Canadians will save an estimated $3.8-billion through an unprecedented three-year agreement reached between Canada's provinces and territories and the generic pharmaceutical industry, Jim Keon, President of the Canadian Generic Pharmaceutical Association (CGPA), recently announced.
"This national framework provides enormous additional savings to Canada's health-care system without further jeopardizing the supply of cost-saving generic pharmaceutical products and the services provided by pharmacists in neighbourhood pharmacies across Canada," Keon said. "This agreement is an important benchmark in our efforts to establish a stable, predictable and sustainable environment for the development and production of cost-saving generic pharmaceutical products for the Canadian market."
Over the term of the agreement, which has an effective date of April 1, 2014, 18 top-selling, high-volume generic prescription medicines will have their prices reduced to 18 percent of the price of the equivalent brand-name drugs across Canada.
The first 10 generic products alone make up approximately 30 percent of the Canadian generic prescription drug market. The agreement also establishes pricing levels for the various types of generic pharmaceutical products in Canada, as well as new and future generic products. The savings will be shared among public and employer-sponsored drug benefit plans, as well as those Canadians who pay for their prescriptions out of pocket.
In Canada, generic prescription drugs already save Canada's health-care system approximately $13-billion annually. Generic medicines are dispensed to fill fully 67 percent of all prescriptions yet account for only 23 percent of the $23-billion Canadians spend annually on prescription medicines.
In reaching the agreement, CGPA and provincial and territorial governments reviewed international pricing data and compared various aspects of the Canadian market versus other countries, such as the legal and regulatory environment, drug patent systems, and other costs. While Canada is a relatively small market, the costs and barriers to entering this market are very high. The international data also showed that countries, such as New Zealand, that employ a tendering model for prescription drugs also have fewer products available for patients. In the end, the studies showed that 18 percent pricing in Canada for high-volume, multi-source generic drugs is not unreasonable.
