CGPA Statement on the Release of the Report of the Council of the Federation Working Group on Health Care Innovation

Toronto, July 27, 2012 – The following is a statement by Jim Keon, President of the Canadian Generic Pharmaceutical Association (CGPA), regarding the release of the report by the Council of the Federation Working Group on Health Care Innovation, From Innovation to Action.

“CGPA and its member companies recognize and support the need for provinces and territories to engage in health-care reforms. The generic pharmaceutical industry has been working with provincial governments as they have implemented significant drug policy reforms across Canada since 2006 that have led to dramatic reductions in retail reimbursed prices for generic prescription drugs. These provincial generic pricing reforms are creating hundreds of millions of dollars in new savings for the public and private payers each year.

However, the generic pharmaceutical industry is concerned that this new report suggests provinces will explore bulk-purchasing options generic prescription medicines in Canada. This approach could have negative consequences for domestic pharmaceutical manufacturing and create instability within the Canadian drug supply system.

According to IMS Brogan, the leading source of prescription drug sales information, generic drugs fill more than 60 percent of all prescriptions in Canada yet account for less than 25 percent of the $22-billion spent annually on prescription medicines. In Canada, the average price of a brand-name prescription is $73.76, while the average price of a generic prescription is only $25.04. As these figures highlight, generic prescription medicines are providing excellent value for Canadians and those savings are increasing.

Bulk purchasing or tendering schemes can create a “winner-take-all” scenario that removes incentives for generic manufacturers to bring new products to market and removes competitors from the market. Tendering can also create supply chain uncertainty and contribute to drug shortages like those we have recently seen through sole-source contracting in the hospital market. Provinces must also provide adequate incentives for generic pharmaceutical manufacturers to make the sizeable investments, and undertake the significant litigation risks required to bring cost-saving generic products to market as early as possible.

The next step for ensuring the ongoing sustainability of public and private drug benefit plans in Canada is to increase the use of cost-saving generic prescription medicines. It is estimated that for every one percent increase in generic drug utilization in Canada, Canadians save an additional $262-million. In the United States, generic drugs are dispensed to fill fully 80 percent of all prescriptions. If generic utilization in Canada was equal to US levels, Canadians would have saved up to an additional $3-billion in 2011.

In addition, there are other actions Premiers could take to reduce their drug budgets. The Drummond Report in Ontario made several recommendations regarding pharmaceuticals, including: using an evidence-based approach to decisions regarding coverage of new brand-name drugs, permitting pharmacists to substitute less expensive alternatives to prescriptions, permitting pharmacists to administer injectable and inhalant medications, and allowing pharmacists to prescribe for minor ailments. These proposals would provide significantly greater savings than bulk purchasing of generic prescription drugs and should be pursued as a priority by the Council of the Federation.

The Canadian Generic Pharmaceutical Association and its member companies are committed to continuing to work with Premiers to develop appropriately targeted measures to yield substantial savings to provincial drug programs.”

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 more than 60 per cent of all prescriptions but account for only less than 24 percent 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