Prescription Drug Prices:

Analysis of Canada's Patented Medicine Prices Review Board

HRD-93-51: Published: Feb 17, 1993. Publicly Released: Feb 22, 1993.

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Pursuant to a congressional request, GAO: (1) described the purpose and structure of Canada's Patented Medicine Prices Review Board as well as its guidelines and procedures, especially those used to determine if a drug price is excessive; and (2) summarized the evidence about the effects of the Board's actions on the prices of new drugs, on price increases for existing drugs, and on pharmaceutical research and development.

GAO found that: (1) the Board is the federal body responsible for restraining prescription drug prices in Canada; (2) the Board periodically publishes guidelines that it uses to determine whether a manufacturer's introductory price on a new drug or price increase on an older patented drug is excessive; (3) the Board has the power to order the removal of market exclusivity or a price reduction if it finds a price to be excessive; (4) Canadian experience shows that a drug price review board can restrain prescription drug prices; (5) statistical analyses suggest that Canadian prices of new patented drugs subject to Board review were, on average, one-third lower than had there been no Board; and (6) restraint of drug prices reduces the incentive for manufacturers to undertake innovative pharmaceutical research and development.

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