Medical instrument manufacturers and suppliers are in a panic over a spike in medical device prices, after the Federal Government revealed its intention to lift the carbon tax to encourage innovation.
Industry leaders have warned that a lower price tag could make it harder for companies to make the products they need and that could hurt them.
Industry groups and consumers are also concerned that the government’s move could cause them to switch suppliers or take other measures to avoid losing out on revenue.
Industry experts say they expect to see an influx of new medical devices.
“It’s a concern that there will be a big increase in demand,” said Kevin MacDonald, executive vice-president of the Medical Instrument Manufacturers Association.
“There will be an increase in the supply, because there will probably be a huge increase in supply, but it will also be an additional supply for manufacturers to work with, which will mean the cost of making that device will go up.”
Industry experts have warned the Government’s move to the carbon price could cause a huge spike in demand.
“I think it’s an issue that we all want to avoid,” said MacDonald.
“The fact is we need a more sustainable and competitive business model.”
MacDonald and other industry leaders are concerned that a higher price tag would make it more difficult for companies like Aventis Therapeutics Inc. to make products that could be used by doctors and others who require them.
Aventes Therapeuticals Inc. is a subsidiary of Aventi Pharmaceuticals Inc., a pharmaceutical company based in Fort McMurray, Alta.
The company is developing a cancer treatment that uses a combination of COVID-19 drugs and immunotherapy, which it is using to treat patients with advanced or metastatic cancer.
It plans to make $50-million in the first quarter of this year from the sales of the drug and immunotherapeutics, according to filings with the Canadian Securities Administrators.
“We think it would be a tough sell for a lot of folks, particularly when you consider how difficult it is to develop an approved drug on a scale that’s comparable to what we’re doing,” said Steve Goglia, CEO of Aultec Therapeutics, the world’s largest medical device company.
Aventic Therapeutors expects to earn $5.2-million from sales of its cancer drug in the fourth quarter, up from $1.7-million last year. “
If we can’t get a better price in terms of pricing, it’s hard to make a case that we’re going to be able to compete.”
Aventic Therapeutors expects to earn $5.2-million from sales of its cancer drug in the fourth quarter, up from $1.7-million last year.
Industry representatives also warn that a $50 per-unit price hike would likely lead to lower sales and fewer doctors using Aventics.
The federal government has not provided details on how it plans to implement the carbon pricing.
The carbon tax, which is set to start in 2019, has already led to the lowest prices in Canada for medical devices since 2008, when it was introduced.
The government says it will lower the tax to 20 cents per metric tonne by 2019, but the new price tag will increase the price for the most popular medical products by a dollar each year.
The Government of Alberta said its goal is to bring in the $1,100 per tonne price tag by 2019.
But it’s unclear how much lower the price will be.
The Federal Liberals announced in the fall that they plan to introduce a carbon tax in 2019 of up to $2,000 per ton of CO2 emitted, a level that is higher than the $800 per ton mark set by the previous government.
A new tax on medical device sales is one of the Liberal Party’s first moves since becoming a majority government in December.
It is expected to generate about $8.4-million a year.
“As the market evolves, we expect prices to rise and manufacturers will adjust,” said Health Minister Kelvin Goertzen.
“But it’s also important to note that the cost to our health system of having a healthy economy will be borne by the middle class.”
Industry representatives and government officials have said that while the federal government’s carbon tax may be a temporary measure, the tax will help the country move forward with the transition to a more efficient economy.
But industry groups are concerned about how the new tax will affect their business.
“This is just a tool to raise revenue,” said Andrew Sargent, CEO and president of the Canadian Medical Association.
Sargant said the Canadian medical industry needs to ensure its products are not competing with products from overseas and that the new taxes will hurt patients who rely on foreign-made products.
“They have to ensure that we get it right and they have to get it in a fair way.”
A Canadian Medical Assn.
spokeswoman said it does not comment on internal deliberations.
A Canadian pharmaceutical company has reported a