance plans also include co-payments, which encourage patients to make cost-efficient choices between alternative treatments. Consumer sensitivity to prices in turn creates incentives for physicians to prescribe treatment more efficiently and for drug manufacturers to invest efficiently in the development of new drugs.

"The best policy choice for improving access to the newest prescription drugs is to allow the private insurance market to compete through price and service," Rovere said.

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The Fraser Institute is an independent research and educational organization with locations across North America and partnerships in more than 70 countries. Its mission is to measure, study, and communicate the impact of competitive markets and government intervention on the welfare of individuals. To protect the Institute's independence, it does not accept grants from governments or contracts for research. Visit www.fraserinstitute.org.