In the continuing battle over high drug prices, Canada, which has the third highest drug prices in the world (but not exceeding the U.S.), is set to curtail prices through a little known agency, the Patented Medicine Prices Review Board (PMPRB). According to Reuters, the PMPRB would cap the cost of patented drugs in accordance with the cost of these drugs in other countries, excluding the U.S., as well as the cost effectiveness of these drugs, that is, quality-adjusted life years (similar to what the UK does). The United States has the highest drug costs in the world,  followed by Switzerland and Canada. The plan, which was announced in 2017, would not go into effect immediately as it has to be approved by the Trudeau government, which, with a fall election approaching, has its own issues. Canada’s national health service does not offer a drug plan, however, the PMPRB proposal would cap the costs of drugs for Canada’s public and private health plans.

The drug companies are scrambling to respond. Innovative Medicines Canada (Canada’s counterpart to the Pharmaceutical Research and Manufacturers of America (PhRMA) in the U.S.), has already stated that such a policy may limit Canadians’ accessibility to new patented medicines. In fact, PhRMA itself met with the Canadian ambassador to the U.S. to express its concerns with lowering drug prices in Canada. In an attempt to forestall passage of the new policy,  the drug companies are offering to give up $6.4 billion (American dollars) in revenue in the next 10 years, to freeze prices, and to reduce the prices of drugs for rare diseases.

Canada is a relatively small market for drugs but, if this policy goes through, it could have a significant impact on the prices of drugs in the U.S. since the Trump Administration has declared that it would limit drug prices to the cost of drugs in other developed countries, including Canada. Many Americans already buy drugs from Canada, and the U.S. FDA is looking into legalizing the importation of some drugs from Canada.

Canada’s healthcare system is managed on the provincial level, and each province has heretofore determined which drugs are or are not included in the province’s formulary. But PMPRB is an agency that is mandated by the Canadian patent law, and it has national authority. There doesn’t seem to be a U.S. federal agency that has comparable powers to limit drug costs, or would be willing to do so. Although the U.S. federal government decries the high cost of drugs, neither the Executive branch nor Congress, seem to be able to do anything about it. It will be interesting to see whether PMPRB’s proposal will be approved given the heavy lobbying efforts by the pharmaceutical companies on both sides of the border and with Justin Trudeau, weakened by a corruption scandal, facing fall elections.