Price-control measures such as the Most-Favored-Nation Drug Pricing policy can reduce access to new medicines, warns Canadian think tank 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, Ontario, Jan. 29, 2026 (GLOBE NEWSWIRE) -- Price control measures such as the Most-Favored-Nation pricing policy for prescription medication risks reducing American patients’ access to new medicines, warns Canadian think tank MEI in an Economic Note released this morning.
“What’s worse than expensive medication is no medication at all,” explains Emmanuelle B. Faubert, economist at the MEI. “Price control measures have harmed Canadian patients by reducing their access to new and innovative treatments, and such measures will lead American patients to suffer the same fate.”
The economist points to the Delivering Most-Favored-Nation Prescription Drug Pricing to American Patients executive order that was issued last May. This executive order aims to reduce the price of prescription medication for American patients by bringing prices in line with those in other developed nations.
A similar mechanism, managed by a government body called the Patented Medicine Prices Review Board (PMPRB), has been in place in Canada since 1987. It is charged with analyzing the price of new medication using a panel of comparable countries and, based on this, establishing a price ceiling for every new medication.
The researcher notes that the PMPRB dropped Switzerland and the United States from the list of comparable countries. These changes were announced in 2017 but became effective in 2022. This applied downward pressure on the price of new medicines, which in turn reduced the attractiveness of the Canadian market for the launch of new pharmaceutical innovations.
Between 2018 and 2021, the proportion of drugs presenting major therapeutical benefits marketed in Canada within two years of their global launch dropped from 46 per cent to 31 per cent.
“Pharmaceutical research is not cheap, and neither are the efforts to ramp up production of new products,” adds Mrs. Faubert. “The lower the regulated launch price is, the further down the line a market is pushed when it comes to accessing new medication.”
Between 2000 and 2018, the estimated direct average cost of developing a new medication was $172.7 million. When accounting for the cost of capital and development failures, that average cost rises to $879.3 million. This doesn’t include costs associated with regulatory compliance and other steps needed to bring a new product to market.
Canadian researchers have linked access to drugs with overall savings in health care, estimating that every dollar spent on new and generic medication could help save between $1.05 and $1.50 in hospital and other health costs.
“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 how they can help avoid more invasive and expensive treatments, they’re not simply treating something that couldn’t be treated before, and the benefits of accessing new medications far outweigh the costs.”
You can read the Economic Note here: https://www.iedm.org/wp-content/uploads/2026/01/economic-note-042026.pdf.
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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