Canada's federal and provincial governments are now taking more than two and a half years, on average, to approve new prescription medicines, says a new report.

The federal regulator, Health Canada, takes an average of nearly 16 months to approve new drugs as safe and effective, after which the provincial governments typically spend another 15 months or more to decide whether new drugs will be eligible for public reimbursement under their drug plans, says the report, from free-market think tank The Fraser Institute.

This combination of federal and provincial decision-making creates delays or, more often, deprives patients of access to new medicines, it claims.

The Institute's research found that only 23% of new drugs approved as safe and effective by Health Canada in 2004 had been approved for either full or partial reimbursement under provincial drug plans as of June 9, 2011, compared to 98% that had been covered by at least one private insurer.

Moreover, Health Canada took longer to certify new drugs during 2006-2009 than the European Medicines Agency (EMA) and, during five of the last six years studied (2004-2009), its performance was worse than that of the US Food and Drug Administration (FDA).

The report's authors suggest two specific policy changes to make new medicines available more quickly to Canadians. First, they say, Canada could speed up its regulatory processes by taking advantage of the knowledge and capacity of other jurisdictions, rather than attempting to duplicate the processes of the US FDA. If Canada entered into agreements of "mutual recognition" with other countries, new medications already approved in those jurisdictions could be introduced onto the Canadian market far more rapidly, and vice versa, they add.

Second, government drug programmes could be replaced with means-tested subsidised access to private insurance, they suggest. A properly-regulated and competitive private-sector insurance market, in which universal access to catastrophic drug insurance would be facilitated through means-tested subsidies for those on low incomes, could make new medicines more readily available without increasing the burden on taxpayers, the report proposes.

In fact, only a very small percentage of Canadians actually face exorbitant drug costs, says the Institute; during 1997-2002, only 3% of Canadian households spent more than 5% of their annual income on prescription drugs.

'Means-tested subsidies provided to those with low incomes, regardless of age, to purchase catastrophic drug insurance in a private, competitive insurance market benefits recipients by giving them the choice of selecting the drug plan that meets their individual medical needs and financial abilities," said Mark Rovere, study co-author and associate director of health policy studies at the Institute.

Unlike the majority of public drug plans which have small, flat co-payments, most private drug insurance plans include co-payments that are linked to the full cost of the prescription, and these encourage patients to make cost-efficient choices between alternative treatments, says the report. Consumer sensitivity to prices in turn creates incentives for physicians to prescribe treatment more efficiently and for drug manufacturers to invest efficiently in the development of new drugs, it adds.

"Allowing the private insurance market to compete through prices and service, thus eliminating government monopolies on drug prices and coverage, is the best policy choice for improving access to the newest prescription drugs," according to Mr Rovere.