Prices Determined by Industry

The pharmaceutical industry is one of the leading high-tech industries that largely determine the innovative and strategic security of Canada.

The main factors of market dominance today are:

  • significant investments in R&D of new drugs;
  • introduction of customized approaches to treatment based on the latest achievements in the field of genomics, biostatistics, computer science and medical chemistry;
  • creation of flexible manufacturing transformer cells capable of quickly re-profiling production and ensuring its scale;
  • transition to a unique production of personalized drugs, which can virtually eliminate competition with generic drugs;
  • full transfer of production to GMP standards.

The second feature is a new segmented picture of the pharmaceutical market. When analyzing the commodity structure of exports, as a rule, three groups of drugs are analyzed: original or innovative medicines, branded generics and unbranded generics. Those latter are popularized by savings programs (in particular this one: as the most cost-effective solution, but original drugs still retain their popularity. Throughout the period under review, original drugs were the leaders in terms of sales – share of more than 66%. However, we note a general negative trend for this group of drugs – a decrease over the period 2010-2018 by 11,8%. On the contrary, a group of generics is characterized by a growth trend in sales – by 6,9%. The share of original drugs is seriously reduced in sales volumes. Also, a decrease in physical terms is also characteristic of the product segment of branded generics – they do not withstand increased competition with non-branded counterparts.


Canadian pharmaceutical market shows the increase in the efficiency of the processes of discovery, development and circulation of new types of medicines. Externalization and headlight alliances companies through horizontal / vertical integration, the creation of cross-border clusters, as well as regional integrated markets are characteristic for Canadian market.

The pharmaceutical industry in Canada consists of an ecosystem of multinational and local companies that, in an unstable domestic and foreign market, are forced to resort to mergers and acquisitions and integration in the form of alliances. In 2008, at the height of the patent collapse and economic downturn, pharmaceutical multinationals accounted for more than 72% of mergers and acquisitions. In the same year, 36 alliances involving pharmaceutical companies were registered in Canada. So, Genfarm, one of the top 10 best generic corporations in Canada as part of Merck Generics, was acquired by Milan. In the same period, the Canadian company Apotex acquired the Belgian Topgen I.S. in order to expand access to the European generic market.

A single system for regulating the circulation of medicines will help create a unified pharmaceutical market and increase the availability of effective, safe, high-quality drugs for the population. In the case of effective joint actions, significant transformations can be expected by 2020. 

Regulation Is to Enter in Force

The Government of Canada has announced amendments to the Patented Drug Regulations to revise the list of countries that need to be guided in setting drug prices. Thus, it is planned to save about 13,3 billion Canadian dollars over 10 years. A new revision of the Patented Medicines Regulation was presented in August that revised the list of countries with which Canadian regulators are checked by setting drug prices. The USA and Switzerland are planned to be excluded from the list, where prices are exorbitant, and focus on countries that are similar to Canada in terms of population, economy and approach to healthcare.

This initiative has been discussed in the country since 2017. Then there was evidence that every tenth resident of the country does not buy the necessary drugs because of the overcharged prices for them. According to the Minister of Health, Ginette Petitpas Taylor, the new rules will become the basis for the new national drug program, including in terms of covering the expenses of citizens on prescription drugs.

The updated Regulation will enter into force on July 1, 2020 as specified in the Patent Medicines Prices Review Board. This structure determines that the cost of the patented medicine is overstated, and may order the patent holder to lower the price and compensate for the amount of excess income received by him. This is Canada’s largest drug pricing reform since 1987.

PMPRB will have the tools and information necessary to protect Canadian consumers from excessive drug prices at its disposal. Insurers believe that strengthening the PMPRB is a vital step towards modernizing the regulatory framework for drug prices in Canada. It is believed that a new approach establishes the right balance between lowering prices and ensuring Canadians have access to the innovative medicines they need.

However, Innovative Medicines Canada (IMC) has expressed concern about rule changes. They fear that patients will not benefit from this. Changes in the law have jeopardized industry’s desire to invest in R&D in Canada. They will also influence the decision to conduct clinical trials in the country.

Note that Canada’s healthcare system does not cover the cost of essential prescription drugs, so patients only have to rely on various insurance benefits. In recent years, the government has repeatedly expressed concern that the share of drug spending is steadily increasing, including due to the fact that the cost of original drugs in Canada is on average 20% higher than in other developed countries, with about 20% of Canadians cannot afford to buy health insurance.

Project of National Agency

The Canadian authorities intend to establish a national drug agency the task of which will be to reduce the cost of prescription drugs. This will expand the state-funded health care program. Unlike many other countries, Canada’s healthcare system currently does not cover the cost of essential prescription drugs, so patients only have to rely on various insurance benefits. The cost of original medicines in Canada is on average 20% higher than in other developed countries, while about 20% of Canadians cannot afford to buy health insurance. It is expected that the new agency, which can make money already in 2022-2023, will evaluate the effectiveness of new drugs, discuss their cost with pharmaceutical companies, and determine the economic feasibility of their use. In general, the cost of purchasing medicines in Canada increased from 2,7 billion Canadian dollars in 1985 to 33,8 billion Canadian dollars (25,4 billion US dollars) in 2018.

Plans of American Authorities to Launch Import of Meds from Canada

Canadian authorities are protesting against U.S. plans to allow their citizens to buy cheaper drugs in Canada, fearing that this will lead to a shortage, according to NASDAQ. The U.S. Presidential Administration is considering the possibility of importing drugs from Canada, where they are much cheaper, in order to combat high prices in the United States.

Back in 2020, experts estimated that if at least 10% of all prescriptions written in the United States were mixed with drugs from Canada, the country’s drug reserves would run out within 224 days. In the meantime, over the past three to five years, drug shortages in the country have increased significantly, which causes confusion and stress for patients. Of more than 1700 pharmacy workers surveyed by the Canadian Pharmacists Association, the vast majority, 78 percent, said drug shortages had increased significantly.

The need to somehow resolve the problems associated with this has become a laborious and undesirable part of the daily practice of pharmacists. While drug shortages are an unfavorable everyday reality for patients and pharmacists, pharmacies claim that its magnitude over the past year has led to confusion and stress among patients. The association called on the federal government to provide more assistance to pharmacists to investigate and address the causes of the deficiency.

The Government of Canada is urged to articulate its position regarding the export of Canadian medicines to other countries and take measures to protect their supplies to our pharmacies from the effects of U.S. import laws. Most people are concerned about the lack of medicines (69 percent), especially those over 60 years old. According to Canada Health&Care Mall last year, one in four Canadians felt or knew someone who had been short of drugs over the past three years.

Oncologists in Montreal and other Canadian provinces are concerned about the lack of drugs that are used to treat cancer. Deficit medicines include vinorelbine, leucovorin, and etoposide. Vinorelbine is used to treat lung cancer and breast cancer, etoposide is used to treat lung cancer and testicular cancer, and leucovorin eases the side-effects of the first two drugs. Recently it became known that vinorelbine has also become scarce. The pharmaceutical companies Pfizer and Teva, which produced the drug, stopped production of the drug. This put pressure on generic companies. When the supply of vinorelbine resumes is not known. All three drugs are patented drugs, which means their production is not so profitable, experts say.

Doctors believe that the shortage of drugs for cancer treatment has not yet affected patients. The latter are prescribed substitutes for drugs. However, if the shortage continues, it will affect patients. According to the Canadian Pharmaceutical Association, over the past 5 years, drug supply has deteriorated significantly. The deficit affected not only cancer drugs, but also other drugs. Canada’s Department of Health recognizes that drug shortages can have a significant impact on patients and healthcare providers. The ministry is committed to preventing and minimizing the impact of drug shortages on patients and their families.