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Reimbursement Processes around the World CANADA Description of Healthcare System The Canadian health system more closely resembles the European model than the US system. Most health care services are publicly funded, and government price controls and reimbursement policies tend to keep prescription drug prices down. Despite the proximity to the United States, prices of brand name drugs sold in Canada are closer to European prices and are often much lower than US list prices. Hospital care and physician services are available with no charge to all Canadians. However, there is no national insurance plan for outpatient prescription drugs. Many employers provide private group insurance coverage for employees and their dependents. All provinces have set up publicly funded drug plans and federal government plans are in place for veterans, native Canadians, Royal Canadian Mounted Police and members of the armed forces. Provincial plans are focusing on containing costs and are offering benefits primarily to people age 65 and older, social assistance recipients and others with high drug costs relative to income. It is estimated that roughly 10% of the population has no insurance for prescription drugs. The federal government reviews the safety and efficacy of drugs and approves them for sale through Health Canada's Therapeutic Products Directorate. It also monitors the safety of drugs on the market. Manufacturers can begin to sell new drug products as soon as they receive marketing approval known as a “Notice of Compliance” or “Notice of Compliance with Conditions”. A priority review may be requested for important new therapies. After a new drug receives marketing approval, decisions are made about public funding. Under the terms of the Canada Health Act, all drugs administered to patients in hospitals are fully funded by the public health care system for all Canadians with no co-payments. Hospital Pharmacy and Therapeutics Committees make decisions about which new drugs should be added to their formularies. Global hospital budgets are set by the provincial governments through their Ministries of Health. Each province has its own public drug plan formulary which lists drugs that are reimbursable by the public drug plan. Usually hospital only drugs (such as IV cancer drugs) are not included on these formularies. Formularies not only list which medicines the province will reimburse, they also set the reimbursement levels (e.g. criteria for reimbursement). Each province makes its own decision about funding new drugs as provincial governments determine drug plan budgets. However there is a move towards a more national approach to reviewing and listing new drugs. The Common Drug Review (CDR) process was established in 2003 to streamline the reimbursement review process for provincial drug plans. It is optional for manufacturers to prepare a submission for the CDR, but if they are seeking public reimbursement then they need to do so. Reimbursement Approval Process and Time Frame The CDR reviews manufacturers’ submissions which are required to include evidence of clinical and cost-effectiveness for new chemical entities, new biologicals and new combinations including new oral cancer drugs and recommends whether or not they should be reimbursed by public drug plans and also recommends criteria (e.g. only reimburse as 2nd or 3rd line, only reimburse for a particular patient group etc.). Each of the drug plans considers the CDR recommendations and also considers the expected budget impact of funding the new drug and makes its own decision about formulary listing and criteria for reimbursement. Only Quebec maintains an independent review process for new chemical entities. The Patented Medicine Prices Review Board (the PMPRB) is a federal government agency created by Parliament in 1987 with a mandate to ensure that the prices of patented medicines sold in Canada are not excessive. The PMPRB regulates the maximum price at which a patented drug can be sold based on factors in the Patent Act including:
Pricing Approval Process Once the drug is being sold, the manufacturer must submit introductory pricing information (if it is a patented drug) to the Patented Medicine Prices Review Board (PMPRB). PMPRB staff review prices of patented medicines with reference to the PMPRB Excessive Price Guidelines. The PMPRB’s Human Drug Advisory Panel (HDAP) conducts a review of the clinical evidence and decides if the new drug is a breakthrough or substantial improvement (category 2 drug), or a new active substance offering only moderate or no improvement (category 3) or a line extension of an existing drug (category 1). A price test is then applied based on the category assigned to determine if the introductory price is acceptable. PMPRB reviews the actual average selling price (transaction price) of each product. The average selling price is the list price net of rebates, discounts and free goods. Introductory prices of category 2 drugs are limited to the higher of the maximum price of comparable drugs for sale in Canada in the same therapeutic class or to the international median price of the same drug in 7 comparator countries (United Kingdom, United States, France, Germany, Switzerland, Sweden, and Italy). Introductory prices of category 3 drugs are generally limited to the maximum price of comparable drugs in the same therapeutic class (if there are any). Otherwise, they may be limited to the median international price of the drug. Prices of all patented drugs cannot exceed the International Maximum Price. If the price appears to exceed the PMPRB’s Excessive Price Guidelines, the manufacturer is allowed to provide additional evidence in support of the price. If the price remains unacceptable to PMPRB staff, the manufacturer may choose to voluntarily lower the price and repay excess revenues – if not, the case can be heard before the Board at a court–like hearing. If the price is found to be excessive, the Board may order a price reduction, repayment of excess revenues and double damages (two times excess revenues) if there is a finding of a policy of excessive pricing. The PMPRB also reviews average selling prices of existing drugs every six months to ensure manufacturers do not take excessive price increases. Annual price increases are restricted to the level of increases in the Consumer Price Index. Canadian prices of patented drugs tend to be close to average European prices and much lower than US prices. The PMPRB reported that in 2004, Canadian prices of patented drugs were 92% of the international median price. 1 All drugs administered to patients in hospitals are fully funded by the public health care system for all Canadians with no co-payments. Public drug plans in each province cover outpatient prescription drug costs for people over age 65 and those receiving social assistance or individuals and families with high prescription costs relative to income. Generally there are annual deductibles based on a percentage of income that must be reached before public insurance coverage begins. Many employed Canadians and their dependents have prescription drug coverage provided under private employer group insurance plans. These private plans tend to be generous and to cover most brand name prescription drugs as soon as they are approved for sale in Canada. If a new drug is not yet funded under public programs (reimbursement decisions may take a year or more after a drug reaches the market) a patient may be able to get immediate coverage if they are a member of a private plan. For example, when Gleevec (imatinib) was introduced for Chronic Myeloid Leukemia most patients with private insurance would have had immediate coverage for it, however, there would have been a delay in reimbursement for patients waiting for it to be added to provincial formularies. In order to have a new drug listed on provincial drug plan formularies, manufacturers must submit an application to the Common Drug Review with copies to the drug plans in each province. A separate application must be submitted to the Quebec government as Quebec does not participate in the CDR process. Many of the provincial drug plans cover cancer agents, so if a cancer drug is not a “hospital only” drug, the manufacturer would prepare a submission to the CDR. Drugs that are administered in hospital only, i.e. those requiring special administration technology or monitoring that is available only in a hospital setting, would not be submitted to the CDR. Traditionally, drugs administered intravenously were considered hospital only drugs; however, this distinction cannot be uniformly applied as more of these agents are administered in the non-hospital and home settings and are funded by the provincial drug plans. In the CDR submission, the manufacturer would provide evidence of clinical and cost-effectiveness in accordance with the CDR guidelines 2. The manufacturer must also provide the CDR with budget impact analyses showing how reimbursement of the new drug is expected to impact the drug plan budget in each province. The CDR carries out a systematic review of the clinical evidence and evaluates the cost-effectiveness of new drugs. Clinical and pharmacoeconomic drug reviews are generated using an evidence-based approach. They are prepared by expert scientific reviewers, based on material submitted by manufacturers and on studies identified through independent, systematic literature searches. The CDR’s Canadian Expert Drug Advisory Committee (CEDAC), an appointed national independent body of physicians, pharmacists and professionals, then recommends if the drugs should be reimbursed by the participating public drug plans and also recommends criteria for reimbursement. The CDR’s website provides information on the target review time and the actual time taken for each product being reviewed. [Note: Timeframe for review, from the date of receipt of the submission to the final recommendation (as published on their website) is between 99 and 129 days (20 to 26 weeks), depending on when the CEDAC meets. Reconsideration can add to this time. ] Public drug plans are sensitive to price. An appropriate pharmacoeconomic evaluation is required for all submissions to the Common Drug Review. The Common Drug Review uses a template as a guide for reviewers evaluating the pharmacoeconomic data submitted. A cost comparison showing the average cost per day of therapy of the new drug compared to other drugs is one requirement in the PE analysis 3. Manufacturers are also required to submit budget impact analyses showing the expected budget impact of adding the new drug to each of the provincial formularies. Price and budget impact are important factors for drugs that are later entrants in a therapeutic class and are considered “me too” drugs rather than substantial improvements over existing therapies. Generics are widely used in Canada - in hospitals, by provincial government plans and increasingly by private employer drug plans. 40% of prescriptions are filled by generic drugs. If generics are available, the drug plans will only reimburse up to the price of the lowest cost alternative drug. Some drug plans (e.g. British Columbia Pharmacare) use reference pricing to control costs in some categories of drugs such as proton pump inhibitors (with prices capped at the reference drug price), however this approach has not been used for cancer treatments. Hospitals are price sensitive and negotiate discounted prices and use generic drugs if available. However, if a new therapy is more effective, even if it is more expensive it is likely to be added to the formulary. Some provinces conduct their own reviews for cancer drugs and do not rely on the CDR. Cancer agencies in the provinces of British Columbia, Alberta and Saskatchewan conduct their own reviews of cancer drugs for the province. Submissions for reimbursement for cancer drugs must be made to the individual provinces rather than to the CDR. In Ontario both Cancer Care Ontario and the Ontario Ministry of Health and Long-Term Care’s Drug Benefit Programs Branch are involved in reimbursement decisions for oncology drugs. A separate submission is also required for coverage in Quebec for all prescription drugs including cancer drugs. Reimbursement Organizations/HTA Organizations Agence d'Évaluation des Technologies et des Modes d'intervention en Sante (AETMIS) The Canadian Cochrane Network and Centre (CCNC) Canadian Agency for Drugs and Technologies in Health (CADTH) Canadian Institute for Health Information (CIHI) Canadian Health Services Research Foundation (CHSRF) Canadian Institutes of Health Research (CIHR) Program for Assessment of Technology in Health (PATH) The Institute of Health Economics (IHE) Glossary of Special Terms In progress
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