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Winnipeg Free Press - PRINT EDITION

Drug costs can be slashed by $1.3B: study

Controversial Ontario model touted

By: Anne-Marie Tobin

Posted: 05/19/2011 1:00 AM | Comments: 0 (including replies)

TORONTO -- If all the other provinces followed Ontario's model for pricing of generic drugs, Canada could save almost $1.3 billion a year, says a team of researchers at the University of British Columbia.

Michael Law and colleagues at the university's Centre for Health Services and Policy Research examined savings after Ontario introduced changes last summer to the way it paid for generic drugs.

Ontario cut the amount reimbursed to pharmacies for generics by 50 per cent, and saved between $181 million and $194 million in the second half of 2010, they found.

"The policy was really controversial and so we wanted to see as a consequence not only how much Ontario saved as a result but how much other provinces could save if they were to have done the same change," Law, an assistant professor at UBC, said Wednesday from Vancouver.

"It's about five per cent of total spending on prescription drugs," Law said of the $1.3-billion figure, noting this is about equivalent to spending for all cancer drugs in Canada in a year.

"It's just to give an idea of the scope of these savings... There's all sorts of places where government could use this money in the health-care sector."

But the change to the Ontario Drug Benefit Plan, which effectively cut the retail price of generics from about 50 per cent of the cost of brand-name drugs to about 25 per cent, did not come easily. Pharmacists protested at the legislature and said they would have to close some stores and reduce services because of a shortfall.

Quebec later cut generic drug prices to the same level, while British Columbia, Saskatchewan and Nova Scotia took steps to go toward 35 per cent of brand-name prices, Law said.

"These savings in Ontario and what we've estimated in other provinces are only going to get bigger, because Ontario's policy isn't going to be fully enacted until next year at this time, and more and more drugs continue to come off patent and become available as generics."

But Jeff Connell, vice-president of corporate affairs at the Canadian Generic Pharmaceutical Association, said the $1.3 billion doesn't take into account money that provincial governments have provided to pharmacies to soften the blow of lost revenues.

The Alberta Pharmaceutical Strategy, for instance, provides additional compensation for pharmacists to do patient consultations, medication reviews and immunizations.

In Saskatchewan, a deal with the Pharmacists' Association of Saskatchewan and the Canadian Association of Chain Drug Stores means a portion of savings will reimburse pharmacies for expanding services.

Law argued that if those are services Canadians want to have or believe are valuable, "then we should pay for those services rather than pay artificially inflated prices for generic drugs."

Jeff Poston, executive director of the Canadian Pharmacists Association, said the UBC study is interesting and provides a preliminary look at the savings.

"I think it does demonstrate that there are benefits, there are savings to be made in relation to generic drugs," he said from Ottawa.

"But I think it's important that those savings get used to expand coverage, but also they should be reinvested into pharmacy services in order to improve optimal outcomes (for patients)."

-- The Canadian Press

Republished from the Winnipeg Free Press print edition May 19, 2011 A11

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