The challenge to control health spending in Canada while maintaining high standards of patient care is indeed daunting. Prescription drug coverage and the way we pay for pharmaceuticals, however, should be a priority, where costs can be better controlled with no negative impact on optimal patient care. A clear resolve is needed by governments to extract more value from the $22-billion spent on prescription drugs, emphasizing the increased use of lower-cost generic therapies.
According to data from IMS Brogan, a firm that tracks the pharmaceutical industry, retail spending on generic drugs accounted for just 25 per cent ($5.4-billion) of Canadians’ overall spending on prescription medicines; generic drugs were dispensed to fill more than 60 per cent of all prescriptions.
IMS Health also reports that the average cost of a brand-name prescription in Canada is now $73.76, while the average cost of a generic prescription is just $25.04. The average price of a brand-name prescription increased by 40 per cent over the past 10 years, while the average cost of a generic prescription grew by just 21 per cent.
As retail prices for generic prescription medicines are being dramatically reduced for both private and public payers across Canada through provincial drug reforms, the potential reward for increased use of generic drugs has never been greater.
It’s estimated that, for every 1-per-cent increase in generic drug utilization in Canada, Canadians save an additional $260-million. In the United States, for example, generic drugs are dispensed to fill 80 per cent of all prescriptions. If the use of generic drugs in Canada were equal to U.S. levels, additional savings to Canadians would indeed be significant.
Thus policies to increase the use of generic prescription medicines in Canada are key to ensuring the sustainability of drug benefit plans and broader health-care services.
These policies include:
• Intellectual property regimes that are fair and balanced for all stakeholders;
• Timely national review and approval of new generic pharmaceutical products;
• Timely listing of generic pharmaceutical products on provincial drug plan formularies following Health Canada approval;
• Changes to the design of both public- and private-sector drug benefit plans to ensure maximization of cost-saving generic medicines;
• Careful, unbiased, clinical evaluation of the cost-effectiveness of new patented medicines to ensure they provide therapeutic improvement to patients and not just higher costs.
Other innovative approaches, such as allowing pharmacists to substitute drugs in the same category that are virtually identical in terms of their clinical and safety profile, as recommended in Ontario’s Drummond report, would also yield significant savings.
To their credit, governments have begun to make investments in pharmacy services above and beyond payment of dispensing fees, a trend that can and should be accelerated.
But there are threats to the ability of Canada’s generic pharmaceutical industry to makes its full contribution to sustainable health care.
According to a recently released study by two of Canada’s leading academics on pharmaceutical policy, the provinces’ plan to pursue a pan-Canadian tendering scheme for generic medicines may actually lead to higher costs by delaying market entry of cost-saving generic equivalents.
Another threat to the sustainability of both publicly funded and employer-sponsored drug plans is the European Union’s demand for longer periods of market monopoly in Canada for patented brand-name drugs.
While Canada’s generic pharmaceutical industry supports efforts to reduce trade barriers, the EU’s drug patent demands will increase trade barriers for Canadian generic pharmaceutical exports while increasing prescription drug costs by as much as $3-billion annually.
While much of the focus of recent drug plan reforms have focused on retail or reimbursed prices of generic drugs, policy-makers should be reminded that price doesn’t matter if the products aren’t available.
Jean-Guy Goulet is president of Cobalt Pharmaceuticals, a generic drug company.