Drugmakers file second court challenge to Canada’s new drug price rules

TORONTO (Reuters) – Canada’s main pharmaceutical industry lobby group, along with 16 of its member companies, filed a lawsuit on Friday to block new regulations meant to lower patented drug prices, the second legal challenge to a new regime that could eventually reduce prices in the United States as well.

Canada published the final regulations in August, despite heavy lobbying from drug companies, which stand to lose revenue as prices drop. The federal government estimates the new rules will save Canadian patients, employers and insurers, including governments, C$13.2 billion ($10 billion) over a decade.

Friday’s lawsuit was filed in federal court and led by Innovative Medicines Canada (IMC), which represents major drugmakers in Canada. It is separate from a lawsuit filed last month and focuses on federal patent law, arguing that Canada cannot use regulations to “fundamentally alter” the role of its federal drug price regulator.

IMC was not a plaintiff in a Quebec Superior Court challenge filed in August, which argued that price regulation falls within provincial jurisdiction.

“We would not enter into this lightly. The industry lives and breathes saving lives, but it does require a viable business model to do so,” IMC President Pamela Fralick said in an interview. “Canada is not creating a sustainable environment for innovative medicines.”

Fralick said industry had been trying to work with Health Canada to find policy alternatives to the proposal for nearly two years.

IMC has argued that new drugs may launch late or not at all in Canada if prices fall, and that the policy will discourage investment in Canada. The government says other countries with lower drug prices have investment and drug access that are as good as or better than Canada’s.

Lower prices in Canada could spill into the United States, the world’s largest pharmaceutical market, since the Trump administration said in July it would allow U.S. states and other groups to start pilot programs importing drugs from Canada. The administration is also considering linking what it pays for drugs under Medicare, which provides federal health insurance for Americans 65 or older, to prices abroad, including in Canada.

The new regulations, which go into force July 1, 2020, change the list of countries with which Canada’s federal drug price regulator, the Patented Medicine Prices Review Board, compares domestic prices, dropping the United States and Switzerland, where prices are highest. It will also let the agency consider the cost-effectiveness of new medicines for the first time.

Plaintiffs in the new case include Canadian subsidiaries of AbbVie Inc, Astellas Pharma Inc, AstraZeneca PLC, Bristol-Myers Squibb Co, Eli Lilly and Co, Novartis Pharmaceuticals, and Pfizer Inc.