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Increased competition amongall types of drug makers – both generic and research-based – might prove more effective at helping to ensure Canadians’ access to safe, affordable and effective therapies. This lack of competition is estimated* to cost Canadians between CDN$2.5 billion and CDN$6.3 billion per year. The consequences of not acting are far reaching.
Provincial governments, through their publicly-funded drug plans, have attempted to secure better generic prices with mixed results. Ontario (Canada’s largest province) had been surprised to find that, in many instances, they were receiving no significant price difference between the generic product and its brand-name equivalent, in spite of regulations intended to cap the amount that the government would pay for a multi-source product. As part of its sweeping changes to Ontario’s public drug programs, Ontario attempted to push for a discount of 50 per cent (or more) for generic products but had to introduce some flexibility in the policy in the face of industry opposition. Moreover, believing that the practice of pharmacy rebates was a significant factor in keeping generic prices relatively high, Ontario had wanted to ban the practice outright before agreeing to a new, tightly regulated, regime permitting certain payments by manufacturers as “professional allowances”.
But the story doesn’t end there. The Government of Ontario appears to understand that their efforts to secure lower prices for generic drugs achieved only partial success and are keen to do more. Indeed, in the weeks following the government’s recent re-election, word has come from Ministry of Health officials that a new competitive pricing framework may be coming for multi-source drugs. While the opportunity clearly exists for the Ontario government to use its power as a significant purchaser to introduce true competition in the generic sector, only time will tell if they are prepared to be that bold.
After all, Ontario is home to some very large and influential generic manufacturers who haven’t been afraid to flex their muscle in the past. As well, Ontario’s pharmacy retailers have increasingly relied on payments by generic manufacturers to stock their product, a marketing strategy that may ultimately prove incompatible with certain models of competitive pricing. In the coming year, whether or not the Government of Ontario is prepared to fight these battles will no doubt be watched closely by other provinces and the federal government.