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Monday, December 20, 2010

Two new reports on Generic Drugs in Canada reaffirm Health Council’s findings

John G. Abbott, CEO, Health Council of Canada

Earlier this week, I read with great interest the latest reports on generics drugs released by the Patented Medicine Prices Review Board (PMPRB).

One report, Generic Drugs in Canada: Price Trends and International Price Comparisons, 2007 compares the price trends of generic drugs in Canada to 11 other countries. The report found that ”…generic drugs cost less in foreign markets than in Canada. These price differences are substantial. The implications of the international price comparisons are clear… foreign prices are, on average, only about two-thirds of corresponding Canadian prices… for the majority of drugs and nearly all therapeutic classes”.

This independent assessment reaffirms findings in The Health Council’s recent report on generic drugs Generic Drug Pricing and Access in Canada: What are the Implications? Our report found that that international prices for generic drugs in 10 other developed countries to be 15-77% lower than average Canadian prices. Obviously little has changed (at least up to now).

The second PMPRB report Generic Drugs in Canada: Market Structure – Trends and Impacts suggests that generic drug products are highly concentrated in terms of sales. In 2007 the top four leading suppliers accounted for 96.7% of sales of generic drugs. The report noted that this concentration is not the fundamental source of difference between the Canadian and foreign prices. It goes on to refer to a recent study of the Canadian Competition Bureau that concluded “…competition among Canadian companies occurs principally through rebates provided to retailers. In a market framework of this sort one would expect more vigorous competition among companies to produce larger off-invoice rebates rather than lower prices”.

These reports reveal valid insight into generic drug pricing in Canada; however, their findings are based on 2007 and earlier data. Thus, they do not reflect the potential impact of recent policy changes to generic drug re-imbursement policies in Canada where provinces like Quebec, Ontario, Alberta, and British Columbia have taken major steps to reduce the cost of generic drugs.

For our health policy leaders, industry professionals, and the Canadian public to continue to make informed choices about generic drugs reports of this nature must be researched and published regularly.

Finally, I am encouraged by the progress to date. With leadership, positive changes are possible to control health system costs while improving access and maintaining quality. I look forward to reading future discussion papers that report on how the newly implemented policies and planned joint purchasing initiatives are reflected in downward pressure on generic drug prices in Canada and improved access to these drugs for Canadians.

Key Words: Pharmaceuticals Management, Generic Drugs

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