Canadians wait too long for access to innovative drugs, cautions the MEI
- Pharmaceutical innovation is responsible for up to 66% of the increase in the age of death in the United States, and 73% in 26 high-income countries.
Ottawa, January 29, 2026 – Long approval delays and price control policies for new drugs harm Canadians with health problems, says an MEI researcher in an Economic Note released this morning.
“Innovative drugs can change patients’ lives, but Canada continues to lag significantly behind in terms of access to these drugs,” explains Emmanuelle B. Faubert, economist at the MEI. “One reason for this is Canadian regulatory bodies’ excessive control of prices, which relegates us far down the priority list for the launch of new drugs.”
In 2022, Canada revised the list of comparable countries used by the Patented Medicine Prices Review Board to set maximum prices for the sale of innovative drugs. In this revision, Switzerland and the United States were removed from the list of comparable countries, and six countries where patented drugs are sold at lower prices were added to it.
The economist explains that by reducing price ceilings for the marketing of patented drugs, this decision made the Canadian market less attractive, which could relegate it to a lower position in the launch sequence for innovative drugs.
“Launching a drug is a long and costly process, in terms of research, evaluation by the relevant authorities, and production ramp-up,” says Ms. Faubert. “The lower the price ceiling, the further down the list we will find ourselves when it comes time to launch a new product, as companies prefer selling their limited stock in the most profitable markets.”
She adds that such a pricing policy could further undermine our trade relationship with the United States, citing an Executive Order adopted last May opening the door to tariffs to offset the effects of an overly aggressive national drug pricing policy on the financing of pharmaceutical innovation.
It is estimated that developing a new drug costs on average US$172.7 million. This cost climbs to $879.3 million if research failures and the cost of capital are factored in. These amounts, as enormous as they are, do not include costs associated with the evaluation process and marketing.
Canada also imposes one of the longest administrative processes among OECD countries. The average delay between approval by Health Canada and coverage by insurance plans is almost 30 months, thereby delaying Canadians’ access to innovative drugs.
Indeed, Canada is 19th out of 20 OECD countries in terms of administrative delays for the approval of new drugs. The economist explains that access to innovative drugs plays a major role in improving the health of the population.
Two-thirds (66 per cent) of the increase in life expectancy in industrialized countries was found to be directly attributable to pharmaceutical innovation, according to recent studies. For cancer patients more specifically, it was 96 per cent of the increase in life expectancy, according to a Spanish study.
In addition to the benefits for population health, these drugs also help reduce costs elsewhere in the healthcare system.
One Canadian study covering the period from 1980 to 2002 estimated that each dollar invested in pharmaceuticals had entailed a reduction of between $1.05 and $1.50, notably thanks to reductions in hospitalizations, in extended stays, and in often costly surgeries. This represents several billions of dollars of potential savings.
“To focus solely on the price of a new drug without considering its benefits is to miss the forest for the trees,” points out Ms. Faubert. “Given the nearly $260 billion spent on health care by Canadian governments last year, the savings that could be had from better access to drugs are significant.”
You can read the Economic Note here.
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The MEI is an independent public policy think tank with offices in Montreal, Ottawa, and Calgary. Through its publications, media appearances, and advisory services to policymakers, the MEI stimulates public policy debate and reforms based on sound economics and entrepreneurship.
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