Canada: 2019 Federal Budget Life Sciences Highlights

Last Updated: April 25 2019
Article by Martin Gagné, Dara Jospé and Denis Douville (Summer Student)

Introduction

On March 19, 2019, federal Finance Minister William Morneau tabled the latest federal budget in the House of Commons ("Budget 2019"), which included proposals to move forward on the development of national pharmacare, as well as measures to innovate Health Canada regulations pertaining to medical products and clinical trials.1

Framing the Need for National Pharmacare

Budget 2019's objectives and proposals are guided in part by the interim report provided by the Advisory Council on the Implementation of National Pharmacare (the "Council") to the federal Minister of Finance on March 6, 2019.

The Council's interim report identified three major challenges with regard to prescription drugs, which according to the Council justify national pharmacare. According to the interim report:

  1. Canadians cannot afford needed prescription drugs;
  2. Access to coverage is inconsistent across jurisdictions and populations; and
  3. Canada's spending on prescription drugs is unsustainable.

To address these issues, the Council recommended the creation of a national drug agency, the development of a national formulary, and investment into drug data and information technology systems.2

In response, Budget 2019 has identified two key objectives for national pharmacare: lowering the cost of drugs and expanding coverage. In pursuit of these objectives, the budget proposes to advance the creation of a Canadian Drug Agency and calls for a national strategy for high-cost drugs for rare diseases.

Transition Towards a Canadian Drug Agency

The Government of Canada proposes to work with provinces, territories, and other stakeholders to establish a single entity under which drug evaluation and price negotiation would be carried out in a stated effort to decrease the price of prescription drugs. In this regard, Budget 2019 provides $35 million over four years, starting in 2019-2020, to create a Canadian Drug Agency Transition Office. This office is tasked to support the eventual formation of a Canadian Drug Agency.3

Such an agency would assess new prescription drugs' effectiveness, negotiate drug prices, and recommend which drugs represent the best value for price. It would also take steps towards the future development of a national formulary, a comprehensive, evidence-based list of prescribed drugs. This national formulary would form the basis of a standardized drug listing and access across Canada.

Access to Drugs for Rare Diseases

As another step in the path towards national pharmacare, Budget 2019 provides $1 billion over two years starting in 2022-2023, with up to $500 million per year ongoing, to improve access to high-cost drugs for rare diseases.4

To that end, the Government of Canada seeks to partner with provincial and territorial governments and build a coordinated national strategy addressing drugs for rare diseases. Such a strategy would aim to gather and evaluate evidence on high-cost drugs for rare diseases, improve decision-making consistency, increase access to drugs across Canada, and negotiate prices with drug manufacturers.

Rethinking Health Canada Regulations

Budget 2019 also provides $103 million to Health Canada over five years, beginning in 2019-2020, for the modernization and innovation of its regulations. This funding is earmarked to create a user-friendly regulatory system, use novel or experimental approaches to regulation, and reduce regulatory duplication.5

As part of these efforts, Health Canada puts forward a "regulatory sandbox" for new and innovative medical products. Quoting the European Banking Authority, Budget 2019 describes regulatory sandboxes as "controlled 'safe spaces' in which innovative products, services, business models, and delivery mechanisms can be tested without being immediately subject to all of the regulatory requirements."6 Health Canada has proposed regulatory sandboxes for 3D printed tissues, artificial intelligence, and targeted gene therapies.

The budget also recommends modernizing the regulation of clinical trials. Health Canada proposes a risk-based approach to reduce costs by removing unnecessary requirements for low-risk drugs and trials. As well, the budget recommends revising the regulations to enable the agriculture and food industry to carry out clinical trials in Canada on products such as novel foods and special dietary foods.

Conclusion

Budget 2019 and the Council's interim report are the latest developments in Canada's ongoing discussions concerning the prospect of national pharmacare. For years, academics and healthcare professionals have debated the desirability and possibility of national pharmacare.7 Provincial governments have in the past called for a national drug plan, as discussed in a previous Fasken bulletin.8

Questions remain over the potential scope and exact details of national pharmacare as envisaged by Budget 2019, as well as what it might mean for provincial drug plans and private insurance companies. The federal government characterizes the budget's measures as "first steps" for implementing national pharmacare, and awaits the Council's final report, which will contain a more complete blueprint for this task.9 The final report is expected in spring. It will be made public and tabled in the House of Commons.

Footnote

1 Government of Canada, "Investing in the Middle Class: Budget 2019," March 19, 2019, at pages 57-62 Budget 2019 (PDF).

2 Advisory Council on the Implementation of National Pharmacare, Interim Report, March 5, 2019at pages 3-4 Interim Report (PDF).

3 Budget 2019, supra note 1, at pages 60-61 and 307.

4 Ibid., at page 61-62.

5 Ibid., at page 117-119.

6 Ibid., at page 117.

7 See, for example, Robin Lindsey and Douglas S. West, "National Pharmacare, Reference-Based Pricing, and Drug R&D: A Critique of the National Forum on Health's Recommendations for Pharmaceutical Policy," Canadian Public Policy 25:1 (1999).

8 See also, Keith Leslie, "Provincial health ministers call for national pharmacare program," June 8, 2015

9 Interim Report, supra note 2, at page 8.

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