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Provinces join forces with plans to cut drug costs Add to ...

A plan to force down the cost of generic prescription drugs in Ontario is creating fresh momentum for a regulated national market for purchasing drugs.

Provinces in Western Canada are working on developing a joint drug-purchasing plan. The Atlantic provinces are collaborating on their own initiative and Quebec has policies that allow it to get the best prices available in Canada.

But Canada's most populous province sets the trend for the rest of the country. Ontario's plan to halve its annual generic drug tab of more than $1-billion eclipses initiatives in the other provinces and is fuelling debate on a single national system.

Ontario Health Minister Deb Matthews has called on her provincial and territorial colleagues to work together to develop a single system for generic prescription drugs. In a letter to Canada's health ministers last week, she warned that pharmacy chains could go jurisdiction shopping for the best deal, by making bulk purchases at the new lower price and selling the drugs to consumers in other provinces.

Ms. Matthews's letter has resonated with other health ministers. British Columbia Health Minister Kevin Falcon told The Globe and Mail there is potential for every region in Canada to collaborate on pricing.

"We are aware of potential cross-jurisdiction impacts and are open to working with other [provinces]to mitigate them," Mr. Falcon said.

"B.C. and Ontario share the view that the status quo is unacceptable."

Mr. Falcon has given pharmacy chains in British Columbia until the end of June to come up with a plan to significantly reduce the cost of generic drugs. If they fail to do so, he said, he will take unilateral action.

Manitoba Health Minister Theresa Oswald said in an interview that she sees "a lot of merit" in having a national strategy on generic drug pricing.

"If the minister there has a cautionary tale," she said in commenting on Ms. Matthews's letter, "we're going to pay attention."

Canada's smallest province is also watching Ontario's move with keen interest. "We're faced with rapidly rising drug costs and are looking at ways to maximize the dollars we spend," said Faye Martin, Prince Edward Island's director of pharmacy services.

Ms. Martin said the Atlantic provinces are collaborating in an effort to get better prices on generic drugs, but the talks are at an early stage.

Health policy experts said other provinces could face pressure from the public to follow Ontario's lead in lowering generic drug prices across Canada, which are the second highest among developed countries after the United States. Otherwise, the experts said, the provinces run the risk of drugstore chains recouping their lost income in Ontario by increasing prices elsewhere. Consumers whose drug costs are not covered by public or private plans would be the big losers.

If Canada retains a patchwork of 13 different provincial and territorial markets, Ontario's move could set off a chain reaction of higher prices elsewhere and impede access to generic prescription drugs for many consumers, said John Abbott, chief executive officer of the Health Council of Canada, an agency that monitors health-care reforms.

John Church, a professor at the University of Alberta's School of Public Policy, said the large pharmacy chains with operations across the country would be in the best position to take advantage of pricing discrepancies.

"The gaming of the system that can occur is real," he said.

Ontario's fight with pharmacies over drug prices has called attention to a business model the industry has relied on for decades. The province plans to abolish professional allowances - rebates generic drug manufacturers pay to pharmacies in return for stocking their products. The rebates paid to pharmacies largely account for the high cost of generic drugs in Canada.

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