Nigel S. B. Rawson, PhD | Affiliated scholar/Senior fellow, Canadian Health Policy Institute, Macdonald-Laurier Institute, Fraser Institute |
– ABSTRACT –
President Trump has introduced his Most-Favored-Nation (MFN) reference-based drug pricing policy, which requires prices of all brand medicines without competitors be set at the lowest price in OECD countries with a GDP per capita of at least 60% of the U.S. GDP per capita to reduce prescription drug costs to Americans and increase prices in other countries, including Canada, to end freeloading on American innovation. This is causing much uncertainty among drug developers and Trump’s comparator countries where medicine prices are tightly controlled, although so far Canadian governments seem to be in a state of denial. Canada’s Drug Agency (CDA) performs health technology assessments (HTAs) of drugs to try to evaluate their “cost-effectiveness” for all provinces and territories, except Quebec. CDA is one of five gatekeepers that drug developers must work with to get new medicines listed in government drug plans. The objective of this analysis is to assess trends in reimbursement recommendations made by CDA between 2009 and 2025, CDA’s use of a specific cost-effectiveness threshold, and the time taken to perform HTAs. The potential impact of Trump’s MFN policy on Canada is addressed in the light of these trends and recent CDA policy proposals. CDA’s reimbursement recommendations have changed markedly since 2009, with a strong increase in positive recommendations. However, all of these recommendations are conditional on clinical criteria and/or a price condition in recent years. Clinical criteria range widely, but some seem poorly considered and inadequately reflect the complex clinical management of many diseases resulting in clinically inappropriate reimbursement criteria. Price conditions were often non-specific before 2016, but subsequently they have frequently been expressed as a specific percentage reduction to achieve a low cost-effectiveness threshold of $50,000 per quality-adjusted life-year. Between 2016 and 2022, the rate of specific percentage reductions to achieve the cost-effectiveness threshold increased from 12.5% to 93.5%. More than half of CDA recommendations in the last five years included a price reduction of 73% or higher and, in a quarter, the recommended reduction exceeded 90%. Major pharmaceutical companies are committing to investing in research and development and manufacturing in the United States and reducing or closing facilities in less expensive parts of the world. Canadian governments have a choice. They can hope to outlast the Trump administration and continue to under-value and under-invest in pharmaceutical innovation – resulting in fewer medicines being launched in Canada than already occurs and even longer delays to access drugs that are launched here – or face up to higher prices, recognize the benefits innovative medicines can bring to both patients and health care systems, and substantially increase investment in life sciences in Canada.
CITATION
Rawson, Nigel S.B. (2026). Reimbursement recommendations for new medicines in Canada: current trends in an uncertain era. Canadian Health Policy, April 2026. canadianhealthpolicy.com.