In one of the songs in the musical Cabaret, there’s a refrain that goes “Money makes the world go round”. That’s true in most areas, including the regulation of prescription drugs by Health Canada. The question is, whose money and which way is drug regulation spinning?
Up until 1994, it was taxpayers’ dollars that paid for the activities of Health Canada. But at that time, the Liberal government was running large deficits, and the government instituted a system of “cost recovery”.
Cost recovery is the idea that people or companies that use a service should pay at least part of the cost of providing the service. So, if you want to avoid traffic on the 401 highway in Toronto, you should pay a toll to use the 407 highway.
In principle, cost recovery sounds like a good idea—“the user pays”. But what cost recovery ignores when it comes to drug regulation is that companies and the public don’t always have the same goals when it comes to drug regulation.
Companies want to get drugs on the market as quickly as possible to start recovering the money that they’ve put into the research and development.
The public wants drugs to be safe and effective.
Sometimes the goals overlap, but often not. Witness past drug disasters, such as the one with Vioxx that, during its five years on the market, caused an estimated excess of 88,000 to 140,000 cases of serious heart disease in the United States (U.S.).
Cost recovery means that in 2022-23 over 56 per cent (or $176 million) of the cost of regulating drugs in Canada came from the coffers of the drug companies.
There are two directorates in Health Canada whose primary purpose is to look at the evidence and decide if a new drug should be allowed to be sold: the Pharmaceutical Drugs Directorate (PDD), which looks after traditional medicines like pills, tablets, creams and sprays, and the Biologic and Radiopharmaceutical Drugs Directorate (BRDD), which is in charge of biologics, drugs that need to be given intravenously. A third division is the Marketed Health Products Directorate (MHPD), which monitors the safety of drugs already on the market.
Over the decade from 2010 to 2020, the first two directorates combined, i.e., the ones that make a decision about whether to approve a new drug, received three times the amount of money and employed three times the number of people compared to the third directorate, the one in charge of safety.
The overall level of resources is not evenly spread out between the three directorates—and neither is the money that Health Canada gets from the companies. Well over 50 per cent of the PDD budget comes from cost recovery, as does 37 per cent of the BRDD’s budget. Less than 20 per cent of the MHPD’s budget comes from that source.
Does the source of the money make a difference? Here is quote from a 1998 Health Canada document about user fees: “It was agreed that the fee regulations would be amended to make this link [i.e., the link between cost recovery and performance standards] as soon as possible after the government determines the best way to proceed.”
Translated, what this quote means is that the money that industry pays is conditional on how well Health Canada performs. If Health Canada doesn’t meet timelines about whether to approve a new drug, then fees go down.
User fees are also tied to performance standards for the U.S. Food and Drug Administration (FDA). Evidence there shows that drugs approved within 60 days of the deadline are five times more likely to be withdrawn for safety reasons compared with drugs not approved that close to the deadline. One possible explanation for this finding is that FDA officials worried about lower fees if they overshoot the deadline rush decisions and make mistakes.
Here in Canada, 34 per cent of drugs that are reviewed in a maximum of 180 days (a priority review) have serious safety problems after they are marketed compared to less than 20 per cent of drugs with a standard 300 day review. The equation seems to be cost recovery = faster drug approvals = more safety problems.
In addition, while Health Canada has performance standards for how quickly new drugs get approved, it does not seem to have similar standards for how long it can take between when it receives a report about a safety issue and when it issues a warning about that problem.
Why does Health Canada prioritize getting drugs onto the market over making sure that drugs are already being sold are safe?
Quickly getting drugs on the market matters when those drugs are a major therapeutic advance, but even for cancer drugs, that occurs less than one time in 10. Otherwise, the main beneficiaries of faster drug approvals are the companies making the drugs.
The money-making drug regulation merry go round comes from the drug companies—and the spin is in favour of the companies. It’s time that the Canadian government fully funds drug regulation from public dollars so that the spin is in the public interest.
