Member of Canada’s drug pricing regulator quits over ‘lack of support’ for medicine cost reforms

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A member of the Patented Medicine Prices Review Board, Canada’s drug pricing regulator, has resigned over what he calls a “lack of support” from the federal government and failure to implement “critically important” reforms to lower the cost of medicine.

In a letter addressed to federal Health Minister Jean-Yves Duclos, Matthew Herder said it has been a “privilege” to serve as a member of the PMPRB since 2018, but said he must “regretfully resign.”

“In view of recent events, in particular, the lack of support from your office and the government, I no longer believe it is possible to serve the public good in this role,” he said.

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Herder, director of Dalhousie University’s Health Law Institute and an associate professor in the Department of Pharmacology and Schulich School of Law, said the government has “fundamentally undermined” the board’s independence and credibility.

He said despite the PMPRB’s mandate to protect consumers from “excessive” drug prices, patented medicine prices in Canada remain among the highest in the world.

While the brand-name pharmaceutical industry is supposed to spend 10 per cent of its sales to finance drug research and development, it has failed to meet those targets, allocating just 3.4 per cent of its sales to research and development in 2021.

Herder said he applied to be a member of PMPRB after it sought to modernize its guidelines in 2016, “which the government expanded with the introduction of new regulations in late 2017.”

Those regulations would have altered the list of countries the PMPRB uses to compare drug prices, force drugmakers to disclose some confidential discounts to the PMPRB, and allow the board to consider the cost-effectiveness of new medicines.

However, since their introduction, the implementation of those reforms has been delayed four times.

Matthew Herder has announced his resignation from the Patented Medicine Prices Review Board.
Matthew Herder has announced his resignation from the Patented Medicine Prices Review Board. Dalhousie University

Herder said the reason given for the delays was “uncertainty posed by the pandemic and the time needed by industry to bring their pricing practices up to speed.”

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“While this rationale may have held water initially, subsequent delays (often announced at the 11th hour) have caused immense strain upon the Board, particularly Board staff,” he wrote.

He said the board is unable to enforce new regulations as soon as they come into force.

“A minimum of two reporting periods would need to elapse before staff could even initiate an investigation into whether a given medicine’s price is excessive,” he wrote.

“Despite this gradual approach to enforcing the regulations, which the PMPRB communicated to stakeholders, the government accepted again and again industry’s claim that it needed more time to comply with the new regulations.”

The proposed regulations prompted pushback from the industry, and some pharmaceutical companies took the government to court to challenge them.

After the Quebec Court of Appeal struck down two of the reforms, Ottawa did not appeal the decision and walked back some of the proposed changes.

Herder said the government’s failure to defend the policies “effectively countenanced the evisceration of its own reform.”

In July, only one of the regulations allowing the list of countries Canada compares prices with to be altered went into effect, which Herder called “a far cry from what the government described as the ‘biggest step to lower drug prices in a generation’ when the new regulations were first enacted.”

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Herder also accused Duclos of interfering with the PMPRB and undermining its credibility, saying the minister asked the board to suspend consultations for new guidelines in late November, “for reasons that were largely indistinguishable in form and substance from industry talking points.”

He said the government is holding the board to an “impossible standard” that requires it to impose lower prices based on a group of comparable countries, “but in a manner that is agreeable to the very parties that stand to earn less revenue if those changes are rendered effective.”

“It is difficult enough for a sector-specific regulator to do its job in the face of a hostile industry,” he said.

“But when government adds its voice to that of industry, all that lies before the regulator is an endless tunnel with no light.”

Herder ended his letter by highlighting Canada’s health-care crisis, saying jurisdictional issues are complicating the federal government’s ability to intervene.

“That the federal government is unwilling to support real change in a domain where its jurisdiction over patented medicine cannot be questioned, and those same medicines are the fastest growing contributor to the rising costs of healthcare, is deeply disappointing,” he said.

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In an email to Global News, Herder said he was currently out of the country for research and was unavailable for an interview. “My hope is that the letter speaks for itself,” he wrote.

In a statement, the office for Duclos said the minister “appreciates the leadership and contributions of Mr. Matthew Herder and thanks him for his time on the Board.”

“As an independent quasi-judicial body, the Minister does not provide direction to the PMPRB and cannot comment on the reason for the resignation,” the statement said.

It said that under the Patent Act, the PMPRB must consult with various parties, including the minister, before issuing any guidelines.

“It is in that context that Minister Duclos wrote to the chair of the PMPRB to share his views with respect to the proposed Guidelines,” the statement said, referencing Duclos’s request to halt consultations in late November.

A spokesperson for the PMPRB also declined to comment on Herder’s resignation.

“The history of the PMPRB’s consultations on potential reforms to its Guidelines is well documented and the details are available on our website,” he said in an email. “We cannot comment beyond what’s already a matter of public record.”


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