In our June 2010 Legal Update we reported that the Ontario
Ministry of Health and Long-Term Care had announced amendments to
its drug reimbursement and drug interchangeability regulations that
impacted, among other things, prices for generic drugs in the
province. The Governments of both British Columbia and
Québec have also recently announced reforms that will impact
generic drug pricing in those provinces.
On July 7, 2010, the Government of British Columbia, the BC
Pharmacy Association, and the Canadian Association of Chain Drug
Stores announced that they had reached an agreement (the Pharmacy Services
Agreement) that would be phased in over a three-year period and
eventually result in a cap on generic drug prices of 35 per cent of
the brand name drug price (although the Province is able to grant
exceptions where no manufacturer commits to make a generic drug
available at the maximum accepted list price or where the generic
drugs available at such price are not available in sufficient
supply). Prior to implementation of the agreement, the average
generic drug price in British Columbia was 65 per cent of the brand
name drug price.
Lower generic drug prices will apply to drugs covered by
PharmaCare under the public drug plan (which covers the cost of
prescription drugs for eligible residents of British Columbia), but
savings will apply to drugs that are listed on the provincial
formulary bought in the private sector for individuals covered
under employee and union drug plans, and for those paying out of
The agreement is expected to lower annual health care costs by
$380 million: $170 million per year in savings for the provincial
health system, and $210 million per year for employee and union
drug plans and individuals.
Pharmacies will be partially compensated for their lower
revenues through an increase in the maximum dispensing fee
reimbursed by the Province. Additional funding will also be
available, allowing pharmacies to offer more clinical services to
customers such as medication therapy. Unlike in Ontario and
Québec, there are no rebate restrictions.
In late June 2010, the Québec Government also followed
Ontario's lead and announced that it would be cutting the cost
of generic drugs in the Province, likely to a similar 25 per cent
level. Québec has an agreement with generic pharmaceutical
manufacturers that requires Québec generic drug prices to be
the lowest in the country. Québec residents previously paid
approximately 54 per cent of the cost of brand name drugs for
generic equivalents. In a November 5, 2010 notice to generic drug
manufacturers, the Conseil du médicament set out
transitional measures to bring generic drug pricing in the Province
in line with that of Ontario. The Québec Government's
move is expected to save the provincial drug insurance program $164
million per year.
The Governments of British Columbia and Québec have both
addressed the issue of controlling drug costs through negotiations
of agreements with the relevant industry bodies. The Government of
Alberta took a similar approach when, on April 1, 2010, it also
reduced the price of generic drugs in the Province to a maximum of
56 per cent of the price of existing brand name drugs and 45 per
cent of new brand name drugs. Like British Columbia, Alberta does
not have "no rebate" provisions.
In contrast, the Ontario Government enacted price reductions
through legislation that, effective July 1, 2010, saw the price of
generics reduced to 25 per cent of brand name drugs (a reduction
from the prior 50 per cent) and the elimination of professional
allowances. This is in addition to the prior enactment of
provisions that prohibited rebates for drugs listed on the
Formulary, whether sold on the private or public markets. In
addition, the Ontario legislation has eliminated professional
allowances for drugs on the Formulary and capped professional
allowances respecting sales of "interchangeable drugs" to
50 per cent of interchangeable product private sales to March 31,
2011, 35 per cent from April 1, 2011 to March 31, 2012, and 25 per
cent April 1, 2012 to March 31, 2013. Thereafter, they will no
longer be available. For a summary of the Ontario legislation
please see Ontario Announces Amendments to Drug
Reimbursement and Drug Interchangeability Regulations Effective
July 1, 2010.
With health care costs becoming an increasing proportion of
government budgets, other provinces will likely follow suit and
more changes to the current drug reimbursement systems are
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