Ontario Clarifies Out-of-Country Drug Funding Rules, Citing Potential $5.2-Billion Annual Cost

TORONTO — Ontario has amended a regulation governing public funding for out-of-country drug treatments, formalizing a policy the province says has been in place since 2011 and is necessary to protect access to medications while limiting potentially billions of dollars in additional health-care costs.

The provincial government said the amendment aligns Regulation 552 of the Health Insurance Act with its longstanding out-of-country drug funding policy. Under the approach, public funding is limited to certain treatments that would normally be funded in Ontario but are temporarily unavailable and subject to a medically unacceptable delay.

Ontario estimates that failing to clarify the policy in regulation could expose the Ontario Health Insurance Plan to as much as $5.2 billion in additional costs annually.

Ontario Says Amendment Protects Drug Funding System

The government argues the change is needed to maintain its negotiating position with pharmaceutical manufacturers and prevent companies from bypassing the province’s drug review and pricing processes by making treatments available only outside Canada.

“We’re protecting Ontario patients and taxpayers from price-gouging and protecting their access to life-saving medications that would otherwise only be available in the United States or overseas,” said Sylvia Jones, Deputy Premier and Minister of Health. “This change supports a consistent, fair and transparent approach to funding decisions, protects the integrity of Ontario’s world-class drug approval process and will help avoid up to $5.2 billion in additional costs to Ontario’s health-care system every year.”

The regulatory action comes amid a recent Ontario Divisional Court decision concerning out-of-country drug funding. The province said it is considering available options, including an appeal and/or seeking a mutually satisfactory resolution with the court applicant.

New Rules Set Conditions for Out-of-Country Coverage

Under the amended regulation, public funding for an out-of-country drug treatment would be available only when several conditions are satisfied.

The treatment must normally be performed in Ontario, and both the drug and its administration must be publicly funded in the province. Access to the drug in Ontario must also be temporarily unavailable.

In addition, the delay must create circumstances in which travelling outside Canada is necessary to avoid death or medically significant irreversible tissue damage.

Decisions about which medications receive public funding will continue through Ontario’s existing review system, which includes regulatory approval, health technology assessment, negotiations and a final funding decision.

Province Points to Pharmaceutical Pricing and Negotiating Leverage

Ontario said maintaining the restrictions is also intended to encourage pharmaceutical companies to introduce new products in the province instead of limiting their availability to markets such as the United States.

The government argues that broader out-of-country funding could leave Ontario paying U.S. prices in U.S. currency for medications that have not moved through the province’s standard pricing and funding process.

The province also cited the importance of preserving pan-Canadian pharmaceutical negotiations, through which provinces and territories jointly negotiate with manufacturers over drug access and pricing.

Ontario separately estimates that increases in requests for out-of-country treatments in recent years could generate up to $170 million in additional annual costs without the policy restrictions.

Health Canada Authorization Remains Part of Funding Framework

The government said its approach is intended to ensure drugs publicly funded and administered in Ontario have undergone the required testing and received authorization from Health Canada.

Ontario’s Out-of-Country Prior Approval Program has, since 2011, required recommendations from the Executive Officer of the Ontario Public Drug Programs when considering requests involving drug treatments outside Canada.

The province is also using its Funding Accelerated for Specific Treatments, or FAST, pilot program to encourage manufacturers to introduce new therapies in Canada. Ontario said nine cancer therapies have so far received accelerated access through the initiative.

Ontario Drug Programs Cover Millions of Residents

The Ontario Drug Benefit Program currently provides coverage for approximately 5,900 drug products and therapeutic treatments listed on its formulary, serving about nine million Ontarians in community settings.

Medications that are not included on the formulary can potentially receive coverage on a case-by-case basis through the Exceptional Access Program when specified requirements are met. That program encompasses nearly 1,500 drugs.

The province maintains that formalizing its out-of-country policy will preserve access to medically necessary treatments while ensuring pharmaceutical funding decisions continue through Ontario’s established regulatory, assessment and negotiating framework.