Canada’s National Pharmacare Plan Has Drug Companies Fuming

Prime Minister Justin Trudeau is revising Canada’s drug-pricing regime for the first time in more than 30 years, a move that could cost drug makers billions of dollars in lost sales.

Trudeau, who is heading into an October federal election, has pushed through new regulations to drop the U.S. from a basket of countries Canada uses to cap domestic drug prices. The U.S. pays more on average for prescription drugs than any other developed nation.

President Donald Trump has proposed aligning U.S. pharmaceutical costs more closely with prices in Canada and other large industrialized countries. Currently, Canada is the only country with universal health care that doesn’t cover prescription drugs. Though prices are limited, Canadians pay top dollar for brand-name medicines. Roughly one in 10 Canadians doesn’t fill his or her prescriptions because he or she can’t afford to, according to a government advisory panel.

The new regulations set the stage for a Trudeau-backed universal drug-coverage proposal called "national pharmacare." Conservative Party Leader Andrew Scheer, who’s challenging Trudeau for Canada’s premiership, has called the plan unaffordable and impractical.

Merck, Johnson & Johnson’s Janssen Inc., Bayer AG, Boehringer Ingelheim and Servier Inc. have challenged the constitutionality of Canada’s new regulations in a Quebec court. Industry groups said the government’s plans could make it harder for Canadians to access innovative new therapies.

On average, the cost of high-priority medicines -- those with few alternatives or which provide a substantial benefit to existing treatments -- is expected to drop 40% under the new rules. Over 10 years, the industry would suffer $8.8 billion in reduced revenue, the government estimates. Johnson & Johnson, Novartis AG and Merck & Co. are the biggest sellers of pharmaceuticals in Canada, accounting for a fifth of the market, according to government data.

Health-care is expected to be an important issue for Canadian voters when they head to the polls. Half of Canadians rate health care as one of their top three concerns, according to a June poll by Ipsos.