Canada's federal and provincial governments are now taking more than two and a half years, on average, to approve new prescription medicines, according to a new study from free-market think tank The Fraser Institute and reported by PharmaTimes.

Federal regulator Health Canada takes an average of nearly 16 months to approve new drugs as safe and effective, after which the provincial governments typically spend another 15 months or more to decide whether new drugs will be eligible for public reimbursement under their drug plans, the study said.

This combination of federal and provincial decision-making creates delays or, more often, deprives patients of access to new medicines, it said.

The Institute's research found only 23% of new drugs approved as safe and effective by Health Canada in 2004 had been approved for either full or partial reimbursement under provincial drug plans as of June 9, 2011, compared to 98% that had been covered by at least one private insurer.

Moreover, Health Canada took longer to certify new drugs between 2006 and 2009 than the European Medicines Agency (EMA) and, during five of the last six years studied (2004-2009), its performance was worse than that of the FDA.

The report's authors suggest two specific policy changes to make new medicines available more quickly to Canadians. First, Canada could speed up its regulatory processes by taking advantage of the knowledge and capacity of other jurisdictions rather than attempting to duplicate the processes of the FDA. If Canada entered into agreements of "mutual recognition" with other countries, new medications already approved in those jurisdictions could be introduced into the Canadian market far more rapidly, and vice versa, they added.

Second, government drug programs could be replaced with means-tested subsidized access to private insurance, they suggested. A properly-regulated and competitive private-sector insurance market, in which universal access to catastrophic drug insurance would be facilitated through means-tested subsidies for those on low incomes, could make new medicines more readily available without increasing the burden on taxpayers.

In fact, only a very small percentage of Canadians actually face exorbitant drug costs, said the Institute; from 1997 to 2002, only 3% of Canadian households spent more than 5% of their annual income on prescription drugs.

“Means-tested subsidies provided to those with low incomes, regardless of age, to purchase catastrophic drug insurance in a private, competitive insurance market benefits recipients by giving them the choice of selecting the drug plan that meets their individual medical needs and financial abilities," said Mark Rovere, study co-author and associate director of health policy studies at the Institute.

Unlike the majority of public drug plans that have small, flat co-payments, most private drug insurance plans include co-payments linked to the full cost of the prescription, and these encourage patients to make cost-efficient choices between alternative treatments, the report said. Consumer sensitivity to prices in turn creates incentives for physicians to prescribe treatment more efficiently and for drug manufacturers to invest efficiently in the development of new drugs, it added.

"Allowing the private insurance market to compete through prices and service, thus eliminating government monopolies on drug prices and coverage, is the best policy choice for improving access to the newest prescription drugs," said Rovere.