Mr. Speaker, I am certainly pleased to stand today to address the motion from the hon. member for Vancouver Kingsway. I congratulate him on his speech and I thank him for his work on the health committee.
The government is committed to implementing a national universal pharmacare program that ensures that all Canadians have access to the prescription drugs that they need. This is our goal, as clearly stated in the 43rd Speech from the Throne. It is a goal that we have been working towards for some time. While we are now closer than ever, it is important that we continue our measured, considered approach to implementation. We need to get this right.
This morning I will explain the steps the government is taking to make prescription drugs more accessible and affordable for Canadians. I will also explain why these actions are key to the implementation of a national pharmacare program.
Canadians should not have to choose between buying groceries and paying for medication, but for many people, paying for prescription drugs is a heavy burden and for others it is completely out of reach. Surveys show that more than seven million Canadians are either entirely uninsured or under-insured.
This means that many of these Canadians cannot afford to fill their prescriptions. They simply do without the medication they need. If their health absolutely depends on taking these drugs, they may forgo necessities, such as food and heat, so that they can pay for their prescriptions. We can no longer afford to do nothing. We cannot afford to wait.
That is why we asked Dr. Eric Hoskins and a panel of eminent Canadians to provide the government with a blueprint for a national pharmacare program. After hearing from many thousands of Canadians, the council found a consensus of opinion that everyone in Canada should have access to prescription drugs based on their need and not on their ability to pay.
The government shares this view. With national pharmacare on the horizon, addressing the affordability of drugs is imperative.
How do we do that? The first step is to update specific parts of our regulatory regime and bring them into line with the rest of the world.
Let me begin with a few words about the evolving use of pharmaceuticals in Canada and the associated increasing costs, costs that impact everyone.
Pharmaceuticals are important to the health of Canadians and a vital part of Canada's health care system. Drugs help cure or manage previously debilitating or fatal diseases, allowing Canadians to live longer and healthier lives. Diseases that were deadly 100 years ago, such as tetanus, diphtheria, polio and many others, can now be prevented by vaccination. An HIV/AIDS diagnosis was a death sentence at one time. New drugs offer innovative treatments for diseases like arthritis, hepatitis C and many types of cancer.
All this innovation comes at a cost. It is part of the reason that Canadians are paying higher prices for prescription drugs than they should. Patented drug prices in Canada are the third-highest in the world, behind only the United States and Switzerland. Canadian prices are, on average, almost 25% more than the OECD median for the same patented drugs. As a result, the private and public drug plans that cover the majority of Canadians are rapidly becoming unsustainable.
Let me give an example. Diabetes affects an estimated 3.4 million Canadians and is one of the leading causes of death in Canada. Canada spends nearly $600 million annually on new oral anti-diabetic drugs. The two top-selling oral anti-diabetic drugs cost Canadian public drug plans close to $1,000 per year per patient, twice as much as in France. Imagine the savings if Canada paid France's prices for these drugs. That is a lot of money. It is money that could be used to cover the cost of drugs for people with limited or no insurance coverage.
A second example is a drug used to treat a rare soft-bone disease. This disease used to be almost always fatal, but this drug changed the prognosis. However, it is one of the most expensive drugs in Canada, costing more than $1 million per year per patient, depending on the required dosage. Unfortunately, this high price resulted in difficult decisions and delayed access to the drug for many Canadians.
If Canada paid lower prices for all drugs, there would be more money available in drug plans to provide better coverage or to provide coverage to those without insurance.
Even outside the area of rare diseases, pharmaceutical costs keep going up. Drugs are now the second-largest category of spending in health care, and biologics and other specialty drugs account for an increasing share of these total drug costs. This rate of growth in drug costs is unsustainable, and it is hurting Canadians every single day.
As a trend toward higher-cost specialty drugs continues, we cannot continue to pay higher-than-average prices for drugs. What could we do? The answer is not to spend more. We already spend more per capita on pharmaceuticals than nearly every country in the world. We need a solution to bring fair prices and sustainable drug costs for Canada.
Part of the problem was that Canada's approach to patented drug price regulations was outdated. Our previous pricing regulations were established in the 1980s. We have more than 100 different public drug plans and thousands of private drug plans, which means that drug coverage is provided by a patchwork of payers.
It was well past time to bring these regulations into the 21st century. Canada needed a modernized approach to regulating patented drug prices, one that would provide long-term sustainability and protect Canadians from excessive prices. That is why last summer the government modernized the patented medicines regulations to provide the Patented Medicine Prices Review Board, or PMPRB, with the tools and information it needs to protect Canadians from excessive prices for patented medicines.
I want everyone to remember that Canada pays the third-highest costs in the world. As a comparison, we pay double what France pays on some drugs.
We will now benchmark prices against countries that are similar to Canada economically and similar from a consumer protection standpoint. Previously, the price ceilings for patented drugs in Canada were set by comparing our prices against prices in seven predetermined countries: France, Germany, Italy, Switzerland, Sweden, the United Kingdom and the United States. The list of countries has now been updated by removing the United States and Switzerland and adding Australia, Belgium, Japan, the Netherlands, Norway and Spain, for a total of 11 countries as comparables.
We then wanted the PMPRB to see the actual prices being paid in Canada, not just the list prices being published by pharmaceutical companies. When the PMPRB was created, the market prices of drugs matched the list prices. Over time, as a result of the significant confidential discounts and rebates negotiated by third party payers, actual prices paid in the market became significantly lower than list prices. Without access to this information, the PMPRB was left to regulate domestic price ceilings based on inflated list prices.
With the modernized regulations, patentees will be required to report Canadian price information as the net of all adjustments, such as rebates and discounts, so that the PMPRB is informed of the actual market prices being paid in Canada.
Finally, we wanted to consider the value that a drug offers and its overall affordability. Most other countries with national pharmacare programs already do this. When setting a price, we need to consider three things. First is the value for money: Does the drug offer a therapeutic benefit that justifies its cost? Next is the size of the market: How many people will benefit from the drug? Last is to consider Canada's GDP and GDP per capita: Can we afford to pay for the drug?
These changes will provide the PMPRB with the tools it needs to protect Canadians from excessive drug prices and bring us in line with the policies and practices of most other developed countries. This was a critical step toward improving the affordability and accessibility of prescription drugs. Taken together, we anticipate that these regulatory changes will save roughly $13 billion over the next 10 years. That is a significant saving for Canadians.
From those savings, public and private drug plans will have greater capacity to improve benefits for plan members or to consider new therapies not currently covered. All Canadians, including those with drug plans and those paying out of pocket, will benefit from lower prices for prescription drugs.
Modernizing pricing regulations complements the work already under way at Health Canada to streamline the regulatory review process for drugs by enabling priority drugs to reach the market more quickly. It supports the work already taking place under the pan-Canadian pharmaceutical alliance to negotiate lower prices for prescription drugs. As a member of this alliance, the Government of Canada is able to combine its buying power with that of the public plans in the provinces and territories.
It is estimated that the alliance saves public drug plans more than $2 billion a year. Successful negotiations result in more affordable prescription drug prices for public plans and lower generic drug prices for all players.
Before we can implement a national pharmacare program in Canada, we have to address the rising cost of drugs in the country by taking the steps I have outlined. Doing so will improve the viability of a national pharmacare program. National pharmacare, in and of itself, would be another step that could help us control drug prices.
I am confident that this government is on the right path. We are now exploring options as we move forward with a national pharmacare plan, and we are making significant investments.
Budget 2019 earmarked $1 billion over two years beginning in 2022, with up to $500 million ongoing to help Canadians with rare diseases access the drugs they need. This is very important. This is an investment that must be made.
Budget 2019 also proposed $35 million over four years to support the creation of the Canadian drug agency, an important step toward a national pharmacare program. We have pledged to work with provinces, territories and stakeholders on the creation of the Canada drug agency. This agency could use its negotiating power to achieve better prescription drug prices on behalf of Canadians. Negotiating better prices could help lower the cost of prescription drugs for Canadians by up to $3 billion over the long term.
I appreciate the opportunity to discuss some of the important work we are doing to prepare for the implementation of a national pharmacare program. Part of this effort involves addressing the affordability of prescription drugs, an essential building block for pharmacare. To do that, we have brought our regulatory approach to pharmaceutical pricing in line with approaches that are used in the rest of the world. The actions we have taken to improve the system will help to bring down the prices of prescription drugs.
I would very much like to thank the hon. member for Vancouver Kingsway for his motion. I am pleased to say that we are moving forward steadily. Each of the actions I have described today is helping to pave the way for an effective pharmacare program.
From bringing down prescription prices to improving the management of these drugs in our health care system, we are taking the time necessary to get this right, keeping in mind that the provinces and territories will have a key role to play in determining how pharmacare will take shape.
Pharmaceuticals are an important part of Canada's health care system. That is why federal, provincial and territorial ministers of health have made affordability, accessibility and appropriate use of prescription drugs a shared responsibility.
The updates we have made to the patented medicines regulations, when taken together with the Patent Act, will provide the PMPRB with the tools to protect Canadians consumers from excessive patented drug prices.
All of these measures are important steps in our plan to prepare for the implementation of a national pharmacare program. It is critical that the government work closely with the provinces and territories, as they play a key role in the development of a drug agency, the strategy for high-cost drugs and for rare diseases. Together we are making progress toward a more efficient and effective system.
Based on these initiatives and others I have outlined today, it is clear that we are in fact moving forward with the recommendations from the Hoskins report. I am pleased to support today's motion and urge other hon. members in the House to do so as well.
We must continue to collaborate with the provinces and territories. Our government looks forward to continuing these discussions while taking the critical next step to implement national universal pharmacare.