Canada's Amendment to Patented Drug Price Regulation: A Prescription for Global Drug Cost Control?

Added Therapeutic Benefit of Top-Selling Brand-name Drugs in Medicare

Importance

The Inflation Reduction Act of 2022 authorizes Medicare to negotiate prices of top-selling drugs based on several factors, including therapeutic benefit compared with existing treatment options.

Objective

To determine the added therapeutic benefit of the 50 top-selling brand-name drugs in Medicare in 2020, as assessed by health technology assessment (HTA) organizations in Canada, France, and Germany.

Design, Setting, and Participants

In this cross-sectional study, publicly available therapeutic benefit ratings, US Food and Drug Administration documents, and the Medicare Part B and Part D prescription drug spending dashboards were used to determine the 50 top-selling single-source drugs used in Medicare in 2020 and to assess their added therapeutic benefit ratings through 2021.

Main Outcomes and Measures

Ratings from HTA bodies in Canada, France, and Germany were categorized as high (moderate or greater) or low (minor or no) added benefit. Each drug was rated based on its most favorable rating across countries, indications, subpopulations, and dosage forms. We compared the use and prerebate and postrebate (ie, net) Medicare spending between drugs with high vs low added benefit.

Results

Forty-nine drugs (98%) received an HTA rating by at least 1 country; 22 of 36 drugs (61%) received a low added benefit rating in Canada, 34 of 47 in France (72%), and 17 of 29 in Germany (59%). Across countries, 27 drugs (55%) had a low added therapeutic rating, accounting for $19.3 billion in annual estimated net spending, or 35% of Medicare net spending on the 50 top-selling single-source drugs and 11% of total Medicare net prescription drug spending in 2020. Compared with those with high added benefit, drugs with a low added therapeutic rating were used by more Medicare beneficiaries (median 387 149 vs 44 869) and had lower net spending per beneficiary (median $992 vs $32 287).

Conclusions and Relevance

Many top-selling Medicare drugs received low added benefit ratings by the national HTA organizations of Canada, France, and Germany. When negotiating prices for these drugs, Medicare should ensure they are not priced higher than reasonable therapeutic alternatives.

Estimating the Impact of Delayed Access to Oncology Drugs on Patient Outcomes in Canada

Introduction

New requirements in Canada’s pricing processes for patented drugs may exacerbate delays in regulatory and reimbursement reviews. This study seeks to better understand the impact of any additional delays on non-small cell lung cancer (NSCLC) patients by measuring the following: (a) durations and outcomes of regulatory and reimbursement reviews of NSCLC drugs in Canada and reference countries; (b) delays in Canada’s reviews of three NSCLC drugs (nivolumab, afatinib, and pemetrexed [NAP]); and (c) estimating clinical, patient, and economic impacts of delays in Canada’s reviews on access to NAP.

Methods

Information from the Context Matters database and the literature (2005–2020) was used to evaluate the durations and outcomes of reimbursement reviews of NSCLC drugs in Canada and comparator countries. Public information was used to assess delays in Canada’s reviews of NAP. Empirical modeling with data from the literature and the Southern Alberta Lung Cancer database was used to estimate the impact of delays in Canada’s NAP reviews on patients (i.e., as losses in person-years of life and quality-adjusted life-years [QALYs]).

Results

Regulatory and reimbursement reviews in countries of interest take 12–18 months. In Canada, reviews of NSCLC drugs took 216 days (median), with a 24% rejection rate (mean = 19%). Delays in NAP reviews ranged from 5 to 94 days at Health Canada, 0–80 days at CADTH/pCODR, and 12–797 days in Canadian provinces. These delays may have affected 6400 patients, who lost up to 1740 person-years of life and 1122 QALYs (valued at CA$112 million).

Conclusion

Changes to Canada’s prescription drug pricing processes may prolong reviews.

Supplementary Information

The online version contains supplementary material available at 10.1007/s40487-022-00187-3.

Evaluation of the effectiveness of comprehensive drug price reform: a case study from Shihezi city in Western China

BACKGROUND

China carried out a comprehensive drug price reform (CDPR) in 2017 to control the growing expense of drug effectively and reduce the financial burden of inpatients. However, early studies in pilot regions found the heterogeneity in the effectiveness of CDPR from different regions and other negative effects. This study aimed to evaluate the effects of the reform on medical expenses, medical service utilisation and government financial reimbursement for inpatients in economically weaker regions.

METHODS

Shihezi was selected as the sample city, and 238,620 inpatients, who were covered by basic medical insurance (BMI) and had complete information from September 2016 to August 2018 in public hospitals, were extracted by cluster sampling. An interrupted series design was used to compare the changing trends in medical expenses, medical service utilisation and reimbursement of BMI for inpatients before and after the reform.

RESULTS

Compared with the baseline trends before the CDPR, those after the CDPR were observed with decreased per capita hospitalisation expenses (HE) by ¥301.9 per month (p < 0.001), decreased drug expense (DE) ratio at a rate of 0.32% per month (p < 0.05) and increased ratio of diagnosis and treatment expenses (DTE) at a rate of 0.25% per month (p < 0.01). The number of inpatients in secondary and tertiary hospitals declined by 458 (p < 0.001) and 257 (p < 0.05) per month, respectively. The BMI reimbursement in tertiary hospitals decreased by ¥254.7 per month (p < 0.001).

CONCLUSION

The CDPR controlled the increase in medical expenses effectively and adjusted its structure reasonably. However, it also reduced the medical service utilisation of inpatients in secondary and tertiary hospitals and financial reimbursement for inpatients in tertiary hospitals.

Comparative Approaches to Drug Pricing

The United States relies primarily on market forces to determine prices for drugs, whereas most other industrialized countries use a variety of approaches to determine drug prices. Branded drug companies have patents and market exclusivity periods in most industrialized countries. During this period, pharmaceutical companies are allowed to set their list price as high as they prefer in the United States owing to the absence of government price control mechanisms that exist in other countries. Insured patients often pay a percentage of the list price, and cost sharing creates some pressure to lower the list price. Pharmacy benefit managers negotiate with drug companies for lower prices by offering the drug company favorable formulary placement and fewer utilization controls. However, these approaches appear to be less effective, compared with other countries' approaches to containing branded drug prices, because prices are substantially higher in the United States. Other industrialized countries employ various forms of rate setting and price regulation, such as external reference pricing, therapeutic valuation, and health technology assessment to determine the appropriate price.