On January 18, 2013, the Canadian provinces and territories
(with the exception of Quebec) announced a joint initiative (PDF) designed to achieve
significant cost savings for publicly funded drug plans. Working
through the Council of the Federation, participating provinces and
territories will leverage their combined bargaining power to set a
common reimbursement level for the following six generic drugs
that, together, represent approximately 20% of publicly funded
spending on generic drugs in Canada: atorvastatin, ramipril,
venlafaxine, amlodipine, omeprazole, and rabeprazole. Beginning on
April 1, 2013, the price for these six generic
drugs will be set at 18% of the price of the corresponding brand
The only province not participating in the initiative is
Quebec. However, Quebec is nonetheless expected to benefit
from the announcement in light of the most-favoured nations clauses
included in the commitments signed by manufacturers as a condition
of publicly funded reimbursement of their drugs.
An announcement concerning drug cost management had been widely
anticipated following the direction provided to the Health Care
Innovation Working Group at the July 2012 meeting of the Council.
While there had been speculation that the provinces and territories
would implement a tendering system whereby generic drug
manufacturers would compete for reimbursement by provincial and
territorial drug plans, stakeholders had expressed apprehension
about adoption of a single-source approach. Of particular concern
was the potential for drug shortages arising out of reliance on a
single supplier. The capped reimbursement approach appears to
represent a compromise, as multiple suppliers will be maintained,
while achieving desired price reductions for specific drugs.
The Working Group has indicated that the initiative is merely a
starting point and that additional reforms may be forthcoming as a
long-term strategy is developed.
1.Current rates of reimbursement for generic drugs vary
across the country and are generally set between 45% to 25% of the
price of the brand name counterpart.
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