US embassy cable - 04OTTAWA3059

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