OTTAWA—The federal government is introducing changes to the oversight of drug costs, a move it says will help lower prices as a critical step towards a national pharmacare program.

On Friday, Ottawa will announce amendments to the regulations that govern how a quasi-judicial review board polices drug prices.

The government says the changes to the Patented Medicines Regulations are the most significant reforms since the rules were introduced in 1987 and estimates the savings at $13 billion over the next decade.

“It’s the biggest step in a generation to lower the price of prescription medication … by enhancing the power and providing more tools to the (board),” Health Minister Ginette Petitpas Taylor told the Star in an interview Thursday.

“We’ve made it very clear as a government that we want to move forward with the national pharmacare program but to do so we absolutely have to lower the price of prescription medication,” she said.

The changes will be implemented over the coming year, meaning that any impact on prices remains some time off.

The amendments affect the role of the Patented Medicine Prices Review Board, an independent quasi-judicial board that monitors the prices of patented medicines and has the power to intervene when it deems a cost is excessive. It also tracks trends in pharmaceutical sales and medicine prices.

One change will remake the basket of countries that the review board uses as benchmarks when weighing drug prices. “We want to make sure that we compare ourselves to countries that have similar health-care systems or similar health approaches and also similar economies,” she said.

Switzerland and the United States have been dropped from the list while Australia, Belgium, Japan, Netherlands Norway and Spain have been added. France, Germany, Italy, Sweden and United Kingdom remain.

The review board “will now benchmark prices against other countries that are more like Canada,” Petitpas Taylor said.

“So we’re really changing the basket of countries we are comparing ourselves too and as a result we will be able to see a drop in the average price of drugs,” she said.

Another change will allow the review board to consider the market price of drugs, including information about third-party rebates.

Currently, it is restricted to seeing the price published by the pharmaceutical companies, which leaves it regulating prices based on what the government says are inflated costs rather than the true price.

“We know the sticker price is not the actual price insurance companies pay,” Petitpas Taylor said. “The (review board) will be able to set a price ceiling with a better idea of how reasonable the list price is.”

The final change will permit the review board to consider whether the cost of a drug reflects its value for patients and its affordability. This applies mostly to drugs used to treat rare diseases, which are often cost prohibitive.

The government says the changes are the result of extensive consultations and study. They also act on recommendations contained in the final report by the advisory council that examined national pharmacare. It recommended that the government strengthen the Patented Medicines Regulations to lower the cost of patented drugs.

Petitpas Taylor said that Canada has some of the highest costs for medication and that action is needed.

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“We certainly recognize that Canada has been behind other developed countries when it comes to taking the steps that are needed to lower the price of prescription medication,” she said.

“This is really the foundational piece for us to move forward with the national pharmacare. We need to get this done,” she said.

In its final report released in June, the advisory council urged Ottawa to work with the provinces to establish a single-payer, public system of prescription drug coverage. Its chair, Dr. Eric Hoskins — the former Ontario health minister — warned that the current patchwork of public and private prescription drug coverage is unsustainable.