The Harsh Reality of Canada’s PMPRB Regulations

Canada’s Patented Medicine Prices Review Board (PMPRB) proposed a basket of regulatory changes back in 2016. The changes were intended to help better control prescription medication pricing in Canada. More than five years later, government officials continue to postpone implementation. Their latest postponement keeps the changes at bay through the end of June 2022.

The irony of it all is that we Americans look at the Canadian model and praise them for their comparatively low prices. But on the other side of the border, Canadians themselves are concerned that their prices are too high and only stand to get higher.

There is a harsh reality in all of this: if Canada’s prescription drug prices are so much lower than ours, yet they are still concerned that their prices are too high, it is clear that we have a much bigger problem with prescription drug prices than we care to admit.

• Fourth in Line

A core group of American consumers knows full well that they can get certain prescription medications from Canadian pharmacies at a fraction of the cost here in the United States. They buy their medications through online properties like Canada Pharmacy. So what’s all the fuss among Canadian consumers?

A 2019 report from the PMPRB revealed that Canada’s prescription medication prices were fourth highest in the world. Only the U.S., Switzerland, and Germany had higher prices. In that context, Canadian citizens are justifiably concerned. They don’t want drug prices going any higher than they already are. They certainly don’t want to climb to a higher position on the infamous top five list that currently has them pegged at number four.

They are seemingly in jeopardy of climbing at least one position. According to a 2021 Organization for Economic Co-operation and Development report, Canada was third in 2021 in the total amount spent on prescription medications per capita. And yet their prices are still exponentially less than ours. Go figure!

• We Are the Profit Base

It is hard to understand why prescription drugs cost so much here if you don’t know how the industry works. Our excessively high prices are the result of multiple factors, not the least of which is the fact that U.S. consumers are essentially the profit base that keep multi-national pharmaceutical companies in business. Simply put, they make most of their profits from U.S. sales.

Not only that, but our high prices also pay for the vast majority of pharmaceutical company research. That says something about how free markets work as compared to markets controlled by government regulations. This is one of the few instances in which free markets put the U.S. at a distinct disadvantage.

For the record, pharmaceutical companies signed on to a 1987 agreement in which they promised to spend at least 10% of their Canadian sales revenue on research and development. In 2019, the actual amount spent was just 3.9%. This is a clear demonstration that pharmaceutical research and development is supported primarily by the U.S. market.

• Maybe This Year

PMPRB regulations have routinely been postponed prior to implementation. Will they be postponed again this year, or will they actually be implemented as of July 1? It remains to be seen. The previous two postponements were blamed on COVID and an unwillingness to disrupt the system when things were so fragile. But COVID is finally taking its place in the rear-view mirror. The Canadian government may not be able to use it as a reason to postpone yet again.

In the meantime, U.S. consumers who have discovered cheaper prescription medications through online Canadian pharmacies have no plans to stop making their purchases. They have no reason to. If the PMPRB regulations do actually get going, U.S. consumers will have all the more reason to fill their prescriptions in Canada.

Jay Aguila