Treatment Access, Health Economics, and the Wave of a Magic Wand

Abstract

New drugs are expensive, in part due to excessive drug development costs. Governments are trying to reduce drug prices. This can delay access to effective agents. A country’s access to new drugs correlates with prices they agree to pay. After Health Canada approves a drug, the Canadian Agency for Drug and Technologies in Health (CADTH) assesses it. CADTH’s approval is usually contingent on it costing ≤CAD 50,000 per quality adjusted life year (QALY) gained. This value (unchanged from the 1970s) is inappropriately low. An inflation-adjusted CAD 50,000 1975 QALY should translate into a CAD 250,000 2021 QALY. CADTH’s target also does not consider that drug development costs have risen much faster than inflation or that new precision therapies may only be used in small populations. In a separate process, proposals from the Patented Medicines Price Review Board (PMPRB) would decrease initial Canadian drug prices by 20%, but prices would fall further as sales increased, with ultimate price reductions of up to 80%. PMPRB claims its proposal would not reduce drug access, but multiple analyses strongly suggest otherwise. Government price controls target the symptom (high prices), not the disease. They translate into shortages without solving the problem. CADTH and PMPRB approaches both threaten access to effective drugs.