Merck Canada says new drug price regulations are unconstitutional

by Reuters
Friday, 23 August 2019 17:49 GMT

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By Allison Martell

Aug 23 (Reuters) - Merck Canada and a group of pharmaceutical companies are challenging the constitutionality of new regulations meant to lower patented drug prices, the company said in a statement on Friday, in a late bid to derail reforms that would hurt pharmaceutical companies' earnings.

The Canadian government announced final regulations that give new powers to the Patented Medicine Prices Review Board (PMPRB) earlier this month, and published them in an official register on Wednesday. They go into force on July 1, 2020.

"Our position is that the federal government does not have the constitutional authority to regulate the prices of medicines and manage healthcare systems, which has always been provincial jurisdiction," Merck Canada said, adding the new rules "will slow and limit Canadians' access to new breakthrough medicines."

Health Canada, Canada's federal health department, did not immediately respond to a request for comment.

The filing ratchets up a confrontation between Prime Minister Justin Trudeau's Liberal government and the pharmaceutical industry ahead of an Oct. 21 national election.

The new regulations expand the information the PMPRB can consider when setting drug price caps, among other things, giving it the ability to consider cost-effectiveness, measured in quality-adjusted life years, for the first time.

The rules will save patients, employers, insurers and government drug plans money, at the expense of drug company profits in Canada. They could eventually have consequences in the United States, the world's largest pharmaceutical market.

The Trump administration said in July it would let U.S. states and others start pilot programs importing drugs from Canada. It has also said it may base what the U.S. government healthcare program Medicare pays for certain medicines based on prices in other countries, including Canada.

Drugmakers, represented in Canada by lobby group Innovative Medicines Canada, have argued that lower prices would delay drug launches, reduce investment in life sciences and drive new drug trials out of the country.

The federal government says other countries with lower drug prices have investment and drug access that is as good as or better than Canada's.

Staff at the PMPRB wrote in a briefing last year that Canada had accepted high prices since the 1980s in the hopes of attracting more research and development funding, but "the anticipated benefits haven't materialized and the regulatory pricing model is broken." (Reporting by Allison Martell in Toronto; additional reporting by Kelsey Johnson in Ottawa; editing by Chris Reese and Jonathan Oatis)

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