Generic prescription medicines saved canada’s health-care system $26-billion over past five years


Toronto, January 9, 2012 – The use of generic prescription medicines has saved Canada’s health-care system nearly $26-billion since 2007, according to an analysis of Canadian retail prescription drug sales information released today by the Canadian Generic Pharmaceutical Association (CGPA).

“The data released today reinforces that the savings provided by generic prescription medicines are essential to the sustainability of both public and private drug benefit plans in Canada,” said Jim Keon, President of CGPA. “As Canada’s First Ministers prepare to meet in Victoria this month to engage in important discussions regarding the future of health care in Canada, the potential impact of the European Unions’ demands for longer drug monopolies in Canada must be on the agenda.”

As part of the current trade negotiations with Canada, which Ottawa hopes to conclude in 2012, the European Union (EU) has proposed longer periods of market monopoly for brand-name prescription drugs. A February 2011 report estimates that the EU’s proposals would extend periods of market monopoly for brand-name drugs in Canada by an average of three and a half years and add approximately $2.8-billion annually to Canada’s prescription drug bill. Of that $2.8-billion, approximately $1.3-billion would be borne by provincial governments with the remaining $1.5-billion coming out of the pockets of patients and employers that sponsor drug plans for their employees.

“Over the past two years provincial governments have introduced reforms to their drug benefit plans in order to ensure their ongoing sustainability. The savings achieved through these reforms could be wiped out it the EU’s drug patent extensions are adopted,” Keon said.

Keon added that Canada’s generic pharmaceutical industry supports efforts by the Government of Canada to reduce trade barriers, noting that approximately 40 percent of the industry’s Canadian production is for export markets.

“Extending market monopolies for brand-name drug companies will not reduce trade barriers. In fact, such extensions would actually extend the period of time during which Canada’s generic pharmaceutical industry is prohibited from exporting Canadian-made generic pharmaceutical products, in turn costing Canadian jobs,” he said.

Keon said that extending monopolies for brand-name drug companies is not only expensive but entirely unnecessary. He pointed to May 2011 report by Edward M. Iacobucci, the Osler Chair in Business Law at the University of Toronto’s Faculty of Law, that shows Canada’s intellectual property system for pharmaceuticals is already stronger than that in any other industrial sector in Canada, and is in many ways stronger than pharmaceutical IP in the EU and United States.

As debate over the EU’s drug patent proposals has escalated, brand-name drug companies have attempted to link greater intellectual property protections to increased pharmaceutical investments. There is, however, no empirical evidence to support these claims.

In Canada, market monopolies for brand-name drug companies have increased eight times since 1987, yet investments continue to decline, with R&D spending in Canada by brand-name drug companies at its lowest level since 1988. The Patented Medicine Prices Review Board (PMPRB) reports that in 2010, brand-name drug companies spent only 6.9 percent of their Canadian revenues on research and development in Canada, marking the tenth consecutive year that brand-name drug companies have broken their promise to spend at least 10 percent of their domestic sales on R&D. The same year, the brand-name drug industry spent only 1.4 percent of its Canadian sale revenues on basic research that could lead to the discovery of new medicines.

“Furthermore, if there was a link between increased IP protection and pharmaceutical investments then why are brand-name drug companies reducing investments in markets such as Canada while increasing investments in jurisdictions such as India and China, whose IP regimes rank amongst the weakest in the world?” Keon asked.

Click here to view the analysis on generic savings from 2007 to 2011.

About the Canadian Generic Pharmaceutical Association
The Canadian Generic Pharmaceutical Association (CGPA) represents Canada’s generic pharmaceutical industry. The industry plays an important role in controlling health-care costs in Canada. Generic drugs are dispensed to fill 60 per cent of all prescriptions but account for only 25 per cent of the $22-billion Canadians spend annually on prescription medicines.

For more information, please contact:

Jeff Connell
Vice President, Corporate Affairs
Canadian Generic Pharmaceutical Association (CGPA)
Tel: (416) 223-2333
Mobile: (647) 274-3379