Canadians are waiting years longer than patients in peer countries to access innovative medicines because of federal price controls and regulatory delays, according to a new analysis from the Montreal Economic Institute.In an Economic Note released Thursday, MEI economist Emmanuelle B. Faubert said Canada’s approach to regulating patented drug prices has pushed the country to the back of the line when pharmaceutical companies decide where to launch new treatments.“Innovative drugs can change patients’ lives, but Canada continues to lag significantly behind in terms of access to these drugs,” said Faubert. “One reason for this is Canadian regulatory bodies’ excessive control of prices, which relegates us far down the priority list for the launch of new drugs.”In 2022, the Patented Medicine Prices Review Board revised its list of comparator countries used to cap drug prices, removing Switzerland and the United States while adding six lower-price countries. Faubert said the change reduced allowable price ceilings and made the Canadian market less attractive to drug manufacturers.By lowering the maximum prices for patented medicines, Canada risks being pushed further down the global launch sequence, she said, as companies prioritize markets where limited initial supplies can be sold at higher returns..“Launching a drug is a long and costly process,” Faubert noted, citing years of research, regulatory review, and production ramp-up. “The lower the price ceiling, the further down the list we will find ourselves when it comes time to launch a new product.”The MEI also warned that aggressive pricing policies could strain Canada’s trade relationship with the United States, pointing to a U.S. Executive Order adopted last May that opens the door to tariffs in response to national drug pricing policies seen as undermining pharmaceutical innovation.Developing a new drug costs an average of US$172.7 million, according to the report. When failed research and the cost of capital are included, that figure rises to $879.3 million, not including regulatory and marketing costs.Beyond pricing, Canada also imposes some of the longest administrative delays in the OECD. .The average wait between Health Canada approval and insurance coverage is nearly 30 months, significantly delaying patient access. Canada ranks 19th out of 20 OECD countries for administrative delays in approving new drugs.Faubert said the consequences for public health are substantial. Studies show pharmaceutical innovation accounts for up to 66% of the increase in life expectancy in industrialized countries. For cancer patients, one Spanish study found innovative drugs were responsible for 96% of gains in life expectancy.Innovative medicines can also reduce costs elsewhere in the healthcare system. A Canadian study examining the period from 1980 to 2002 found that every dollar spent on pharmaceuticals reduced other healthcare costs by between $1.05 and $1.50, largely through fewer hospitalizations, shorter stays, and reduced need for surgery.“To focus solely on the price of a new drug without considering its benefits is to miss the forest for the trees,” said Faubert. “Given the nearly $260 billion spent on health care by Canadian governments last year, the savings that could be had from better access to drugs are significant.”
