The Cameron InstituteThe Organization for Economic Co-operation and Development (OECD) has produced ample evidence showing the correlation between price controls and R&D spending. We know that the more downward pressure on prices, the less R&D done in that country.
In Canada, drug prices are set by a non-elected federal body called the Patented Medicine Prices Review Board (PMPRB). The board sets the price for a new drug entering Canada not to exceed the average of the price already set in a basket of hand-picked countries. So, even though Canadians can afford the same drug prices as Americans, they are given the gift of a “discount” by their government relative to what their American neighbors are paying for the same treatments.
As it stands according to the Global Innovation Index, Canada is barely an “efficient” innovator country, slowly becoming less efficient, and out-of-step with the rest of the world in its intellectual property protection deficit. The Cameron Institute recently questioned the PMPRB’s intention to further reduce drug prices in Canada, while increasing industry R&D in the country. These two goals are economically incompatible.
Innovation in medicine saves lives, and innovation costs money. We all want the latest treatments for ourselves and our loved ones. For Canadians to receive them, the PMPRB must shift its mindset regarding drug prices and R&D.
