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Government task force looking at high cost of generic drugs in Canada

[PoliticsWatch Posted 4:00 p.m. July 4, 2006]

OTTAWA  — A federal-provincial task force developing a national pharmaceutical strategy considers Canada's high generic drug prices an issue that has to be dealt with.
Internal documents obtained under Access to Information by PoliticsWatch say information about generic drug prices should be made available so provinces and territories can "negotiate more reasonable prices" for non-patented drugs.

At the 2004 First Ministers' health summit, Canada's premiers who had wanted to create a national pharmacare program agreed instead to a National Pharmaceutical Strategy. 

Since then, federal, provincial and territorial health ministry officials have been developing the elements of the strategy under a special task force which has taken place behind closed doors without public consultation.

Officials were originally expected to report on their progress this month.

Task force briefing notes and documents obtained under Access to Information show that the higher cost of generics in Canada is on the task force's radar screen. 

"The primary issue for patented drugs relates to the growth of 'price creep," a May 2005 "conceptual paper" for deputy health ministers explains. "The most significant problem for non-patented drugs ... is Canada's lack of international competitiveness on prices."

The paper notes that studies show the price of generics in Canada are "significantly higher" than in other nations. 

"On average, Canadian prices for top-selling (generic) drugs were between 39 per cent and 49 per cent higher than the median prices in other countries studied," the document adds, citing a 2002 report for the Patented Medicines Prices Review Board.

Information given to bureaucrats involved in the task force compared Canadian generic drug prices to competitors. The PMPRB report found that when compared to Canada, generic drug prices were:  

> 24 per cent lower in Germany
> 26 per cent lower in the UK
> 32 per cent lower in Australia
> 68 per cent lower in New Zealand

The paper adds research on generic drug prices "points to the need for ongoing information on the prices." 

"Regular availability of this information would better enable jurisdictions to negotiate more reasonable prices for non-patented drugs, in parity with international prices," it states.

The paper also includes a section of "potential solutions" to the issues raised in the briefing note, but that portion of the documents were blacked out by Health Canada. 

Increasing access to generic drugs is often viewed as the quickest way for governments to save money when implementing drug programs. 

Earlier this year, Ontario Health Minister George Smitherman announced a new pharmaceutical strategy for the province's drug plan that would make it easier for patients to access generic drugs when a brand name drug is available, a so-called "generics first" policy.

However, dealing with generic prices was not part of Smitherman's controversial plan.

A 2004 report by Brett J. Skinner of the Fraser Institute entitled "Generic Drugopoly," blamed government policy primarily for Canada having such high generic drug prices. 

"The market dominance enjoyed by relatively few generic companies in Canada raises the possibility that some degree of monopoly-style power partially explains the abnormal pricing structure for generic drugs," Skinner wrote.

"The special commercial advantages enjoyed by the domestic Canadian generic drug industry may be viewed as unintended consequences of public policy; however, the consistency of the outcomes in favour of one particular
industrial interest suggests that there may be a pattern of favouritism being applied by governments in Canada."

One such area of government policy is the PMPRB, which sets drug prices for patented drugs. 

Skinner notes that most of the European countries used for price comparisons by the PMPRB have price controls on both patented and non-patented drugs. 

Generic price controls are common in the UK, France, Italy, Sweden, and Switzerland. The United States has no general price controls on either patented or non-patented drugs.

"Canada by contrast only imposes price controls on patented medicines; i.e., there are no direct price controls on non-patented medicines in Canada," he noted.

He suggests that Canada's hybrid system could be a factor in inflating generic drug prices.

PoliticsWatch will have more stories related to the National Pharmaceutical Strategy documents in the coming weeks.  

If you are interested in purchasing copies of documents obtained by PoliticsWatch for this or any other story contact us at news@politicswatch.com or call 613-232-0516.

: Related Links

> McGuinty government to push ahead with drug strategy 

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