Canada has a drug price problem, and it risks getting a lot worse in the near future. Canadian prices for patented drugs are already the 4th highest amongst 31 countries in the Organization for Economic Cooperation and Development (OECD) and per capital spending, at US $990 per year, is also the 4th highest in the OECD. The latest report from Statistics Canada says that 11 per cent of men and over 15 of women experienced cost-related non-adherence to prescription drugs because they lacked insurance.
Now, changes to the guidelines of the Patented Medicine Prices Review Board (PMPRB), tariff threats from the United States, and the upcoming renegotiation of CUSMA are posing new threats to drug prices and access to prescription drugs. On top of these threats one of the main levers for mitigating the effects of higher prices—pharmacare—is coming under attack by the pharmaceutical industry, insurance companies and their ideological allies.
The situation is serious, and warrants immediate action by federal policymakers. Let’s take stock of the threats on the horizon.
Changes to the PMPRB
The PMPRB is a federal agency that was set up back in 1987 to ensure that the prices for patented drugs are not “excessive.” One of the criteria it has historically used to decide what constitutes “excessive price” was to compare the proposed Canadian price for a new drug with the median price in 11 other high-income countries. Under new guidelines set to take effect on January 1, 2026, the Canadian price can be up to the highest—rather than the median—in those 11 countries. The current median price is 15 per cent below the Canadian price. The highest international price, which will be the new standard, is 21 per cent above the Canadian price.
If the drug is not available in any of the other countries when it arrives on the Canadian market, then the company will be able to price the drug at whatever level it wants and keep that price until its annual price review. The Executive Director of the PMPRB told the Globe and Mail that this pricing freedom would incentivize drugmakers to bring their products to the Canadian market first.
What’s happening at the PMPRB should come as no surprise. From February 2023 until March 2025, the chair of the board of the PMPRB was Thomas Digby, who spent 25 years working in the pharmaceutical sector—including a stint at Novartis, a giant global company, where he specialized in enforcement of intellectual property rights for revenue generation. Taking over from Mr. Digby on an interim basis is the current vice-chair, Anie Perrault, whose recent roles before her PMPRB appointment included executive positions with adMare BioInnovations, BIOQuébec and Genome Canada.
In the past, one of the factors that the PMPRB took into account was the additional therapeutic value of a new drug compared to what was already on the market—the lower the value, the lower the price. Under the new guidelines the therapeutic value of a new drug will no longer be a factor in determining its price.
Federal, provincial and territorial health ministers, and senior officials who are authorized to represent Canadian publicly-funded drug programs, will also be able to make complaints about prices. According to the new guidelines “Other parties who have concerns about the list prices… are encouraged to raise their concerns with their relevant Minister(s) of Health or Canadian publicly-funded drug program.” This advice is cold comfort for people working minimum wage jobs who aren’t covered by provincial and territorial drug plans and won’t have any access to their Minister of Health.
Prior to in-depth price reviews—a preparatory step to determine whether there should be a formal hearing to investigate if the price is excessive—only the manufacturer will be allowed to submit information to the PMPRB staff. Clinicians who prescribe the drug, patients who take the drug, people and organizations and individuals that pay for the drug will not not have that same right.
Donald Trump and tariffs
Tariffs imposed by Trump on forestry products, aluminum, steel and automobiles are already blamed for a rise in the unemployment rate from an average of 6.45 per cent in 2024 to 6.9 per cent in October 2025. Economists estimate that 600,000 to 2.4 million jobs could be at risk. About 55 per cent of Canadians are covered by employer-sponsored drug plans, but when workers get laid off, they also lose health benefits including prescription drug insurance tied to their jobs. Unsurprisingly, 23 per cent of those without insurance spent over $500 out-of-pocket in 2022 on prescription drugs compared to only 10 per cent for those with insurance.
The lack of access to prescription drugs leads to premature deaths due to ischemic heart disease and diabetes, and avoidable deterioration in health in people aged 55 and over. When Canadians must choose between buying prescription drugs and paying for food and rent, it’s often no contest—patients skip their medications and suffer the consequences. The result is more physician visits (including to overcrowded emergency departments) and more hospital admissions.
Added to the threat of losing prescription drug coverage is the very real possibility that drug prices will increase. Nearly a third of the active pharmaceutical ingredients that go into North Americans’ medicines come from China. In the past, President Trump has threatened to slap anywhere from 100 to 200 per cent tariffs on Chinese drugs and drug ingredients.
To the extent that drugs from China pass through the U.S. on their way to Canada, the cost of both publicly- and privately- funded drug plans will increase. Those at the bottom of the income scale—who pay out-of-pocket and can least afford to pay more—will be the ones who suffer most from higher prices.
CUSMA renegotiations
It is highly likely that pharmaceutical policy issues, particularly those related to intellectual property rights (IPR), will feature prominently in the renegotiation of CUSMA due to start in 2026. One of the consequences of stronger IPR will almost inevitably be the delay in the introduction of generic drugs and thus increased overall drug spending in Canada. Generic drugs are at least 45 per cent less expensive than the equivalent brand-name drug and make up over 75 per cent of prescriptions in Canada.
Each year, the Office of the U.S. Trade Representative (USTR), an agency of the U.S. federal government responsible for developing and promoting U.S. foreign trade policies, prepares a report outlining U.S. views about the trade practices of other countries. In a submission to the USTR, the Pharmaceutical Research and Manufacturers of America (PhRMA, the U.S. lobby organization that represents the major pharmaceutical companies) made a series of complaints about “unfair and non-reciprocal [Canadian] trade practices.”
PhRMA alleged that Canadian protection for regulatory data is not comparable to that offered in the U.S., that Canadian effective patent enforcement is weak, that Canada does not provide sufficient patent term restoration to compensate companies for lengthy delays in the development and regulatory approval processes, and that the method Canada uses to ensure the price of new patented drugs is not excessive is dysfunctional. The U.S. lobby groups also alleged that the system of health technology assessment that Canada uses requires excessive discounts from manufacturers, and the time between when companies file a new drug application and when the drug is publicly funded is prolonged due to bureaucratic barriers.
The USTR report noted that “stakeholders have raised concerns on the limited duration, eligibility, and scope of [patent] protection in Canada’s system.” Subsequently, PhRMA’s submission to the USTR consultation on CUSMA demonstrated that the industry sees the review as an opportunity to strengthen IP protection and enforcement in Canada.
Attacks on pharmacare
One of the benefits of a pharmacare plan that covers the entire Canadian population is that it confers single-buyer power on government buyers, be they the federal government alone or a combination of federal/provincial/territorial governments. “Monopsony buying power,” as it is known, is one of the main reasons why Australian prices for patented medicines are only 71 per cent of Canadian prices.
However, ever since it started to be seriously proposed, pharmacare has come under attacks from the pharmaceutical industry, the insurance industry and their ideological allies like the Fraser Institute and other free market groups. Innovative Medicines Canada, the pharmaceutical industry lobby group in Canada, is pushing for a fill in the gaps model which would provide coverage for people who don’t have drug insurance but leave the system otherwise untouched.
GreenShield, a member of the Canadian Life and Health Insurance Association (CLHIA), is helping to lead the insurance industry charge against pharmacare. In July 2023 it announced a pilot program that offered up to $1,000 in drug coverage to low-income Canadians who did not have public or private prescription drug insurance.
In making the announcement, GreenShield’s chief executive Zahid Salman repeated the myth that 97 per cent of Canadians already have coverage. That’s theoretically true, but doesn’t reflect what happens in the real world. In Nova Scotia if you pay anything less than 25 per cent of your gross family income for drugs, there’s no public coverage. In Manitoba, if your gross family income is above $75,000 annually you need to pay 7.59 per cent of your income before you qualify for coverage. Earn $75,000 and pay under $5,693 and there’s no coverage. According to reporting in The Breach, Denis Ricard, chair of the CLHIA board claimed that “A fully one-payer national pharmacare is going to be a disaster for this country”.
Joining the battle against pharmacare was Brett Skinner, the CEO of the free market Canadian Health Policy Institute. Skinner’s message was that a national government-run drug insurance program was not necessary and would be bad for patients and costly for taxpayers. He argued that if Canadians were faced with high deductibles there were provincial programs to deal with them.
The federal government’s recent policy changes have helped these attacks on pharmacare. At present only three provinces (British Columbia, Manitoba and Prince Edward Island) and the Yukon have signed deals with the federal government for a very truncated form of pharmacare that covers only contraceptives and diabetes products. While Prime Minister Carney himself has equivocated about whether there are plans to include other provinces and territories, Minister of Health, Marjorie Michel, has been more blunt and said that there are no new deals in the works. A report by an expert committee, commissioned by the Liberal government under Justin Trudeau, called for federal funding for a package of essential medicines that would cover all Canadian residents, Michel dismissed the report saying that it wasn’t binding on the government.
Moving forward
Canada is facing a multiprong threat to its ability to ensure that prescription drugs are available to the population at affordable prices. Those threats are both internal and external—and, if policymakers do not counter them, will mean that many more people will be forced to choose between keeping themselves healthy and being able to pay for food and housing.
The rightward shift of the federal government has created new obstacles to opposing the threats. However, there is resistance. The Canadian Health Coalition will be lobbying for pharmacare and drug prices on Parliament Hill in February 2026. Individuals and groups should mount a strong push to make drug prices and pharmacare a major issue in the NDP leadership race.
As Tommy Douglas once said, “Courage, my friends; ’tis not too late to build a better world.”
Parts of this article have previously been published by the Canadian Centre for Policy Alternatives and The Conversation. Deborah Gleeson, Brigitte Tenni and Ron Labonté all contributed to the section on CUSMA renegotiations.
