‘You disappointed us’: Why is Canada opposing more transparency in drug prices?

Delegates to the World Health Assembly are expected to consider a transparency resolution demanding the pharmaceutical industry release confidential data about the costs of R&D, the outcomes of clinical trials and the actual prices that countries pay for drugs after secret negotiations and rebates. (L. Cipriani/WHO)


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Behind closed doors at the World Health Assembly (WHA) meeting in Geneva this week, health officials from around the world began hammering at the black box of secrecy surrounding the pharmaceutical industry.

As the debate in the room heated up, observers were surprised that Canada was among the countries that seemed to be trying to weaken that effort.

The fact that transparency is even on the agenda for government health officials at the WHA is evidence of the mounting international frustration over high drug prices. The meeting sets priorities for the World Health Organization (WHO), which is already grappling with the global impact of drug prices on public health.

Pharmaceutical companies have long insisted that high prices are necessary to cover research and development (R&D) costs and keep them in business.

But with increasing numbers of new drugs priced at hundreds of thousands of dollars per patient per year, some countries are demanding to see the industry’s financial data.

The WHA’s transparency resolution would demand unprecedented disclosure by drug companies about how much they spend on R&D, including the cost of clinical trials.

The resolution would also call for a system for countries to compare the true prices they pay for individual drugs. Right now, no country knows what another country is paying for the same drug. That’s because companies hold secret negotiations with individual governments, forcing officials to sign non-disclosure agreements preventing them from revealing any price discounts that they were able to negotiate.

But battle lines quickly appeared in the meeting room, with Germany, the United Kingdom, the United States and several other countries, including Canada, proposing changes to the wording that would soften the resolution and protect industry secrecy.

You guys are supposed to be the good guys, right?– James Love, of advocacy group Knowledge Ecology International

Out in the hallway, members of various health advocacy organizations posted updates about the debate on social media. At this point, they’re the only ones reporting on what’s going on as the transparency resolution undergoes various drafts. And they are surprised by what they’re hearing about Canada’s role.

Tweet from MSF Access Campaign as delegates to the WHA debated wording for the transparency resolution demanding drug companies release confidential data about R&D costs and prices. (MSF Access Campaign )

“We have pretty good intelligence about what’s going on in the room,” said James Love, of Knowledge Ecology International, a non-profit group that advocates for access to affordable drugs.

Love tweeted his dismay at Canada’s industry-friendly position.

“You disappointed us this week, Canada,” Love told CBC News. “You guys are supposed to be the good guys, right?”

Love described several examples where Canada requested changes that softened the resolution.

In one case, the original wording called on countries to “undertake measures to publicly share information on prices and reimbursement cost of medicines.” But Canada joined Germany, the U.K. and Australia to eliminate the word “public.”

And instead of “requiring” companies to release the costs and the results of human clinical trials, Canada suggested  “encourage and support,” according to a text of the changes published by Love’s group.

“People are already encouraged,” said Love, adding that the whole point is to force companies to disclose the information. “You’re just blocking the reform.”

Love pointed to Germany and the U.K. as the strongest voices against increased industry transparency.

Tweet from MSF Access Campaign reporting changes to the wording of the transparency resolution as it was discussed by WHA delegates. (MSF Access Campaign via Twitter)

Questioning R&D costs

Back in Canada, Aidan Hollis watched the debate unfold on social media. He is a professor at the University of Calgary, who researches the economics of pharmaceutical markets.

He said part of the pressure behind this international call for pharmaceutical industry transparency has been created by the growing opacity in drug pricing.

“The information is all on one side at the moment,” Hollis said. “The company knows what it spends and what it is charging every country. But the countries are not able to compare prices because they’re legally sworn to secrecy.”

“When you have this kind of asymmetry of information, basically the party with more information is the one that’s going to win.”

The debate highlights growing skepticism over industry claims that high R&D costs require high prices.

“The costs of R&D and production may bear little or no relationship to how pharmaceutical companies set prices of cancer medicines,” a recent WHO report on cancer drug prices concluded. “Instead, pharmaceutical companies set prices according to demand-side factors, with a focus on extracting the payers’ maximum willingness or ability to pay for a medicine.”

Hollis said transparency about R&D costs is needed to evaluate what is a reasonable price for drugs, adding that Canadians are willing to pay if the price is not excessive.

“The problem is when people feel like they’re being taken advantage of,” Hollis said. “When there’s basically huge excess profits that are being captured by companies, and they say, ‘Oh, we need it because of the small patient population.’ And then it turns out that actually they only need it in order to have huge profits for shareholders and huge payoffs to the executives.”

‘Follow the money’

Why are some countries blocking transparency?

“Follow the money,” Hollis said. “It seems that countries with a large pharmaceutical industry are the ones that are supporting non-transparency because that’s where the profits are.”

James Love, director of the advocacy group Knowledge Ecology International, waits outside a committee room as WHA delegates debate a resolution demanding greater transparency from the pharmaceutical industry.

What is Canada’s objective? At this point, it’s not clear. 

Health Canada confirmed in an email to CBC News that Canada “is participating in ongoing negotiations to achieve a productive resolution that recognizes the significance of price transparency as an important element of improving access to medicines.”

But the agency did not specify which changes it has asked for in the draft resolution and why it requested those changes.

“Our proposed changes are aimed at reflecting the varied legal and jurisdictional circumstances of Member States (including our own), and allowing the WHO to take more action on this issue,” the Health Canada spokesperson said.

Hollis said, “I find it perplexing on the part of Canada. We don’t really have a substantial pharmaceutical industry, and we pay really quite high prices it seems for the drugs that we’re getting.”

Professor Aidan Hollis, who researches the economics of pharmaceutical markets at the University of Calgary, is following the debate over the transparency resolution at the WHA in Geneva. (Provided by Aidan Hollis)

Meanwhile, back in Geneva, the final draft of the transparency resolution will be discussed before the session ends next Tuesday. If the resolution is adopted, it would reflect a new commitment by the WHO to demand greater transparency around drug prices.

“While WHA resolutions are not legally binding, they show member states’ commitment on the specific issue,” WHO spokesperson Tarik Jasarevic said in an email to CBC News.


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