More competition in generic drugs could offer $800M in savings: study

Making strategic changes to Canada's generic drug market could deliver up to $800 million in savings that could be returned to the consumer or reinvested in the healthcare system, according to a report released by the Competition Bureau Tuesday.

"We could free up money that could improve the quality of Canada's health care system as a whole," said Sheridan Scott, Commissioner of Competition, in a speech made at the Economic Club of Toronto.

"Provinces could afford more pharmacy and other health-related services from the savings they gain. Provincial drug plans could consider extending the range of drugs available to users, without increasing overall costs to taxpayers. Canadian businesses and unions that provide drug plans could maintain coverage during uncertain economic times."

Sales of generic drugs totaled $4 billion in sales last year — up 20 per cent from the previous year. The report suggests many drug companies offer pharmacies rebates in exchange for stocking their drugs. But, the study said these savings are not typically passed on to the people who pay for the drugs.

The report suggests promoting the use of mail-order pharmacies and offering incentives to patients to search out lower prices would help boost competition in the generic drug market. The federal agency also suggests regulatory barriers should be dropped to spur competition.

In a statement, the Canadian Pharmacists Association said it welcomed Scott's view that provinces should set up a framework to reimburse pharmacists directly for new services that provide benefits to consumers, rather than relying on allowances from generic drug makers.

But the group said pharmacies currently pass on benefits to consumers, such as free home delivery services or clinic days that are not reimbursed by drug plans.