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B.C. pharmacies face ban on generic drug rebates

American seniors Carole Jasquez (right) from Apple Valley, Ca., and Carla Coco-Boutte from Santa Barbra, Ca., walk into a pharmacy in Vancouver, B.C., after seeing a Canadian doctor for prescription medication, on Wednesday Aug. 25, 2004. A

Richard Lam/CP/Richard Lam/CP

Rebates to pharmacies for stocking and promoting generic drugs will be illegal in B.C. under new rules to come into effect as early as this year.

The B.C. government is following the lead of Ontario and Quebec but hoping to change a system without the bitter confrontations that erupted when similar moves were made in those provinces.

Incentives to pharmacists to stock various generic drugs have been a contentious issue for years. A federal Competition Bureau study into the generic drug sector released in 2007 estimated that drug manufacturers give back around 40 per cent of the invoice price to the pharmacists. The government believes Pharmacare, the publically funded drug program, should not have to pay for the rebate.

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Changes to the rebate system are part of legislation currently under review to lower pharmaceutical drug prices. A legislative committee is expected to consider the changes later this week. The legislation provides a framework for change. Specific initiatives, which are not part of the legislation, will be set out later this year in new regulations.

The government's approach is not sitting well with the B.C. Pharmacy Association. Eliminating rebates at the same time government is holding back increases in dispensing fees and support for clinical services could lead to a reduction in service, especially in the province's smaller communities, the pharmacists say.

The government is looking to pharmacists to become more involved in primary health care, such as giving immunization shots, Geraldine Vance, the association's chief executive officer, said in an interview. As well, more and more people are looking to their pharmacists for advice on general ailments, she added.

The government is taking away a source of revenue without indicating how they expect pharmacists to make up for the loss, she said.

"I'm not saying jobs will be lost, but you cannot take lots and lots of income out of a business, replace it with uncertainty and not have an impact," Ms. Vance said. Without increased government funding for services that are provided, pharmacists will be required to scale back in some fashion, she said.

Studies have shown that generic drugs are more expensive in Canada than other countries. Health Minister Mike de Jong has told the legislature his intention is to lower generic drug prices to be in line with other jurisdictions. Generic drug prices in B.C. are currently pegged at 35 per cent of brand name prices, a drop from 65 per cent two years ago. Ontario is reducing the price for generic drugs to 25 per cent by 2014, and 20 per cent for the top 10 drugs.

Mr. De Jong, who is out of country, was not available for an interview. Michelle Stewart, a spokesperson for the Health Ministry, said rebates from generic drug manufacturers to pharmacies, in competition for pharmacy shelf space, have been identified as a primary cause for the higher prices paid by Canadian consumers for generic drugs.

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The government expects that paying pharmacists the price paid to the manufacturing company without a rebate will contribute to lowering the cost of the drugs, a senior ministry official said. The drugs will be less profitable for the pharmacies, he said, adding that the money should not come from PharmaCare.

Ms. Vance disputed whether rebates were responsible for inflated prices. Generic drug manufacturers are allowed to exceed the 35-per-cent limit under certain conditions, such as higher costs or limited supply. The association maintains that the government has allowed too many exceptions, which resulted in higher than anticipated costs for the government.

The pharmacy association is seeking a transition fund, similar to what was set up in Ontario, she said. Ontario increased dispensing fees and funding for services such as medication reviews, for customers with chronic diseases taking more than four medications, and services for those in residential care.

NDP critic Mike Farnworth questioned whether the ministry was working with the pharmacists to respond to the issues. The NDP supports the legislation that sets up a framework for changes but is concerned about government bringing in regulations on pricing and incentives without review by the legislature. The NDP has questions about what government intends to do that will be raised during committee debate this week, he said.

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