January’s Pan-Provincial Deal Means Price Cuts for Popular Generics

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Photo source: globeandmail.com

One of the current challenges in the pharmaceutical industry is the role of generic drugs. This January, several provinces and territories have joined together to put their combined weight to play when it comes to negotiating on generic drug pricing.

Generics drugs are an important part of pharmaceutical research, manufacturing and sales. A generic drug is a non-branded version of a medication whose effects are considered comparable to the branded version. They include anything from store brand aspirin to prescription-only pain killers. Generics are cheaper than non-generic drugs and they usually only differ in small matters like flavouring. No matter the differences, they are always produced with the same rigorous attention to pharmaceutical quality assurance. Their pricing and the regulations around their availability affects how companies spend money and where they invest their clinical research dollars.

All the territories and every province, except for Quebec, teamed up over the negotiation. The plan revolved around six generic drugs which, when combined, make up 20% of government spending. Provinces and territories leveraged their union to knock the price of these generics from 25% to 40% of the cost of the brand name version to a mere 18%. This may seem small, but it is still high compared with generic pricing around the world. For example, one of the drugs included in the plan, when brought at 18% of the branded version price, is still 5 times as expensive as it is in New Zealand.

The plan includes drugs like Atorvastatin, Ramipril, Venlafaxine, Amlodipine, Omeprazole and Rabeprazole, which all treat common Canadian ailments and are taken as part of ongoing maintenance for various conditions. These prices took in effect at the start of April.

This is not the last battle over generic drug sales in Canada. This provincial team-up is also expected to enhance efforts by individual provinces to change how pharmaceutical sales work. At the moment, each of them is working to change how companies can compensate pharmacies for stocking generics. We will look at the impact that has on the pharmaceutical industry in depth next week.

If you could reform how generics are bought and sold, what changes would you make to Canada?