After enduring lengthy waits for the federal government to approve new prescription drugs, Canadian patients all too often discover that their provincial drug plans will not pay for them, claims a new report.

Health Canada, the federal regulatory agency, takes more than 14 months on average to approve new medicines as safe and effective. Private insurers will then immediately cover those medicines but the provincial governments can take up to another year to decide if they will pay for them, says the study, from The Fraser Institute free-market think tank.

“For the one third of Canadians who rely on provincial drug plans, this puts new medicines out of their reach for up to a year. What’s more distressing is that the provinces often decide not to cover these new drugs at all,” said Brett Skinner, the study’s author and director of biopharma and health policy at The Fraser Institute.

In 2007, Health Canada took an average of 453 days to approve new drugs, while the provinces added another 314 days to approve them for coverage under their drug plans. This is a significant improvement from the waits recorded in 2004, when Health Canada took an average of 839 days and the provinces took 552 days to approve new prescription drugs, a total of 1,391 days or almost four years, says the study.

However, it adds, only 10.1% of new drugs approved by Health Canada as safe and effective in 2007 were being fully or partially reimbursed under provincial drug plans by the end of 2008.

In his report, Mr Skinner proposes making three specific policy changes to improve Canada’s drug approval process and speed up access to new medicines:

- Regulatory cooperation with other countries: _instead of attempting to duplicate the US Food and Drug Administration’s (FDA) new drug approval process, Canada should enter into mutual recognition agreements with other countries. In this way, new medications already approved in those countries could be introduced onto the Canadian market far more rapidly, while consolidating resources through the sharing of data, workload and processes would benefit all participating countries;

- Performance-based user fees: the government should establish, and strictly enforce, targets that Health Canada must meet before it receives user fees from drug companies. Currently, these fees are not linked to performance, but research shows that the establishment of user fees in the US, where the FDA is required to meet a number of performance goals intended to speed up drug approvals, has dramatically reduced drug approval times; and

- Replace government drug programmes with subsidized access to private insurance: the most economically rational way to ensure that everyone has adequate drug insurance coverage, without unnecessarily delaying access or restricting choice through central planning, is to introduce means-tested, publicly subsidized access to private insurance for prescription drugs, says Mr Skinner.

“Most private drug insurance plans have co-payments that encourage patients to make cost-efficient utilisation and substitution choices regarding treatment alternatives. Consumer sensitivity to prices creates incentives both for physicians to prescribe treatment efficiently and for drug manufacturers to invest efficiently in the development of new drugs,” he adds.

- Late last month, Canada’s Patented Medicine Prices Review Board (PMPRB) reported to Parliament that sales of patented drugs rose 5% in 2008 to C$13 billion, representing just under 65% of the total market – a slight dip on 2007. Prices of patented drugs rose an average of 0.1% in the year, compared to 2.3% growth in the Consumer Price Index, and Canadian prices ranked third highest out of seven comparator countries, after the US and Germany.