Pricing and reimbursement of medicines in Canada

Generics/Research | Posted 02/09/2022 post-comment0 Post your comment

Canada is a wealthy country with gross domestic product (GDP) per capita of US$43,258 in 2020. It ranks 16th in the United Nations’ Human Development Index and is one of the most multicultural countries in the world. Canada’s population of more than 38 million includes a significant indigenous population. Its huge land mass means it is very sparsely populated outside urban areas. Authors from Canada and Brazil discuss the pharmaceutical pricing and reimbursement policies in Canada [1].

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Health system overview
Canada provides deep, essentially first-dollar universal coverage for hospital and physician services but excludes other common services such as universal prescription drug insurance. Authority for health services is constitutionally vested with its 10 provinces and three territories (‘jurisdictions’). However, the jurisdictions must comply with the five principles of the Canada Health Act in order to qualify for federal government funding. The political dynamic between the federal and provincial governments is often contentious and linked to financing adequacy and accountability for health outcomes.

Drug insurance and spending
Despite the lack of federally mandated coverage, drug insurance is available to virtually all Canadians. Public plans that cover mostly seniors and social assistance recipients contribute 45% of financing. Workplace-based private plans account for 35% of expenditures and cover more than 60% of the population. Almost one-fifth (19%) of drug spending is out-of-pocket.

Canada has very high per capita drug expenditure and is usually among the top three or four of the Organization for Economic Cooperation and Development (OECD) members. Consequently, it is the 10th largest pharmaceutical market in the world, following Brazil.

Canada is wrestling with inequitable coverage, affordability and sustainability issues driven in large part by high use of specialty drugs and rapid increases in rare disease drug spending. In 2020, 2.7% of Canadians had drug costs exceeding CA$10,000; this small group accounted for 42% of all public drug spending.

Prices for generics were very high relative to international peers; but have steadily and significantly decreased in the last decade. Generics accounted for 73% of retail prescription volume in 2020, and about 20% of total drug spending. Use of biosimilars is relatively low, although five provinces now mandate biosimilars for both new prescriptions and existing patients (switching) [2]. Private insurers are following that lead.

Drug price and cost control
Both federal and jurisdictional governments and their agencies have roles in setting policy and regulating drug prices and costs.
i. The federal government regulates the sale of drugs and medical devices. Its Patented Medicine Prices Review Board ensures prices of new patented drugs are ‘not excessive’ [3]. A basket of 11 comparator countries is now used.
ii. The provincially led pan-Canadian Pharmaceutical Alliance (pCPA) negotiates lower prices for patented, generic and biosimilar drugs for its member jurisdictions [4]. The pCPA mandates a transparent price for biosimilars, typically with a discount of 25%–50%.
iii. The Canadian Agency for Drugs and Technologies in Health provides most public drug plans with health technology assessment (HTA), including clinical, economic and budget impact analyses of new drugs [4]. Quebec has its own HTA agency.

Private drug insurers tend to follow government initiatives, including the use of HTA and confidential Product Listing Agreements.

Drug insurance is virtually universal through a ‘patchwork’ of more than 100 public drug plans and 100,000 private insurance plans. Overall, coverage quality is high but there are several big challenges. A decentralized health system has led to policy inertia, different drug eligibility rules and cost-sharing and formularies, which has in turn created inequities such as high out-of-pocket drug expenses for some Canadians.

Conflict of interest
The authors of the research paper [1] declared that there was no conflict of interest.

Abstracted by Chris Bonnett, PhD, H3 Consulting, Guelph, Ontario, Canada.

Editor’s Comment
Readers interested to learn more about biosimilar switching in Canada are invited to visit to view the following manuscript published in GaBI Journal:

A critical review of substitution policy for biosimilars in Canada

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1. Bonnett C, Stafinski T, Trindade E. Medicines pricing and reimbursement in Canada. Rev Bras Farm Hosp Serv Saude. 2022;13(2):0811. doi:10.30968/rbfhss.2022.132.0811
2. GaBI Online - Generics and Biosimilars Initiative. Nova Scotia, Canada implements biosimilar switching policy []. Mol, Belgium: Pro Pharma Communications International; [cited 2022 Sep 2]. Available from:
3. GaBI Online - Generics and Biosimilars Initiative. Canada amends its drug pricing regulations []. Mol, Belgium: Pro Pharma Communications International; [cited 2022 Sep 2]. Available from:
4. GaBI Online - Generics and Biosimilars Initiative. Biosimilars regulation in Canada: state of play []. Mol, Belgium: Pro Pharma Communications International; [cited 2022 Sep 2]. Available from:

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