February 2008

HEALTHCARE

• Foreword
  by Elaine Cruikshanks, H&K Brussels
• Who's Afraid of Liberalisation?
  by Ulrich Adam, H&K Brussels
• Health Care in the 2008 US Presidential Race
  by Jody Hoffman and Patrice Stanley, Wexler & Walker PPA
• Gordon Brown's Impact
  by Corinne Pluchino, H&K London
• Key Issues in the Healthcare Reform Debate
  by Effie Zhu, H&K Shanghai
• Price Controls for Patented Medicines while Generic Prices Run High
  by Cherie Payne & Jason Grier, H&K Ottawa

Hill & Knowlton International Belgium,
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http://www.hillandknowlton.be

Political Attention on Canada’s Generic Drug Prices

Price Controls for Patented Medicines while Generic Prices Run High (continued)

The October 2007 report stated that despite price controls on patented medicines and price incentives offered by generic manufacturers, Canadian consumers do not benefit from lower prices of generic drugs. The reason found was that drug stores are given a range within which prices must fall, and many simply charge the highest prices allowed, despite significant rebates given them by the generic manufacturers.  Although these rebates are often as high as 40 per cent, any potential savings end at the door of pharmacy retailers.

To counter the situation, Canada’s federal government recommended that the way generic drugs are marketed be changed so that competition among generic manufacturers benefits not only pharmacies, but also the end-users. 

Specifically, the report suggested the following measures might help to lower costs of generics for consumers:

• Providing manufacturers with incentives to compete to be listed on provincial and private plan lists of drugs that will be reimbursed;

• Having plan providers decide which versions of generic drugs will be dispensed at the pharmacy based on a bidding process by manufacturers;

• More in-depth monitoring of the net price paid by pharmacies for generic drugs to ensure the price paid by the plan reflects the rebates given to pharmacies; and

• An increased role for private plans in obtaining lower prices for their customers.

Unpacking the sources of discrepancies between the retail and wholesale prices of generics reveals that Canadian consumers are not getting the best deals, despite the country's rigorous price controls.  It also reveals that province by province, there may be opportunities to influence the debate on this issue, while also encouraging the federal government to continue its leadership role. 

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