By Allison Martell and Allison Lampert

TORONTO/MONTREAL (Reuters) – Canada’s two most populous provinces, Ontario and Quebec, have privately expressed concerns with a federal government plan to slash the price of patented drugs, arguing that such regulatory changes could hurt investment in life sciences.

The Canadian government has said it plans to soon publish a final version of new regulations aimed at cutting patented drug prices that are among the highest in the world. Announced in 2017, the changes were expected to take effect in January, but the government delayed them to review feedback.

With an election set for October, time is running out.

The previously unreported opposition from two provinces that are home to more than 60% of Canada’s population, seen in letters obtained by Reuters, shows the political risk of taking on the pharmaceutical industry and overhauling the nation’s drug-pricing system, a complex process that involves many governments and organizations.

Other provinces, including British Columbia, support the plan, and the federal government said it “remains committed to improving the access and affordability of prescription drugs”.

Quebec, in its April letter, said it favored negotiating lower drug prices but feared the plan to require drug companies to disclose discounts could make that more difficult.

“There is a fear that drugmakers would be more reluctant to offer discounts to the provincial and territorial governments in the event where they would need to share this information,” it wrote.

The federal regulations would give new powers to the Patented Medicine Prices Review Board, a national agency that sets maximum prices. Draft rules would change the countries it compares Canadian prices to, dropping the United States where they are highest, and would let the agency consider the cost-effectiveness of new medicines.

The draft drew criticism from global drugmakers, including Johnson & Johnson <JNJ.N>, Merck & Co <MRK.N> and Amgen Inc <AMGN.O>, and intense lobbying from industry and patient groups which fear the changes could delay drug development.

The letter from Ontario’s Conservative government, led by right-wing populist Doug Ford, echoed a key industry talking point on the proposal.

“While we share the federal government’s objective to provide Canadians with affordable medicines, we are concerned that the regulations, as proposed, could result in delayed access to innovative medicine and longer wait times for patients,” reads the letter, sent in February.


An Ernst & Young study commissioned by pharmaceutical lobby group Innovative Medicines Canada argued that new drugs tend to be launched later in some countries with strict price controls than in the United States or Canada.

“Lobbying played no role in the government’s decision to send this letter, which was intended to encourage the federal government to continue consultations,” said Ontario’s health ministry in an emailed statement.

Many countries with lower prices have more pharmaceutical industry investment, and access to drugs that is as good or better than Canada, the federal government said in its statement.

“There is no direct relationship between high drug prices, access to medicines, and investment in pharmaceutical research and development,” it said.

Asked about the letter, Alexandre Lahaie, press aide for Quebec Health Minister Danielle McCann, said the government’s priority was getting Quebecers access to the best medications and therapies.

Quebec elected the center-right Coalition Avenir Quebec last October.

Both provinces will be crucial to Liberal Prime Minister Justin Trudeau’s re-election campaign; the rival Conservative Party of Canada tends to be strongest in western Canada.

Ontario’s letter said the life sciences employ about 83,000 people and contribute C$38.5 billion ($29.2 billion) to the province’s gross domestic product. Quebec noted it was aiming to lure C$4 billion in private life sciences investment by 2022.

Other provinces were more positive. Manitoba said it was “supportive” of the PMPRB’s work, and Saskatchewan said it “generally supports the changes.”

Alberta said in a statement it “supports the goal of reducing drug costs so that savings can be reinvested in frontline services and patient care.”

“These reforms are foundational to increasing patient access and we strongly encourage the Federal Government to implement them in the best interest of all Canadians,” British Columbia’s Ministry of Health said in a statement.

BC’s health minister said the ministry had written to the federal government in February to say it “strongly supports the modernization of the PMPRB.”

(Editing by Bernadette Baum)