A report suggests that the province had set an important precedent in negotiations with the industry
A new deal to cut generic drug prices across Canada was widely welcomed last week. Negotiating with federal, provincial, and territorial governments (except Quebec), the Canadian Generic Pharmaceutical Association agreed to lower prices for 70 of the most commonly prescribed generic medications.
While the agreement was forged with public plans in mind, the reductions are expected to spill over to private plans as well. It could also help Canada shed its dubious distinction as one of the top drug spenders per capita among industrialized countries. And according to one report, it’s all because of Quebec.
“For the last few years, provincial governments have been negotiating together, using the clout of their collective bulk buying power to lower prices they pay under public drug plans,” reported CBC News. “But negotiations were different this time.”
The difference was because Quebec decided to play hardball with generic drug companies last year. In an attempt to control its rising health plan costs, the province demanded that generic drug companies submit tenders — offers to see who can offer the lowest price — for the most commonly prescribed medications.
“And everybody started to panic,” Marc-André Gagnon, a pharmaceutical policy researcher at Carleton University, told CBC News. He said the drug companies foresaw a troubling domino effect: after Quebec got deep discounts, other provinces would have demanded a similar deal, which would cause a similar clamour among private insurers and people with no drug coverage.
Rather than submit to a tendering process, generic drug companies voluntarily lowered their prices by 38%. They also agreed to publish the true prices of medications. With a five-year deal in place, the firms will not be forced into competition with each other.
“Whether they are covered under a public/provincial drug plan or an employer-sponsored drug plan or if they have no drug plan at all — the new prices apply to them,” said Jeff Connell, vice president of corporate affairs for the Canadian Generic Pharmaceutical Association.
The agreement reached with the national government is beneficial, but it might not be the best deal possible. Comparing the new Canadian prices with those from New Zealand, CBC News found many examples where costs were two to 10 times higher than what the New Zealand government pays under its universal drug plan.
“All of that suggests that prices are lower when companies are forced to compete and submit tenders. And that's why generic companies will probably blink again in five years when the new deal expires,” the report said.
Related stories:
Generic-drug price cut expected to help province, but not pharmacies
New initiative means generic drug costs will be slashed by up to 40%
While the agreement was forged with public plans in mind, the reductions are expected to spill over to private plans as well. It could also help Canada shed its dubious distinction as one of the top drug spenders per capita among industrialized countries. And according to one report, it’s all because of Quebec.
“For the last few years, provincial governments have been negotiating together, using the clout of their collective bulk buying power to lower prices they pay under public drug plans,” reported CBC News. “But negotiations were different this time.”
The difference was because Quebec decided to play hardball with generic drug companies last year. In an attempt to control its rising health plan costs, the province demanded that generic drug companies submit tenders — offers to see who can offer the lowest price — for the most commonly prescribed medications.
“And everybody started to panic,” Marc-André Gagnon, a pharmaceutical policy researcher at Carleton University, told CBC News. He said the drug companies foresaw a troubling domino effect: after Quebec got deep discounts, other provinces would have demanded a similar deal, which would cause a similar clamour among private insurers and people with no drug coverage.
Rather than submit to a tendering process, generic drug companies voluntarily lowered their prices by 38%. They also agreed to publish the true prices of medications. With a five-year deal in place, the firms will not be forced into competition with each other.
“Whether they are covered under a public/provincial drug plan or an employer-sponsored drug plan or if they have no drug plan at all — the new prices apply to them,” said Jeff Connell, vice president of corporate affairs for the Canadian Generic Pharmaceutical Association.
The agreement reached with the national government is beneficial, but it might not be the best deal possible. Comparing the new Canadian prices with those from New Zealand, CBC News found many examples where costs were two to 10 times higher than what the New Zealand government pays under its universal drug plan.
“All of that suggests that prices are lower when companies are forced to compete and submit tenders. And that's why generic companies will probably blink again in five years when the new deal expires,” the report said.
Related stories:
Generic-drug price cut expected to help province, but not pharmacies
New initiative means generic drug costs will be slashed by up to 40%
