Canada: Understanding how drug pricing works

Canada: Understanding how drug pricing worksOur Canadian Partner, The Williamson Group – A Cowan Company, recently published an article explaining the intricacies of Canada’s drug pricing system.

Drug pricing in Canada is not a wide-open, free-market game. The Patented Medicine Prices Review Board (PMPRB) is a federal government agency charged with establishing the price of new drugs approved for sale in Canada. The PMPRB’s 1987 mandate is to ensure that prices of patented medicines sold in Canada are not to refer to a maximum amount that a drug manufacturer can charge, but quite often the price out the factory gate is less.

Typically, the drug is shipped to a wholesaler, who will add a markup to the price they were charged when they resell the drug to a retail pharmacy. The retail pharmacy, in turn, will add its markup on the drug when reselling it to the consumer—or, more accurately, to the plan sponsor. If your plan is using a pay direct drug card however, there will be limits to the retail pharmacy markup. Most insurers have also put Private Listing Agreements into place with manufacturers to manage the cost of some specialty drugs.

Read more about Canada’s drug policies in this article (pages 13-14).

Need help with prescription benefits in Canada?

Just let us know. We’d be happy to put you in touch with our Canadian Partner The Williamson Group – A Cowan Company.