No less than two prime ministers and four cabinet ministers spoke on Friday when Moderna announced that it will build a vaccine manufacturing plant in the Montreal area. The presence on the same stage of such a line-up of federal and Quebec politicians is not common. But the announcement of the establishment in Quebec of the American manufacturer of mRNA vaccines against COVID-19 and other respiratory diseases was such good news for the two governments that neither Justin Trudeau nor François Legault wanted to miss the opportunity to brag about it. After all the flaws in the Canadian vaccine supply system revealed by the pandemic, MM. Trudeau and Legault could finally congratulate themselves on taking concrete measures to close these breaches.
For Mr. Trudeau’s government, this is a 180 degree turn in its relations with the pharmaceutical industry. When they came to power in 2015, the federal Liberals promised to wage war on multinational corporations to drive down the prices of patented drugs.
Fulfilling its promise to create a pan-Canadian drug insurance plan will also depend on its ability to control costs. With this in mind, in 2017, then-Minister of Health Jane Philpott announced her intention to revise the criteria used by the Patented Medicine Prices Review Board (PMPRB) to establish ceiling amounts.
The first version of the reform, announced in 2019, was expected to save Canadians more than $13 billion over 10 years on drug prices, according to Health Canada estimates. The pharmaceutical industry has instead calculated its shortfall at more than 20 billion. She argued that such a reform would scare away new industry investment in Canada and jeopardize the launch of new blockbuster drugs for cancer and rare diseases in the country.
She also took her case to court to overturn aspects of the reform that would have forced pharmaceutical companies to disclose the discounts they give to large buyers. These are mostly provincial governments, which provide certain medications free of charge to seniors and low-income people through their own drug plans. The disclosure of these discounts would have had the effect of forcing the industry to offer the same discounts to all buyers, including private insurers.
The Trudeau government and the pharmaceutical industry were therefore on very bad terms when the pandemic hit and Ottawa was looking to obtain potential vaccines against COVID-19. Canada’s lack of factories capable of producing vaccines has left the government at the mercy of European producers, with President Donald Trump banning U.S. vaccine makers from exporting part of their production to Canada. , even though the United States had a surplus of vaccines.
Restore dialogue
Appointed Minister of Innovation, Science and Industry in early 2021, François-Philippe Champagne has been given the task of rebuilding the bridges between government and the pharmaceutical industry, as well as enhancing the capacity of Canadian production in the field. Last year’s budget allocated several billion dollars to the development of a new Biomanufacturing and Life Sciences Strategy.
But for the pharmaceutical industry to respond to Ottawa’s call, the Trudeau government would have had to back down on its reform of the regulation of drug prices. Former Health Minister Patty Hajdu barely agreed in mid-2021 to delay implementation for a second time; his successor, Jean-Yves Duclos, did the same in December.
But a decision by the Court of Appeal of Quebec, intervened last February, forced Ottawa to put water in its wine. The court concluded that the federal government exceeded its powers by trying to interfere in drug price negotiations between the multinationals and the provinces.
It was therefore no coincidence that, on April 14, Mr. Duclos announced that “the government will not implement the changes related to the new price regulation factors nor those related to the requirements to report information on prices and revenues. Ottawa will only go ahead with part of its reform: the federal government will change the list of countries to which the PMPRB refers to determine whether the prices of patented drugs are “excessive” in Canada. Instead of the $13 billion in savings over 10 years promised in 2019, Ottawa is now instead planning price reductions of $2.9 billion over the same period.
Last week, Minister Duclos justified his government’s decision not to appeal the decision of the Quebec Court of Appeal to the Supreme Court by saying that he was “aware that we need to have in Canada an industry strong pharma, especially given the lesson we learned [durant la pandémie de] COVID-19”.
This is an important victory for the industry, a victory that would have something to do with Minister Champagne’s efforts to attract new investment to Canada. It also risks complicating the achievement of the Liberal promise of a national drug insurance plan – which is at the heart of the support agreement between the PLC and the NDP, it should be remembered.
The Liberals therefore had to swallow the pill of their defeat in the Court of Appeal. Fortunately for them, Moderna’s announcement comes to put a balm on their wounded self-esteem.