Generic drug costs can be cut: report

Canadians spend too much for generic drugs but there are ways to reduce the costs, according to a report released Friday.

The Health Council of Canada's discussion paper calls for greater transparency on generic drug pricing as provincial governments try to control the impact on their health-care budgets.

Generic drugs are cheaper versions of brand name drugs that come on the market after the brand name patent expires.

Canadians pay some of the highest prices in the world for generic drugs, John Abbott, CEO of the Health Council of Canada, said from St. John's on Friday.

"As consumers and certainly as taxpayers we want lower prices for our generic drugs," Abbott said. "We know it is possible. We now want governments and retail chains and others to start to bring these prices down so they become affordable for more Canadians."

Governments have traditionally set the price of generic drugs. However, the current system diverts too much money to manufacturers, distributors and retailers that could be saved by taxpayers or used in other areas of health care, the group said.

The paper aims to bring transparency to drug pricing so Canadians can start to question politicians about it, Abbott said.

The report offers six suggestions to reduce spending on generic drugs:

• Drug insurance companies could revisit the maximum reimbursements prices, such as markups for wholesalers and retailers, since evidence suggests Canadian prices are too high.
• Set reimbursement prices at the pharmacy level after governments decide on reasonable markups. The goal is to allow regulators and the public to know the origins of the total, similar to how an electricity bill might break down production and distribution costs.
• Encourage the use of alternative and competing distribution channels, such as online purchases and dispensing machines.
• Allow pharmacists to provide more paid services, such as providing counselling to seniors and others prescribed multiple medications,  to moderate the impact of reducing generic drug prices and help the health-care system.
• Drug plans, including employer-sponsored plans, could use "tiered formularies" or lists to encourage their beneficiaries to use lower-cost drugs. For example, when doctors can prescribe from a list of drugs for the same disease, an employee could enjoy lower premiums for choosing the cheapest option.
• Provincial and territorial drug plans could ensure that newly approved drugs are listed on their formularies quickly.  

In 2007, a report by the Competition Bureau said the way generic drugs are marketed in Canada has not resulted in the benefits of competition being passed along to Canadians as lower prices.  In 2008, the bureau concluded Canadian taxpayers, consumers, and businesses could save up to $800 million a year if changes were made to the way that generic drugs are paid for by governments and private plans.

The Health Council of Canada was created by the 2003 First Ministers' Accord on Health Care Renewal. Its mandate is to monitor and report on the progress of health-care renewal in Canada.