Canada’s patchwork of ‘orphan’ drug policies

Ravi Singh

Simon-Kucher &amp, Partners

Manufacturers of drugs that treat orphan diseases face unique challenges in Canada. Unlike other countries with orphan drug policies that typically provide the opportunity to obtain more rapid regulatory approval and / or financial R&amp,D incentives, formal orphan drug policies do not exist in Canada. Through these policies, governments state what qualifies as a rare disease within a given population, payers develop an approach to evaluating and funding therapies that treat them (i.e., orphan drugs, or ODs), and regulators may provide special approval standards based on the inclusion criteria under such a policy.

Consequently, no standard definition exists across Canada for what qualifies as a rare disease, in contrast to the FDA (fewer than 200,000 people in the U.S.), for example. Alberta Health and Wellness uses a definition of less than 1 in 50,000 and the Ontario Ministry of Health and Long-Term Care (MOHTC) uses 1 per 100,000 – 150,000. The absence of a universal definition of what qualifies as a rare disease makes it difficult to have a consistent and comprehensive approach to evaluating and funding ODs by provinces and territories (provinces, hereafter). Budget impact (i.e., drug price and disease prevalence) is a key determinant of coverage by provincial public drug plans. Therefore, the usually high price tag of ODs relative to drugs that treat a wider population, often leads to difficulties in obtaining public funding via conventional drug evaluation methods.

Seeking a high price but facing an uncertain evaluation and funding situation, manufacturers often launch ODs only in other developed markets (e.g., US, EU countries) and do not seek regulatory approval in Canada. This may be attributed to an environment that is perceived as hostile for OD pricing and presents poor prospects for coverage by provinces. This article outlines the nuances associated with the evaluation and funding of ODs by provincial public drug plans across Canada, and provide insights into understanding the complexities and challenges associated with these varying frameworks.


“…no standard definition exists across Canada for what qualifies as a rare disease, in contrast to the FDA…”


Challenges on a national level

Part of the challenge for manufacturers is that Canada is a pharmaceutical market where health technology assessments (HTAs) strongly influence public payers’ coverage decisions. The Canadian Agency for Drugs and Technologies in Health (CADTH) performs HTAs at the national level and issues non-binding recommendations, which serve as an input for provincial drug evaluations (L’Institut national d’excellence en santé et en services sociaux (INESSS) in Quebec conducts its own HTA). Therefore, ODs funded by provincial drug plans may be expected to meet the same cost-effectiveness criteria, e.g., cost / QALY measures, as other drugs (though no official Cost/QALY thresholds exist above which drugs are not recommended, informal conventions are used across evaluations to provide some consistency). Given their high price tag (relative to drugs that treat a wider patient population), most ODs would typically exceed conventional, informal cost-effectiveness thresholds.

For example, as part of the Common Drug Review (CDR), the Canadian Expert Drug Advisory Committee (CEDAC) issued a “do not list” recommendation for Soliris (paroxysmal nocturnal hemoglobinuria). As Soliris costs over C$500,000 (public price) annually per patient, CEDAC referred to Soliris’ C$2.4 million incremental cost / QALY (plus supportive care) compared to supportive care alone as not cost-effective.

Current provincial frameworks

Provinces are ultimately responsible for the majority of public drug funding. However, cost-effectiveness is not the only deciding factor for public reimbursement. Among other considerations, provincial drug plans also take into account a drug’s budget impact when deciding on formulary inclusion. Even though ODs treat such a small population (thus mitigating their budget impact), examples exist of ODs not receiving full coverage in some provinces. As such, successfully navigating the web of varying frameworks (whether OD-specific or not) is necessary to achieving successful market access in Canada.

Alberta was the first province to develop a separate framework for funding ODs. On April 1, 2009, Alberta Health and Wellness introduced its Rare Diseases Drug Program, which provides coverage for Albertans. However currently, the program only covers drugs for five rare diseases. Alberta has been praised for being the first province to develop a separate OD funding program, yet it remains to be seen if other rare diseases will be covered in the future and if further details on the evaluation process used for funding decisions will be disclosed.


“…successfully navigating the web of varying frameworks (whether OD-specific or not) is necessary to achieving successful market access in Canada.”


Ontario’s MOHLTC formed an OD working group in 2008 with the goal of creating a separate evaluation framework and helping to resolve access and funding concerns for ODs. Additionally, in January 2010, the Ontario Citizens’ Council discussed, during its first meeting, the need for a full-fledged evaluation and funding framework for ODs in Ontario. In response to Ontario’s OD working group efforts and calls from the public, the Ministry created an expert review process to help align potential patients with available OD therapies. The process also considers coverage of therapies that were studied under alternatives to rigorous, statistically significant trials (e.g., individual observational reports and unpublished data). This new framework has been used to assess funding requests for several drugs. However, the Ministry has faced criticism for not clearly stating official evaluation criteria and for not using this new framework for all new ODs, including Soliris.

Many provinces also have alternative funding mechanisms in place to fund specific ODs when they don’t meet the conventional cost-effectiveness requirements for drugs funded via standard routes. Although the exact route for this type of funding varies, ODs are primarily funded through drug-specific agreements between the province and the manufacturer. For example, Quebec has alternative funding in place to cover certain ODs that are not on the provincial formulary, such as Orfadin (Hereditary Tyrosinemia Type 1) 1 . Depending on the province, these agreements may or may not be confidential.

Special access

In 1996, Health Canada released a document detailing why no formal orphan drug policy had been adopted in Canada. The report2 concluded that Canadian citizens have adequate access to essential ODs through existing mechanisms. Health Canada’s Special Access Program (SAP) is one of the mechanisms cited. SAP provides access on a case-by-case basis to drugs that are otherwise unavailable for sale in Canada, or drugs that do not have regulatory approval by Health Canada. Though not explicitly directed at ODs, the program provides access to drugs for serious or life-threatening conditions when conventional therapies have been considered and ruled out, have failed, are unsuitable, or are unavailable 3. Several ODs fall under SAP. Manufacturers are permitted – but not required – to charge a price under SAP, however, the responsible payer entity (e.g., drug plan, hospital, patient, etc.) is responsible for making the payment. Therefore, funding is not guaranteed, and provincial formulary access is ultimately at each province’s discretion.


“SAP may thus provide an alternative route to market access, and potentially reimbursement, when other routes are closed.”


The advantage of SAP for manufacturers is that these drugs often do not have to go through the rigorous scrutiny of a formalized cost-effectiveness assessment within the standard evaluation and funding framework for typical new drug submissions. SAP may thus provide an alternative route to market access, and potentially reimbursement, when other routes are closed. However, ODs could be subject to budget impact assessments by the paying body and adequate funding routes (alternative agreements, hospital budget, etc.) have to be available to guarantee reimbursement.

The way forward

Although the Canadian market presents many challenges when it comes to public funding and access for ODs, provinces are still working toward developing solutions, either via the creation of separate regulations or by relaxing conventional evaluation criteria used for drugs that treat a wider patient population. Unlike other developed markets, manufacturers also have the option to not seek regulatory approval and potentially obtain reimbursement via SAP. It takes a joint effort of all stakeholders, including patient groups, to ensure that predictable funding routes are created. In the meantime, unless adequate funding routes exist, seeking reimbursement via SAP may be a promising route for OD manufacturers.


1. Mariève Simoncelli, University of Montreal, “Évaluation des coûts de traitement de la tyrosinémie de type I,” September 2010.

2. Health Canada, “Orphan Drug Policy”, 1996.

3. Health Canada, “Guidance Document for Industry and Practitioners, Special Accesss Programme for Drugs”, January 2008. It is important to note that Health Canada explicitly states that SAP is not a formal early access program.


About the author:

Ravi Singh is a Consultant in the Life Sciences Division of Simon-Kucher &amp, Partners. He focuses on assisting clients with the strategic development and commercialization of pharmaceuticals and biologics. He has supported clients in pricing and market access strategy development, clinical trial design, engagement strategy and value story development. Ravi graduated from Columbia University with a BA in Economics and Hispanic Studies.

For further information you can contactRavi Singh at

Simon-Kucher &amp, Partners is a global consulting firm with 585 professionals in 23 offices worldwide focusing on Smart Profit GrowthSM. Founded in 1985, the company has over 25 years of experience providing strategy and marketing consulting, and is regarded as the world’s leading pricing advisor.

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