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Cablegate: Watching Pharmaceutical Prices in Canada

This record is a partial extract of the original cable. The full text of the original cable is not available.

151341Z Nov 04

UNCLAS OTTAWA 003059

SIPDIS

ALCAN COLLECTIVE

STATE FOR WHA/CAN, EB/DCT AND OES/EID

USDOC FOR 4310/MAC/ONA

STATE PASS USTR FOR MELLE AND CHANDLER

STATE PASS HHS FOR STEIGER

E.O. 12958: N/A
TAGS: ECON ETRD CA
SUBJECT: WATCHING PHARMACEUTICAL PRICES IN CANADA

REF: (A) OTTAWA 2394 (CANADIAN HEALTH CARE PRIMER)

(B) TORONTO 928
(B) 03 OTTAWA 3649

SUMMARY
-------

1. PREVIOUS MESSAGES HAVE EXPLAINED WHY PHARMACEUTICAL
PRODUCTS MAY SELL AT CONSIDERABLY LOWER PRICES IN
CANADA THAN IN THE U.S. MARKET. IN ORDER TO TRACK
EFFECTS OF THE CROSS-BORDER "INTERNET PHARMACY" TRADE
ON CANADA'S PHARMACEUTICAL MARKETS, THIS MESSAGE CITES
SOME KEY SOURCES OF DATA AND ANALYSIS. WHILE THERE IS
NO FIRM STATISTICAL EVIDENCE YET THAT CANADIAN
PHARMACEUTICAL MARKETS ARE BEING DISRUPTED, THE
PHARMACEUTICAL PRICE REGULATOR HAS EXPRESSED CONCERN
ABOUT REPORTS OF PRICE INCREASES. END SUMMARY.


RECENT PMPRB CONCERN
--------------------

2. THE CANADIAN REGULATOR, THE PATENTED MEDICINE PRICES
REVIEW BOARD (PMPRB), COLLECTS AND ANALYZES DATA ON
DRUG PRICES IN CANADA, AND COMPARES THEM WITH THE U.S.
AND SIX EUROPEAN COUNTRIES IN ITS ANNUAL REPORT (SEE
WEBSITE PMPRB-CEPMB.GC.CA). FOR 2003, IT SHOWS THAT
PRICES FOR PATENTED DRUGS IN CANADA INCREASED BY LESS
THAN THE CONSUMER PRICE INDEX, CONTINUING A TREND OF
MORE THAN A DECADE. A PMPRB OFFICIAL TOLD US THAT LAGS
IN COLLECTING PRICE DATA MEAN THAT CERTAIN CURRENT
UPWARD PRESSURES MIGHT NOT BE MEASURED FOR SOME TIME.

3. IN OCTOBER, THE PMPRB'S CHAIRMAN WROTE: "OVER THE
PAST YEAR, THE PMPRB HAS RECEIVED QUESTIONS CONCERNING
PUBLISHED REPORTS OF PRICE INCREASES FOR PATENTED
DRUGS. . . WE HAVE REMINDED PHARMACEUTICAL PATENTEES OF
THE PMPRB'S RESPONSIBILITY TO ENSURE THAT PRICES FOR
PATENTED MEDICINES ARE NOT EXCESSIVE IN ANY MARKET IN
CANADA (EMPHASIS IN ORIGINAL). THE PMPRB HAS RECEIVED
INFORMATION THAT MANUFACTURERS HAVE ADVISED THE TRADE
OF PRICE INCREASES FOR CLOSE TO 35 PERCENT OF ALL
PATENTED DRUG PRODUCTS IN 2004 (RAISING) THE QUESTION
OF WHETHER WE ARE SEEING A CHANGE IN PRICING BEHAVIOR
AND, IF SO, WHY. . . . THE PMPRB IS DOING FURTHER WORK
TO ASSESS WHETHER THE REPORTS OF PRICE INCREASES IN
2004 REPRESENT A NEW TREND AND, IF SO, WHETHER THE
CURRENT REGULATIONS AND GUIDELINES ARE STILL
APPROPRIATE."

OTHER SOURCES
-------------

4. A COMPREHENSIVE 2003 PAPER BY DANZON AND FURUKAWA OF
THE WHARTON SCHOOL ("PRICES AND AVAILABILITY OF
PHARMACEUTICALS: EVIDENCE FROM NINE COUNTRIES") FOUND
THAT IN 1999 (WHEN THE CANADIAN DOLLAR WAS
UNDERVALUED), AVERAGE CANADIAN PRICES WERE LOWER THAN
THOSE IN OTHER MAJOR DEVELOPED MARKETS, AND 33 PERCENT
LOWER THAN U.S. PRICES. DANZON'S WEBSITE AT
HC.WHARTON.UPENN.EDU IS AN EXCELLENT SOURCE FOR SERIOUS
WORK ON PHARMACEUTICAL MARKET ECONOMICS, BUT SUCH WORK
IS GENERALLY BASED ON DATA WHICH IS AT LEAST TWO YEARS
OLD.


5. THE CANADIAN INSTITUTE FOR HEALTH INFORMATION (CIHI)
MAINTAINS VERY DETAILED DATA ON CANADIAN PRESCRIPTIONS
(INCLUDING PATIENTS' POSTAL CODES). WHILE THIS DATA
COULD BE HIGHLY REVEALING OF PRICE AND DEMAND TRENDS,
FOR EXAMPLE IN BORDER AREAS, THE CIHI IS A SELF-
FINANCING BODY AND ONLY SHARES THIS DATA ON A
COMMERCIAL BASIS. HOWEVER, A CIHI EXPERT TOLD US IN
EARLY NOVEMBER THAT SHE HAS YET TO SEE HARD STATISTICAL
EVIDENCE OF ACCELERATING PRICES OR OTHER CHANGES IN THE
MARKET.

CELLUCCI

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