A government plan to cut prices on commonly used generic drugs has pharmacy operators across Canada worried about the potential impact on their businesses.


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Canada unveils plan to cut generics costs

February 4th, 2013

TORONTO – A government plan to cut prices on commonly used generic drugs has pharmacy operators across Canada worried about the potential impact on their businesses.

The Council of Federation, a congress of the premiers of Canada’s 13 provinces and territories, unveiled an initiative in mid-January to set prices for six popular generics — atorvastatin, ramipril, venlafaxine, amlodipine, omeprazole and rabeprazole — at 18% of the equivalent brand name drugs. Provinces and territories now pay 25% to 40% of the branded prices.

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

Those six medications now represent about 20% of publicly funded spending on generics in Canada, according to the council. The group noted that the combined buying power of provinces and territories will yield the lowest generic drug prices to date in Canada, saving drug plans up to $100 million when the program is fully implemented. At the time the initiative was announced Quebec had chosen not to participate, the council said.

The Canadian Association of Chain Drug Stores (CACDS) welcomed the price-setting program, but not without concern.

CACDS said the plan shows that government has heeded community pharmacy’s concerns about the potential risks for increased drug shortages, supply chain instability and the resulting impact on patient care. The association, too, said it was “very pleased” that a national competitive bidding process for generics won’t be pursued.

Still, CACDS expressed apprehension about further reductions to generic drug prices by provincial governments, given 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 stated. “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 Ontario Pharmacists’ Association (OPA) said it was “disappointed” by Ontario’s decision to join other provinces in setting price points for the six generics. Though the plan’s economic impact on pharmacies remains uncertain, OPA noted that without reinvestment of the savings into more pharmacy-based services patient care could be negatively affected.

“We were surprised by [the January 18] announcement, as the continued erosion of pharmacy revenues seriously affects pharmacists’ ability to provide the health care services allowed under our newly expanded scope of practice, for which we receive no incremental compensation,” commented OPA chairman Billy Cheung. “While we recognize that patients will benefit from lower generic drug prices, Ontario already has the lowest prices in Canada, and just last April our pharmacists were asked to accept lower prices to help pay for some of the 2012 budget ­commitments.”

In April 2012 budget moves by Ontario Premier Dalton McGuinty included a proposal to lower the cost of the top 10 generic drugs to 20% of the branded price. And in 2010 Ontario cut the cost of generics paid for by the Ontario Drug Benefit and Trillium Drug Benefit plans to 25% of the cost of the branded product, down from 50%.

“By continuing to reduce the price of generic drugs, the primary revenue source for most pharmacists is diminished, leaving pharmacists little time to focus on providing valuable frontline care to people in their community,” stated OPA CEO Dennis Darby.

Under regulations approved last fall, Ontario pharmacists were permitted to provide such new services as renewing scripts, flu shots and prescribing smoking cessation drugs. Yet OPA noted that since most of the new professional services were implemented without additional compensation for pharmacists, pharmacies must continue to rely in part on the dispensing of medications to sustain their practices.

“These services help take pressure off other parts of the health care system, keep patients out of acute care, increase medication adherence and improve overall health outcomes,” Darby added. “We would prefer to focus our efforts on being fairly compensated for the work pharmacists do to help patients and save money for the health care system.”

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