Medicine Reimbursement Recommendations in Canada, Australia, and Scotland

Published on: 
The American Journal of Managed Care, September 2008, Volume 14, Issue 9

Pharmacoeconomic analyses appear to account for differences in recommendations made regarding public payment when national bodies consider the same drugs for the same indication.

Objective: This study was undertaken to compare the recommendations made by the Canadian Common Drug Review (CDR) regarding whether drugs should be listed on provincial and federal formularies with recommendations made by similar bodies in other countries.

Study Design: Retrospective cohort analysis.

Methods: All recommendations made by CDR until September 30, 2006, were accessed. Two comparable agencies, the Australian Pharmaceutical Benefits Advisory Committee (PBAC) and the Scottish Medicines Consortium (SMC), were identified, and recommendations were obtained from the Web sites of all 3 agencies. We examined whether each of the agencies put equal proportions of drugs into each of 3 categories: unrestricted listing, listing with criteria, and do not list. Second, we compared recommendations on individual drugs.

Results: CDR made recommendations on 47 drugs. PBAC and SMC made recommendations about 31 and 29 of these products, respectively. There was no statistically significant difference in the percentage of drugs assigned to each category of recommendation in comparisons between CDR and PBAC, and between CDR and SMC. There was moderate agreement between CDR and PBAC for recommendations on individual drugs and poor agreement between CDR and SMC.

Conclusions: CDR is no different from other similar agencies in terms of the number of drugs recommended for full or restricted listing, or against listing. There is a relatively low level of agreement on recommendations about individual drugs among the different agencies. These differences appear to be because of pharmacoeconomic evaluations and likely reflect discrepancies between countries in national markets and health systems.

(Am J Manag Care. 2008;14(9):581-588)

Pharmacoeconomic evaluations can significantly affect decisions about whether to lista drug on a formulary.

  • Evaluations depend on the factors that are included in them.
  • Pharmacoeconomic evaluations from industry should be independently assessed by drug plans.

Payment for drugs prescribed outside of hospitals is not included within the basic set of healthcare services covered by Medicare in Canada. Accordingly, individual provinces and territories developed their own separate public insurance schemes for drug coverage. The federal government also runs drug plans for members of the military and for native Canadians, among others. All of these plans use a positive formulary (ie, a list of drugs that are paid for), with recommendations for which drugs to include coming from an expert advisory committee.

The presence of multiple committees with different criteria for decision making and with different timetables resulted in a sometimes-chaotic situation. A drug may have been approved for reimbursement in one province early on without any restrictions for use, whereas in another province the same drug would not be listed at all. Furthermore, pharmaceutical companies had to submit the same information to be reviewed by different federal and provincial committees.1 In 2003 the Common Drug Review (CDR) was established to coordinate reviews for all plans except the one operated by the province of Quebec. CDR reviews applications for coverage for new chemical entities, new combination products, and most recently new indications for existing products.

Pharmaceutical companies wishing to have a drug listed on Canadian formularies submit clinical and pharmacoeconomic information to CDR. Then, CDR contracts a team that prepares a clinical review, including a systematic review of all relevant published and unpublished randomized controlled trials. In addition, CDR examines and critiques the manufacturer’s pharmacoeconomic evaluation. The review team then prepares a report for the Canadian Expert Drug Advisory Committee (CEDAC), a body appointed by the Board of Directors for the Canadian Agency for Drugs and Technologies in Health (see CEDAC uses the review to assess the clinical and economic value of the product and then makes a recommendation about listing, taking into consideration the medication’s effectiveness, safety, and cost-effectiveness compared with existing therapies.2 CDR recommendations are not binding on any of the participating drug reimbursement plans, which are free to make their own funding decisions.3 Therefore, provincial differences in listings may persist.

CDR recommendations have come in for considerable criticism from a number of quarters, specifically drug manufacturers and patient groups.2 CDR reviewers are said to be deficient in expertise, and the review process is said to lack fairness, objectivity, and transparency.4 The pharmaceutical companies are especially critical of CDR’s reliance on cost-effectiveness criteria in making its recommendations, charging that this process “leaves Canadian physicians with restricted choices and does little to help patients who may not respond well to an existing therapy.”5 This theme of patients being denied access to important new medications is echoed by patient groups.6

In assessing these concerns, it is useful to look at how CDR compares with other international agencies that are carrying out similar work. This study was undertaken to compare the recommendations CDR has made with recommendations made by similar bodies in other countries, specifically looking at whether CDR imposes more restrictions on access than other agencies that also use a combination of clinical and pharmacoeconomic evidence in their decision making.

METHODSAll recommendations made by CDR and posted on its Web site from September 2003, when it started receiving submissions, until September 30, 2006, were accessed from the organization’s Web site ( For each drug, a single author abstracted the generic name, the primary indication, and the funding recommendation. If a drug was evaluated more than once, only the most recent recommendation was used. In addition, for each drug, we downloaded a document that contained a brief summary (usually less than 1 page) of the reasons for the recommendation. Because knowledge about a drug may change over time, the date of the recommendation (month and year) also was recorded.

Other agencies making funding recommendations were included, provided that they met the following criteria:

• They were located in a developed country, operationally defined as membership in the Organization for Economic Cooperation and Development.

• Pharmacoeconomic studies were used in deciding whether or not to recommend funding drugs.

• Recommendation categories had to be more than dichotomous (yes/no); for example, a range of decisions must include an option such as “fund with restrictions.”

Until the end of September 2006, CDR made 51 recommendations on 47 drugs. Four drugs were evaluated twice. (See Table 1 for a list of drugs and indications and which other agencies evaluated these drugs.) CDR recommended 2 (4.3%) drugs for unrestricted listing, 23 (49.0%) for conditional listing, and recommended against listing 22 (46.8%) drugs. PBAC and SMC made recommendations about 31 and 29 of these products, respectively. Twenty-two drugs were assessed by all 3 agencies. Out of the 9 products assessed only by CDR, the recommendations were unrestricted listing (1 drug), list in a similar manner to other drugs in class (1 drug), list with restrictions (1 drug), and do not list (6 drugs). All of the 6 drugs rejected by CDR were deemed not to be cost-effective. CDR also cited negative cost-effectiveness and/or high costs as either the sole reason or 1 of the reasons for recommending against listing the other 16 unlisted drugs. Similarly, cost-effectiveness considerations were cited by PBAC and SMC in their recommendations to reject 9 of 9 drugs (PBAC) and 8 of 8 drugs (SMC).

CDR and PBAC made the same recommendations for 24 of the 31 drugs (concordance 77.4%) (Table 2). The weighted kappa was 0.4386 (95% confidence interval [CI] = 0.1246, 0.7526), indicating a moderate level of agreement. CDR and SMC agreed on the recommendations for 14 of 29 drugs (concordance 48.3%) (Table 3). The weighted kappa was 0.192 (95% CI = 0, 0.426), indicating a poor level of agreement.

Detailed PBAC documents were available in 4 cases where there were discordant recommendations between CDR and PBAC; for CDR and SMC discordancies there were detailed SMC documents for 5 drugs. The eAppendix Table (available at summarizes the clinical and pharmacoeconomic reasons given by each agency for its recommendations. In general, the analysis of the clinical data was similar, but there were some exceptions. For example, SMC’s evaluation of atomoxetine was somewhat more positive than CDR’s. The main differences in evaluations were in the pharmacoeconomic data. For instance, SMC was quite supportive of the data for pegaptanib, whereas CDR was largely negative. In one case, mycophenolate sodium, despite similar analyses of the clinical and pharmacoeconomic information, CDR and SMC made different recommendations (CDR—list with criteria; SMC—recommended for use).

There were 7 discordant recommendations between CDR and PBAC. In only 1 case was there more than 52 weeks difference between the recommendations of the 2 agencies. For the discordant recommendations between CDR and SMC, in 6 of 15 cases there was more than 52 weeks difference.

PBAC and SMC made similar recommendations for 11 of 22 drugs with a weighted kappa of 0.1705 (95% CI = 0, 0.4407), indicating poor agreement.


2. Tierney M, Manns B. Optimizing the use of prescription drugs in Canada through the Common Drug Review. CMAJ. 2008;178(4):432-435.

4. EKOS Research Associates Inc. Evaluation of the First Year of Operation for the Common Drug Review. Ottawa: Canadian Coordinating Office for Health Technology Assessment; September 27, 2005.

6. Burns KK. Medicine delayed is medicine denied. Globe and Mail. July 21, 2003:A9.

8. Pharmaceutical Benefits Advisory Committee. Interim document to accompany the guidelines for the pharmaceutical industry on preparation of submissions to the Pharmaceutical Benefits Advisory Committee: including major submissions involving economic analyses. Accessed February 28, 2008.

10. Landis JR, Koch GG. The measurement of observer agreement for categorical data. Biometrics. 1977;33(1):159-174.

12. George B, Harris A, Mitchell A. Cost-effectiveness analysis and the consistency of decision making: evidence from pharmaceutical reimbursement in Australia (1991 to 1996). Pharmacoeconomics. 2001;19(11):1103-1109.

14. Pharmaceutical Benefits Advisory Committee. Public Summary Document.$File/Insulin_glargine.pdf. Accessed April 8, 2008.