Quebec Budget Announces Elimination of “15 Year Rule”

Increased Use of Generic Drugs to Save Province $175 Million Annually

Montreal, November 20, 2012 – The Canadian Generic Pharmaceutical Association (CGPA) today welcomed the announcement that the Government of Quebec will eliminate the Province’s “15-year rule”. The measure was included in Quebec’s 2013 Budget.

Unique to Quebec, this rule required the province’s prescription drug insurance plan to reimburse the price of the original drug even after their patents have expired and less expensive generic equivalents have become available.

“In choosing to remove an obstacle to the sale of generic drugs, the Government of Quebec government will save an additional $175 million annually,” said CGPA President Jim Keon.

The rising cost of the “15-year rule” in recent years – has weighed heavily on the finances of the Government of Quebec, which is responsible for administering the public prescription drug insurance plan. Earlier this year, major private insurance companies announced they would no longer apply the “15-year rule” in order to provide significant savings to their customers, businesses and employees.

“The Government of Quebec has made the right decision in eliminating the “15-year rule”. The costs are simply unjustifiable. Increased utilization of generic prescription drugs is vital to control rising healthcare costs and ensure the sustainability of public and private drug benefit plans across Canada,” said Keon.

According to Quebec’s Treasury Board, the “15-year rule” has cost the government three-quarters of a billion dollars since 2008, to the benefit of brand name pharmaceutical companies. Yet these same companies have announced major job cuts and plant and research centre closures over the same period. Various media sources report that these companies have abolished at least 1,500 jobs in Quebec over the past 5 years.

“The Government of Quebec has announced its intention to reorient its support for the pharmaceutical industry, notably through a rate increase in the R&D reimbursable tax credit which will benefit any life sciences company that is investing in the province,” added Jim Keon. “This decision is welcomed by CGPA as it encourages continued R&D investments by the generic pharmaceutical companies in Quebec, which has been the only source of growth in the life sciences sector these past years,” said Keon.

Canada-European Union free-trade agreement (CETA): savings at risk
The savings that the Government of Quebec hopes to achieve by the elimination of the “15-year rule” is at risk. As part of negotiations for a Canada-European Union (EU) free-trade agreement, the European Commission has put forward proposals to extend market monopolies for brand-name pharmaceuticals in Canada. This would effectively inflate the annual bill for prescription medications to over $800 million per year in Quebec, half of which ($400 million) would have to be assumed directly by the government.

“The Government of Quebec is eliminating the 15-year rule as a cost-saving measure, but if the European Commission is successful in its demands, on pharmaceuticals these savings will disappear,” said Keon. “A trade deal between Canada and the European Union is desirable and can be achieved without the costly pharmaceutical concessions requested by the European Commission.”

For more information, please contact:
Jeff Connell, Vice President, Corporate Affairs
Canadian Generic Pharmaceutical Association (CGPA)
Mobile: (647) 274-3379