Report cites 'multi-pronged threat' of regulatory changes, pharmacare obstacles, international trade
Here’s another thing that may cause headaches for employers and HR professionals: Canada faces a “multiprong threat” to prescription drug affordability, driven by domestic regulatory changes, international trade dynamics and political resistance to comprehensive pharmacare, according to a report.
Specifically, prescription drug prices in Canada are likely to rise in the coming years due to regulatory changes, trade pressures and stalled pharmacare reforms, noted the Canadian Centre for Policy Alternatives (CCPA).
Canada already faces among the highest patented drug prices in the industrialised world, and recent policy shifts could further erode affordability for patients, employers and public drug plans, noted physician and health policy researcher Joel Lexchin in the report published by the CCPA.
“Canada has a drug price problem, and it risks getting a lot worse in the near future,” Lexchin writes in the CCPA analysis, noting that Canadian prices for patented medicines are the fourth highest among 31 Organisation for Economic Co-operation and Development (OECD) countries and that per capita drug spending is also fourth highest.
New guidelines for patented drugs
About to make things worse are new guidelines at the Patented Medicine Prices Review Board (PMPRB), said Lexchin.
With the new guidelines, the federal agency is looking to ensure that prices for patented drugs are not “excessive.” As of 1 Jan. 2026, the PMPRB will allow launch prices for new patented medicines in Canada to go up to the highest price charged in a basket of 11 peer countries, instead of being capped at the median price in those countries, according to the report.
About 55 per cent of Canadians are covered by employer-based drug plans. The report cites data showing that 23 per cent of people without insurance spent more than $500 out of pocket on prescription drugs in 2022, compared with 10 per cent of those with coverage.
Lexchin warns that when people lose coverage or face high out-of-pocket costs, they are more likely to skip medications, leading to avoidable complications, additional physician visits and increased hospital admissions.
Just over half of Canadian employers feel successful in containing healthcare costs, according to a previous report.
Trade development, pharmacare program
The CCPA analysis also warns that future tariffs on pharmaceutical products or active ingredients could push costs even higher. Nearly one-third of active pharmaceutical ingredients used in North American medicines come from China, and Trump has previously threatened to impose tariffs of 100 to 200 per cent on Chinese drugs and drug ingredients. If such tariffs are applied and products transit through the United States on their way to Canada, both public and private drug plans could face higher costs, with low-income patients hardest hit.
The report further flags the upcoming renegotiation of the Canada–United States–Mexico Agreement (CUSMA) in 2026 as a potential inflection point. It says pharmaceutical policy, particularly intellectual property rules, is likely to be a key area of U.S. pressure. Stronger patent and data protection, the CCPA warns, would likely delay the entry of lower-cost generic medicines and increase overall drug spending.
Generic drugs are at least 45 per cent cheaper than brand-name equivalents and account for more than 75 per cent of prescriptions in Canada, according to the report. Lexchin notes that major U.S. pharmaceutical lobby group PhRMA has repeatedly criticised Canadian intellectual property and pricing policies in submissions to the Office of the U.S. Trade Representative and is expected to push for tighter protections during CUSMA talks.
Already, business closure is becoming a possibility for some Canadian employers amid the tariffs issue, according to a previous report from the Canadian Federation of Independent Business (CFIB).
Universal pharmacare challenges
At the same time, the CCPA says one of the most powerful potential tools for controlling costs — universal pharmacare — is being weakened. A national pharmacare plan, Lexchin writes, would give governments “monopsony buying power” as a single large purchaser, similar to arrangements in Australia, where patented medicine prices are about 71 per cent of Canadian levels.
Instead, the report describes mounting opposition from pharmaceutical manufacturers, private insurers and market-oriented think tanks to a universal, single-payer pharmacare model. Industry groups have advocated for a “fill in the gaps” approach that would extend coverage only to those currently uninsured, leaving the existing patchwork of public and private plans largely unchanged.
“The rightward shift of the federal government has created new obstacles to opposing the threats. However, there is resistance. The Canadian Health Coalition will be lobbying for pharmacare and drug prices on Parliament Hill in February 2026,” said Lexchin.
“Individuals and groups should mount a strong push to make drug prices and pharmacare a major issue in the NDP leadership race.”
Earlier this year, the Canadian Labour Congress (CLC) called on the federal government to expand the universal pharmacare program amid the trade war with the United States.
“The fallout from these tariffs will be devastating; thousands of workers will lose their jobs and, with that, their workplace health benefits. Now is the time for leadership, not political cowardice. Canada’s unions have advocated for universal public pharmacare for decades, and in this moment of crisis, we demand urgent action.
“We are calling for the expansion of universal, single-payer public pharmacare to immediately cover 50% of the most prescribed drugs with full implementation by 2027.”
The national pharmacare plan could cause issues for both employers and insurance companies providing coverage, in part because of the need to integrate these plans, John Calvert, former adjunct professor of health sciences at Simon Fraser University, previously told Canadian HR Reporter.
