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CDN Generic Drug Spending

october 15, 2014

By: Adam Cook, Policy Researcher- CTAC

Canada is paying more than double for our generic medications when compared to our international peers. That’s the statement from a new study recently concluded by the University of Ottawa and the Bruyere Research Institute. Lead author Amir Attan, Canada Research Chair in law, population health, and global development policy at the University of Ottawa, suggests that this the product of a bewildering decision made by the Council of Federations (representing premiers of all provinces and territories) in April of 2013. During this meeting, Premiers decided to set their buying prices for generic drugs at 18% of the price of their brand name variants.

Provinces have not clarified how they arrived at that metric, whether it will be revised, or the standards by which this measure will be evaluated but the estimation was that this new model would save over $100million compared to past Canadian spending. Attan explained, “the Canadian approach of setting a single price ceiling for multiple medicines is highly unusual...All other countries studied here have preferred competition or negotiation to varying extents.”

The study in question looked at Canadian buying of 6 specific medications (covering indications from high blood pressure and cholesterol management to depression) that represented approximately 20% of all publicly funded generics. In every case, Canada spent more than other countries surveyed, which included similarly wealthy countries like the U.K. and U.S. as well as countries with similar markets to Canada, such as New Zealand and Sweden. Often, Canada is spending more than double.

While other countries have engaged in more traditional negotiations and calls for best offer from each supplier, Attan says this buying system is the product of “a uniquely Canadian stupidity” and that “...what’s happened here is not the case of an isolated province making an isolated mistake, it’s everyone working together and coming up with a stupid mistake.” While Attan has stated that this method has saved some money (when compared to Canada’s past negotiations), a more contemporary method would have saved much more than the $100 million the council had hoped to save. For example, a recent study commissioned by the Canadian Federation of Nurses suggested a buying plan through pharmacare could save over $11 billion.

Why Canada departed from more traditional negotiation measures is not clear and constitutes a novel approach that has yet to be emulated by our international peers. By way of an example, New Zealand pays 87% less for blood pressure med amlopidine, and US veterans pay 94% less for the anti-depressant venlafaxine.  The study specifically focused on the medications amlodipine, atorvastatin, omeprazole, rabeprazole, ramipril, and venlafaxine. It will be published in the journal Open Medicine.