In what's being called a first step toward a more strategic, coordinated approach to pharmaceutical management, provinces and territories in Canada are establishing price points for six popular generic drugs.

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Canada sets pricing for common generics

January 18th, 2013

OTTAWA – In what's being called a first step toward a more strategic, coordinated approach to pharmaceutical management, provinces and territories in Canada are establishing price points for six popular generic drugs.

Canada's Council of Federation on Friday said provinces and territories have agreed to set pricing for the six generic medications at 18% of the equivalent brand-name drugs. Individual provinces and territories currently pay 25% to 40% of the branded prices.

Plans call for the new prices to go into effect by April 1.

The six generics to be priced at 18% of their branded counterparts are atorvastatin (for treating high cholesterol), ramipril (for blood pressure and other cardiovascular conditions), venlafaxine (for depression and other mental health conditions), amlodipine (for high blood pressure and angina), and the acid reducer/anti-ulcer drugs omeprazole and rabeprazole.

The council, an organization aimed at fostering interprovincial-territorial cooperation, said those six medications account for about 20% the publicly funded spending on generic drugs in Canada.

It's expected that this approach will leverage combined buying power to procure the lowest generic drug prices to date in Canada, yielding savings of up to $100 million for provincial and territorial drug plans when the program is fully implemented.

At this time, Quebec has chosen not to participate in the generic drug price-setting initiative, according to the council.

The price-setting initiative for generics was welcomed by the Canadian Association of Chain Drug Stores (CACDS), but not without concern.

CACDS said Friday the generic pricing strategy shows the government has heeded community pharmacy's concerns about the potential risks for increased drug shortages, instability in the supply chain and the resulting impacts on patients. The group, too, applauded the fact that the move means government won't pursue a national competitive bidding process for generics.

Still, CACDS noted that it's concerned about further reductions to generic drug prices by provincial governments, considering that generic prices have been slashed across Canada over the past few years.

"Prescription drugs provide the greatest value to improving the health of Canadians and reducing future health care costs. We can overcome present challenges by working with stakeholders and government towards a common objective: improved patient care," CACDS president and chief executive officer Denise Carpenter said in a statement. "Prescription drugs are just one of the contributing costs to health care delivery, and we call on provincial governments to consider the system holistically and continue to engage all stakeholders to develop solutions that increase access to health services and improve patient outcomes."

The generic pricing announcement stems from the direction that provincial premiers provided to the Health Care Innovation Working Group at the July 2012 council meeting to proceed an effort to achieve better prices for generic drugs. The initiative builds on work under way to get better value on branded pharmaceuticals.

The Working Group comprises provincial and territorial ministers of health and is led by Saskatchewan Premier Brad Wall and Prince Edward Island Premier Robert Ghiz.

"Drug plan costs are increasing for all Canadians," Wall said in a statement Friday. "In recent years, the generic drug industry has worked with provincial and territorial drug plans to lower generic drug prices in Canada. And with today's announcement, we will realize savings that will ensure more dollars for provincial health care systems across Canada."

"We understand the importance of realizing better value for the important drugs people rely on." Ghiz commented. "This is just a starting point; we are committed to continuing to work together on a long-term strategy to further improve value for Canadians."

In forming the price-setting plan, provincial and territorial drug plan officials met with representatives of drug companies, pharmacies, insurance companies, the public and other stakeholders. Written submissions were also considered.

"We heard that a diverse and stable drug supply are key priorities for provinces and territories, as well as generic drug manufacturers. We are optimistic that the generic drug manufacturers will view price setting as a reasonable and fair approach to obtaining lower generic drug prices for Canadians," Wall stated.

The strategy was determined "based on what we felt would achieve the best value for Canadians in a timely manner," Ghiz noted. "We look forward to further discussions with industry and interested parties as we move ahead to explore a broader long-term approach."

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