There’s never been a worse time to get sick in Canada. Our northern neighbors must wait 2.5 years longer than Americans enrolled in Medicare to access new drugs, according to a report published this month by the Canadian Health Policy Institute.

The Canadian government has chosen to deprive its citizens of the latest therapies by dictating the prices drug makers must abide by if they want access to the Canadian market. And now, the Biden administration and several states are looking to deploy Canadian-style tactics here at home.

When public officials levy price controls on prescription drugs, they’re putting the government’s finances ahead of patients’ lives.

Drug companies understandably prioritize selling in markets where they can make the most progress toward recouping their investments in research and development — which are about $2.6 billion per drug, on average.

That figure takes into account the many drug candidates that don’t pan out. Seven of every eight compounds that enter clinical testing fail. Companies have to rely on revenue from the small minority that succeed to keep them in the black — and fund future research.

Price controls upset these economic calculations. And so they compel drug companies to wait to launch medicines in the countries that employ them — if they decide to launch them there at all.

Between 2018 and 2022, drug makers filed roughly half as many new drug applications with Canadian regulators as they did with the U.S. Food and Drug Administration, according to the Canadian Health Policy Institute paper.

Just 30 of the 166 new drugs approved for marketing in Canada between 2018 and 2022 had ended up on public drug formularies by the end of 2023, CHPI reported. In the United States, 241 new drugs were on public formularies by the end of last year.

That’s right. At the end of 2023, Americans had access to eight times as many new drugs on public formularies as Canadians did.

Canada was first to receive a new drug application for just 33 of the 337 drugs that received approval from at least two of the regulatory agencies in the United States, Europe, and Canada during the time period evaluated by CHPI.

And of the 92 drugs that sought approval in all three regulatory regimes between 2018 and 2022, just one launched in Canada first. American patients had first dibs on 85 of those drugs.

A February 2024 RAND Corporation study found that “most new drugs are sold first in the United States” and that “the United States has access to the largest share of new drugs overall,” precisely because the “latitude to set prices” encourages companies to introduce drugs here “before launching in countries that use external reference pricing” or other forms of price controls.

That may not be the case for long. Medicare is in the process of setting price caps on 10 popular drugs in Part D, as authorized under the 2022 Inflation Reduction Act. Those caps will take effect in January 2026. The following year, 15 drugs under Part D will be ensnared by these price controls. In 2028, 15 from Medicare Parts B and D will be subject to price controls. And in 2029 and thereafter, it’s 20 drugs from Parts B and D. The Democrats have already proposed to increase those numbers.

One study estimates that the IRA’s price controls will reduce pharmaceutical companies’ revenue — and thus the amount of money available for research and development — to such an extent that they’ll develop 139 fewer drugs by 2035.

States are working to implement price controls of their own, too. Colorado announced in March that the state’s Prescription Drug Affordability Review Board would begin setting “upper payment limit[s]” on drugs it thinks are too expensive. The board claims that over 600 drugs currently meet that threshold.

Colorado is hardly an outlier. At least eight other states have created similar bodies. Thus far, only Colorado, Washington, Minnesota, and Maryland have the authority to set price caps.

The fact that states are embracing this type of strategy is bad news, regardless of how many boards have power at the moment. They all function like Canada’s Patented Medicine Prices Review Board, the agency responsible for my home country’s lag in drug approvals and access.

It would be folly to think the United States could implement Canadian-style price controls and not suffer Canadian-style results. If the Biden administration and state governments continue to push for price caps, review boards, and “negotiations” with drug makers, they will inevitably restrict patients’ ability to access new medicines.

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