Federal budget: A Canadian Drug Agency and rare disease funding are not enough

Canadian finance minister Bill Morneau announced funding for a new Canadian Drug Agency in the 2019 Federal Budget. Here he speaks at a press conference in Toronto, March 20, 2019. THE CANADIAN PRESS/Cole Burston

Federal budget: A Canadian Drug Agency and rare disease funding are not enough

The federal budget tabled by Finance Minister Bill Morneau contains two significant announcements dealing with prescription drugs.

First, Morneau announced a proposal to create a Canadian Drug Agency. Second, he pledged $1 billion over two years towards the cost of drugs for rare diseases, starting in 2022 (with up to $500 million per year ongoing).

Both of these moves should be welcomed, but with caveats. A new agency and money for drugs for rare diseases are only very partial steps on the road to a pharmacare plan — a plan that would cover everyone in the country, in the same way that we already pay for doctors and hospitals.

Challenges for a new Canadian Drug Agency

The new Canadian Drug Agency is supposed to work with the provinces and territories and take a co-ordinated approach to both assessing effectiveness and negotiating prescription drug prices on behalf of Canadians.

Assessing cost-effectiveness is already undertaken by two arms of the Canadian Agency for Drugs and Technology in Health (CADTH) — the Common Drug Review (CDR) for drugs in general and the pan-Canadian Oncology Drug Review (pCODR) for drugs used to treat cancer. That is, they determine whether drugs are cost-effective at the price companies want to charge. Price negotiation is done by the pan-Canadian Pharmaceutical Alliance (pCPA).

Costs for drugs for rare diseases have skyrocketed in recent years. (Shutterstock)

The methods that CDR and pCODR use in coming to a decision are strong, but they only make recommendations to provinces and territories and these recommendations can be ignored. Both also take submissions from patient groups into consideration, but not from consumer groups, who may have different views about the value of drugs. Moreover, the vast majority of time the patient groups are partially funded by the companies whose drugs are under consideration.

The pCPA has achieved savings of over $1.2 billion as of March 2017, but more could be done. The savings are only passed onto public drug plans not to people covered by private insurance nor to those who pay out-of-pocket, the most vulnerable group.

The pCPA also often negotiates confidential price reductions. This benefits the provinces and territories that have to pay. However, without knowing the real price, it’s very difficult to determine if a drug is cost-effective. Finally, although provinces may participate in the negotiations, they are not bound to cover the drug, and this might limit the pCPA’s negotiating power.

Will the new Canadian Drug Agency be able to deal with the shortcomings of CADTH and the pCPA? Watch this space.

Skyrocketing rare disease medications

Paying for drugs for rare diseases is an increasing problem as the cost for these medications has skyrocketed in recent years. One of the 19 recommendations from the House of Commons Standing Committee on Health in its final report on this issue was that the federal, provincial and territorial governments “develop a co-ordinated process for the market authorization and reimbursement of drugs for rare diseases.”

Kymriah, a revolutionary new drug that treats rare forms of blood cancers, is an example of the dilemma that public drug plans face when dealing with these types of drugs.

The exact price that Novartis, its maker, wanted wasn’t given but according to a CBC story it would cost up to $387 million a year to treat the estimated 600 to 900 adults with the conditions and an additional $25 million annually for 48 eligible children.

Any new policy about paying for Kymriah and similar drugs must be based on what’s best for patients suffering from rare diseases, not what’s best for the companies making the drugs.

High-tech salami slicing

An orphan drug is one intended to treat a disease so rare that the manufacturer cannot recover the capital invested for its research, without government assistance. In the United States that means that fewer than 200,000 people are affected by a disease. In Canada, that would equate to fewer than 21,500 people.

But the assumption that drugs for these diseases are not commercially viable may not actually be true. Seven of the top 10 bestselling drugs worldwide have “orphan drug” status in the United States.

How do drugs that are approved to treat relatively small numbers of people become bestsellers? Part of the answer lies in how rare diseases are defined. At times the same physiological, biochemical or genetic abnormality may be the cause of more than one disease — as is sometimes the case for different types of cancer.

For example, although the HER2 gene is most commonly associated with breast cancer, it can also be found in cancers of the lung, stomach and pancreas. In the U.S., Herceptin has separate rare disease designations to treat three different forms of cancer.

The use of genetic biomarkers to define what is a rare disease can be misused by pharmaceutical companies to sub-divide diseases in smaller subsets of diseases. Commentators refer to this as “high-tech salami slicing” of diseases into multiple “orphan genotypes.”

Defining diseases based on biomarkers meant that 37 per cent of new drugs approved in the U.S. between 2009 to 2015 had an orphan drug designation.

Inadequate clinical trials

It’s not only how diseases come to be classified as rare that is an issue, it’s also the methods used in clinical trials to test the drugs. For example, the U.S. Food and Drug Administration approved eteplirsen, marketed as Exondys 51, for the treatment of Duchenne muscular dystrophy, a muscle-wasting disease that affects boys and leads to death at about age 26. The treatment costs US$300,000 a year.

The approval was based on a trial that only involved 12 people and only looked at changes in the level of a particular muscle protein — changes that are actually unlikely to yield any meaningful clinical benefit. (The drug is not approved in Canada.)

So, while a new agency and money for drugs for rare diseases are certainly positive steps forward, they are only very partial steps on the road to the desired destination: a pharmacare plan that would cover drugs for everyone in Canada.

A pharmacare plan would have been something to truly celebrate in the budget.