By John Adams and Nigel Rawson, July 2, 2026
Donald Trump’s latest bid to slash prescription drug prices in the United States may have an unintended consequence: exposing just how poorly Canada decides which new medicines deserve public coverage.
While Canadians often assume our system puts patients first, the process used by Ottawa and the federal and provincial governments to assess the value of new drugs routinely overlooks the benefits, trade-offs, and costs that matter most to the people who actually need them.
If Canada’s drug plans are going to make life-changing decisions about access to new treatments, they need a better way of measuring value.
Everyone wants to receive value for their hard-earned incomes. Canadian patients and their families want good value for the money they pay for medicines. But they are not getting it.
The best comparisons are with similar countries with universal public health insurance. This important criterion excludes the United States. Canada’s overall expenditure on healthcare per capita is among the highest of our peers with universal insurance, including countries like Switzerland, Norway, Germany and Ireland. Yet, despite spending plenty of money Canada ranks poorly on measures of healthcare resources, outcomes and quality.
Let’s look at health resources. About six million Canadians have no family physician, hospitals are overcrowded with patients being treated for days in hallways, and wait times to see a specialist and to receive treatment are ever increasing. Meanwhile, reports regularly appear about patients who can’t access crucial new and innovative medicines because drugs are bogged down in the layers of gatekeeping processes that manufacturers, clinicians, and patients must overcome to get medicines covered by government drug plans. Few Canadians realize that Canada has five times more layers of these drug gatekeepers than any other country.
Governments and drug developers put millions of dollars into reviews of new medicines known as health technology assessments (HTAs). This is one of those five layers. The costs of these assessments reflect increasing treatment costs as complex and expensive scientific discoveries lead to therapies for previously untreatable conditions or new and better medicines that improve care for insufficiently treated conditions. But HTA methods in Canada undervalue two key things: the worth of a healthy life and scientific innovation. These methods to appraise the value of new medicines, and the mentalities behind them, are flawed in at least four distinct ways.
The first is that current HTAs are based on inadequate data. They use premarketing clinical trials conducted by drug sponsors in which standardized patients are randomized to receive either the new drug or standard of care. While randomization is important to measure efficacy (the degree to which a drug produces a beneficial result under ideal conditions), it does not reflect real life. Thus, HTAs try to predict a drug’s benefit in the real world of regular clinical practice using evidence from experimental trials. In these studies, patients are selected to have a precisely defined diagnosis and are vigilantly monitored to ensure the medicine is administered at the right dose at the correct time, with no missed doses. The sample of patients in clinical trials are rarely representative of the spectrum of the population when they typically exclude people with more than one sickness.
What is needed is effectiveness — the extent to which a drug used in routine clinical practice does what it’s intended to do. We need initial and rapid drug listings followed by real-world studies and price adjustments based on benefits (or not) in actual practice.
The second flaw is the price used in existing HTAs. Usually, it’s the drug’s list price, which is higher than the price eventually negotiated by large purchasers, such as government drug plans. Despite their apparent sophistication, HTAs rely on inadequate data that can distort coverage decisions.
The third defect is that HTAs are based on modelling techniques requiring multiple assumptions and use something known as quality-adjusted life-year (QALY). QALYs compress quality and quantity of life into a single, simplistic metric on a linear scale from 0 (death) to 1 (perfect health). In reality, disease burden is a complex, non-linear physical, psychological, and social condition. The use of QALYs in this way is not fit for the purpose of determining the genuine value of a new drug.
The fourth flaw is the assumed “value” of a QALY. HTAs compare QALYs with a threshold value of willingness-to-pay to assess cost-effectiveness. The threshold regularly used in Canada for a QALY is $50,000, i.e. the value of a year of good health is assumed to be $50,000. This threshold, which dates to the 1990s, has never been adjusted for inflation, economic growth, disease severity or rarity, or rising innovation costs, and is low by international standards. Nor does it adequately consider the increases in lifespan, work duration and healthy life from drug and related clinical proactive innovations.
What we need are initial drug listings followed by real-world studies and price adjustments based on benefits (or not) in regular clinical practice, as well as a cost-effectiveness value appropriate to the severity of the prognosis of the disease being treated. For example, diseases rapidly leading to death or crippling disability should be assessed against a much higher QALY threshold than minor or moderate conditions.
The Trump administration believes that wealthy countries, like Canada, cheat on the system of valuing innovation by using QALYs to artificially devalue the worth of a human life. It alleges that this offloads the cost of medicine innovations onto Americans. As it pushes to lower US drug prices relative to other countries to reduce what it sees as foreign freeloading, Canada’s reliance on negotiated price cuts and strict eligibility criteria may lead to greater delays and restricted access. Each delay or denial imposes a real cost in poorer health outcomes.
The evidence raised by the Trump administration could include the Canadian government practice of requiring huge price discounts based on an artificially low QALY leading to recommendations from Canada’s Drug Agency of up to 93 per cent price cuts. The Trump take could be the Canadian government system wants drugs for 7 per cent of what Americans are called on to pay.
In contrast to Canada, the United Kingdom has agreed to pay up to 25 per cent more for new medicines by raising its QALY threshold as part of a zero-tariff trade deal with the United States. In addition, UK spending on innovative medicines will increase from the present 0.3 per cent of GDP to 0.35 per cent by 2028 and double to 0.6 per cent by 2035. We see the percentage of GDP as a meaningful metric of ability to pay.
Despite the claims of QALY fans, Canada’s HTA measures and value thresholds don’t reflect the societal values and ethical priorities of Canadians. In the US, 29 patient advocacy groups have formed Value Our Health to try to change value assessments. They have developed key principles for these assessments, including addressing costs and benefits that matter to patients such as lost time at work, risk of disability and caregiving need; acknowledging diversity and differences among patients and not using one-size-fits-all summary measures such as cost per QALY.
Canadian governments should adopt these principles and should replace the current contentious and flawed value assessments for new medicines.
John Adams is a seasoned management consultant with a current focus on advocacy for unmet patient health needs. He has extensive experience in public policy, governance and senior management. A frequent author and commentator on health-related public issues, he is a senior fellow at the Macdonald-Laurier Institute.
Nigel Rawson is a pharmacoepidemiologist and pharmaceutical policy researcher. He is also an affiliate scholar with the Canadian Health Policy Institute and a senior fellow with the Macdonald-Laurier Institute as well as the Fraser Institute.
