As Prime Minister Mark Carney prepares his first federal budget, the future of national pharmacare and Canada’s broader health policy agenda hangs in the balance. From domestic stalls in negotiations to intensifying international battles over drug pricing, the week’s developments highlight the fragile intersection of social promises, fiscal restraint, and global market pressures. Meanwhile, Canada faces growing calls to double down on innovation, trade diversification, and economic sovereignty as new investments and pre-budget recommendations take shape.
Carney’s First Budget Faces Scrutiny as Pharmacare Talks Stall
Prime Minister Mark Carney’s first federal budget is shaping up to be a major political test, especially on health care. As The Hill Times reported that health care, including the future of pharmacare, is expected to be a central focus in Prime Minister Mark Carney’s first federal budget this fall, as his government promises to connect spending restraint with expanded access to essential services.
Carney faces the challenge of honouring his pledge to balance the operating budget within three years while still funding priorities such as health programs, infrastructure, and defence.
The question many are asking is whether Carney can forge a new path distinct from the Trudeau era, without abandoning the Liberal Party’s core commitments.
But signs of trouble are already emerging. The federal government’s commitment to a national pharmacare program is under scrutiny as Health Minister Marjorie Michel’s office reiterated support for four existing agreements but did not commit to negotiating additional deals with provinces and territories that have not yet signed agreements.
Saskatchewan, Nunavut, and Newfoundland and Labrador have all expressed openness to negotiations, but report little to no engagement from the federal government. Meanwhile, Alberta and the Northwest Territories are questioning whether the current $1.5 billion budget can sustain the program’s future.
Drug Pricing Reform Heats Up in U.S. as Pharma Pushback Intensifies
South of the border, the U.S. drug pricing debate is reaching a fever pitch. U.S. President Donald Trump ignited conversations by putting pressure on pharmaceutical companies to lower drug prices, leveraging the threat of deploying various governmental tools if the prices weren’t cut. The discussion on pricing is further complicated by factors such as the 340B program, which, according to a Milliman report commissioned by the Pharmaceutical Research and Manufacturers of America, results in drug costs being nearly 200% higher at 340B hospitals compared to non-340B hospitals.
Amid these legal and political maneuvers, the “Most Favoured Nation” (MFN) policy continues to draw sharp criticism. Writing in Forbes, health writer Sally Pipes describes President Donald Trump’s MFN policy as a move that could negatively impact patients’ access to new drugs and decelerate the pace of innovation. Pipes cited previous cases where price control measures have caused delayed or cancelled drug launches in other countries, and warned that MFN may disincentivize generic drug makers to enter the market. Meanwhile, PharmExec released an explainer on MFN, answering ten common questions on the new pricing policy. Trump promised a 30% to 80% reduction in drug costs through the policy, as drug costs in the U.S. are 2.78 times higher than in other competing countries. Additionally, Barron published an article on drugmakers’ attempts to dominate the weight loss drug market through implementing direct-to-consumer sales. As the U.S. moves toward aggressive pricing reforms, questions are growing about how Canada might respond or diverge.
Canada Eyes Innovation and Trade Stability
As international tensions grow, Canada is facing pressure on multiple economic fronts. Most notably, a new 75.8% tariff imposed by China on Canadian canola seed has escalated an ongoing trade dispute that already includes 100% tariffs on canola oil and meal. In a social media post, Saskatchewan Premier Scott Moe stated that he met with federal Agriculture Minister Heath MacDonald, along with regional and industry leaders, to discuss strategies for protecting market access and supporting Canadian producers. Moe said he plans to travel to China soon and urged Prime Minister Mark Carney to engage directly with Chinese President Xi Jinping, while MacDonald reaffirmed the federal government’s commitment to defending the canola sector and pursuing diversified trade opportunities.
Agriculture Canada, meanwhile, raised its 2025–26 canola production estimate to 20.1 million tonnes for 2025-26, the largest since 2018, though higher ending stocks are expected to push down average prices.
On the other hand, pre-budget consultations are intensifying. The Conference for Advanced Life Underwriting (CALU) released its 2025 pre-budget submission to Finance Canada, urging a review of the corporate tax system with a focus on small business taxation and updates to RRSP and RRIF rules.
The Council of Canadian Innovators (CCI) also submitted its 2025 pre-budget recommendations to the House Finance Committee, warning that Canada faces long-term structural economic weaknesses without urgent action. Additionally, CCI welcomed the federal government’s draft legislation to modernize the Scientific Research and Experimental Development (SR&ED) program, calling it a critical step to strengthen innovation and productivity.
CCI President Benjamin Bergen emphasized the need for policies that protect Canadian intellectual property, support scale-up firms, and ensure government funding directly benefits domestic companies in today’s challenging economic and geopolitical climate.
Ontario took a hopeful step forward with a $5 million investment in the University of Ottawa’s Advanced Medical Research Centre to establish a new wet lab—the first under its Ontario Wet Labs Program. The project is expected to create over 750 jobs and attract $130 million in investments by 2032, reinforcing provincial momentum in life sciences and biotech innovation.
As Canada edges closer to its 2025 federal budget, the stakes are rising. The choices made in the weeks ahead will not only define Carney’s first budget but also shape the country’s competitiveness, credibility, and commitment to long-term growth.
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