The number of meds suspected of being sold at excessively high prices has soared in the past 18 months, equalling the total number of cases in the past 18 years, a Canadian government watchdog reports. The glut of alleged price violations identified by the agency could be an early sign drugmakers are looking for new ways to bolster their revenues, experts suggest. Meanwhile, pharma R&D in Canada, as a percentage of revenue, is declining.

Drugmakers may be trying to push up the cost of drugs already on the market, or of new meds that are marginal improvements, because of a shortage of new breakthrough meds for which more can be charged, Steve Morgan, a health policy professor at the University of British Columbia, tells The National Post.

Of course, rising prices aren’t news to US consumers. But in Canada, price spikes are an event. Jacques Lefebvre, a spokesman for Canada’s pharma’s trade group, says he can’t comment on specific cases, but stressed that the “vast majority” of the 1,200 drugs subject to federal jurisdiction comply with the rules.

Under those price guidelines, new, breakthrough drugs that substantially improve treatment of a condition face the fewest cost restrictions, The Post notes. They’re limited to the median of prices charged for the same drug in a selection of other countries, including France, Germany, Italy, Sweden, Switzerland and the US.

Other new drugs can’t exceed the highest cost of existing drugs sold in Canada to treat the same disease. The price of meds already on the market aren’t supposed to rise more than inflation. If any of those guidelines are violated…

…the board investigates and, if necessary, calls an “excessive-price” hearing, which can result in an order for the company to lower the price and reimburse revenue already gathered from illicit price hikes.

The Patented Medicine Prices Review Board issued six notices calling for public hearings into prices suspected of breaching federal rules in 2006, and another two this year, the board noted in its annual report. That matches the number of all hearing notices issued between 1987 and 2005, the report says. Of the eight drugs whose prices have triggered hearings since January, 2006, three were for treating attention-deficit and hyperactivity disorder, an increasingly popular class of medication.

The others included medication for asthma, multiple sclerosis, a nail condition and schizophrenia, as well a pair of vaccines for children. Most of the drugs had been on the market for a year or more. The increases could stem from the industry’s move away from blockbuster medicines to “incremental innovations” whose prices are more tightly restricted, or from outside complaints after a period of “considerable price stability,” the document said.

The industry is spending more than ever on research and development, but much of it is going into basic science around genetically-based treatments, which probably will not generate new drugs for years to come, Morgan says.

Meanwhile, Canada’s share of that R&D spending appears to be shrinking. The board’s report notes the percentage of pharma revenue in Canada funnelled into research and development has slipped even further below the 10 percent level that is laid out under federal guidelines. Companies devoted 8.1 percent of sales to R&D in 2006, down from 8.7 percent the previous year. The figure has not been at or above 10 percent since 2000, according to the report.