For a drug to be made available in Canada, it must first be reviewed by Health Canada to ensure it meets the requirements and regulations of the Food and Drugs Act. Once it receives regulatory approval, people in Canada can access it, but there are still a few steps before the cost of the drug may be covered by public drug plans.
From regulatory approval to public coverage
Establishing public coverage follows 4 major steps.
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Regulatory review
Responsible: Health Canada
Purpose: Assess safety, efficacy, and quality
Outcome: Drug is approved to be sold in Canada
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Health technology assessment
Responsible: Canada’s Drug Agency (CDA-AMC) and Institut national d’excellence en santé et en services sociaux (INESSS) in Québec
Purpose: Evaluate clinical benefits, cost-effectiveness and system impact
Outcome: Recommendation supporting public funding and outlining conditions
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Price negotiation
Responsible: pCPA
Purpose: Lead and support negotiation with manufacturers for the best price
Outcome: Agreement outlining negotiated price and other terms
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Listing agreements
Responsible: Public drug plans
Purpose: Make listing decisions and finalize agreements with manufacturers
Outcome: Drug is listed, establishing public coverage
More details about the reimbursement process
Step 1: Regulatory review
After a drug manufacturer (also called a sponsor) has researched and tested a new drug, they submit it to Health Canada for regulatory review. Health Canada’s role in this process is to protect the health and safety of people in Canada.
When it comes to drugs, a “regulatory review” means a rigorous, science-based evaluation to assess the safety, efficacy, and quality of a new drug before it’s authorized to be sold on the market. It involves evaluating clinical trial data, manufacturing processes, and labelling to ensure risks are identified and minimized.
If a drug meets the requirements of the Food and Drugs Act and its regulations, the drug is permitted to be sold in Canada.
Step 2: Health technology assessments
The drug manufacturer then submits the drug for a health technology assessment (HTA). There are 2 bodies in Canada that conduct HTAs:
- Canada’s Drug Agency (CDA-AMC)
- Institut national d’excellence en santé et en services sociaux (INESSS) in Québec
The role of these organizations is to help public drug plans make decisions on whether to fund the drug for public coverage. HTAs ensure that funding decisions are rooted in evidence and informed by input from patients, caregivers, and clinicians. HTAs consider the drug’s clinical benefits, patient outcomes, cost-effectiveness, and broader system impact.
Based on their evaluation, the CDA-AMC will issue a recommendation on whether a drug should be publicly reimbursed: either positive (yes) or negative (no). Similarly, INESSS makes “list” or “do not list” recommendations. All recommendations, shared in a report, include conditions such as patient eligibility criteria or a reduction of the drug’s price.
This step may occur concurrently with Health Canada’s regulatory review.
Step 3: Price negotiation
Once a drug receives a positive HTA recommendation, public drug plans may enter a joint price negotiation process with drug manufacturers via the pCPA. The pCPA’s role is to lead negotiations with manufacturers on behalf of public drug plans representing all provinces, territories, and federal governments.
In some cases this step can begin earlier, as in the case of drugs eligible for the pCPA’s early negotiation process.
Our role is to leverage the collective negotiating power of Canada’s public drug plans to secure the best possible prices on drugs. This helps public drug plans to remain sustainable while supporting more people. Successful negotiations conclude with an agreement — a letter of intent, or LOI — outlining the negotiated price and other terms, such as what makes a patient eligible for public coverage of the drug.
Step 4: Listing agreements
In Canada, all provinces, territories, and the federal government manage their own public drug plans and formularies (the lists of prescription drugs they cover). In addition to being involved in pCPA price negotiations, public drug plans are responsible for making the final decisions for public coverage, based on their local priorities and budgets.
Once there’s an LOI outlining the negotiated terms, each participating public drug plan works with the manufacturer to create a product listing agreement (PLA) for the drug. With a PLA in place, the drug may be listed on the drug plan’s public formulary, providing coverage for eligible people enrolled in that plan.