Are low-priced drugs becoming an endangered species?

A single phrase in a federal government report released last week made a dire prediction about the future of drug prices: “Lower-cost medicines may become the exception rather than the norm.”

That warning, in its dry bureaucratic language, was contained in a new report from Canada’s drug price monitoring agency, the Patented Medicine Prices Review Board (PMPRB). The report explores the “market entry dynamics” of new drugs approved in 2016 and 2017 in Canada, the U.S. and the European Union.

“The long-term trends are alarming,” said Douglas Clark, the PMPRB’s executive director. “This is the nature of the pharmaceutical marketplace we now find ourselves in. It’s dominated by these very high-cost drugs.”

Over a 10-year period, the price of Canada’s top-selling patented drugs has increased by 800 per cent, according to the PMPRB.

It wasn’t always this way. Between 1995 and 2003, the prices of new drugs stayed relatively low, increasing by less than one per cent on average annually.

What changed? A combination of public policy and scientific discovery ushered in the era of high-priced specialty drugs. To encourage pharmaceutical companies to develop drugs for cancer and rare diseases, governments offered tax incentives, longer patent protection and quicker approval.

“Those strategies do work,” said Steve Morgan, a health economist at the University of British Columbia. “There’s no question that advances in biotechnology have driven part of the focus on specialized medicines, but also it’s got to be recognized that policy has had an effect here.”

Almost half of the new drugs released in 2016 and 2017 were “orphan” drugs aimed at treating rare diseases, with prices per patient approaching $1 million per year.

One new drug — Mepsevii, which treats Sly syndrome, a rare genetic disorder — is listed at $944,000 per year. Another is priced at $806,300 per year: Brineura, for Batten disease, a rare nervous system disorder. And a third — Spinraza, for spinal muscular atrophy — costs $708,000 for the first year and $345,000 every year after that.

Two others cost around $630,000 per year: Emicizumab, for hemophilia A, and Eteplirsen, for Duchenne muscular dystrophy. An additional six new drugs on the list come at a cost of more than $100,000 a year.

A few years ago, a million-dollar drug would make headlines. But those prices are old news these days.

“It’s no longer something that catches people’s breath because it is happening more often now,” said Morgan.

A quarter of the new drugs were cancer therapies with an average price of almost $14,000 for a 28-day treatment.

Since 2006, there has been a 200 per cent increase in the number of new drugs in Canada with an annual average treatment cost of $10,000 or more.

Are these new drugs worth the price? In some cases, probably not, according to the report.

“Of the new medicines assessed by the PMPRB [in 2016], none offered a notable therapeutic improvement over existing therapies,” the report stated.

“Most medicines that come to market do not represent a truly substantial improvement over existing treatments,” said Morgan.

And increasingly provinces are advised not to cover the drug unless the price comes down.

The report cites decisions by the Canadian Agency for Drugs and Technologies in Health (CADTH) suggesting that “most new medicines launched in Canada are not cost-effective at their submitted prices, and the vast majority of these medicines were approved on the condition that their price be reduced” — in some cases by more than 95 per cent.