Editorials

Winnipeg Free Press - PRINT EDITION

Collaborate on drug deals

By: Editorial

Posted: 05/13/2010 1:00 AM | Comments: 0 (including replies)

Ontario's recent gambit to cut its cost of generic drugs has highlighted the weaknesses inherent in 10 jurisdictions negotiating separately with multinational drug firms. Manitoba already demands that companies give it the lowest price available in Canada, but it has no good way to ensure that is what it gets.

The reason for that is the many ways by which sellers (drug companies) and buyers (pharmacies, provinces) negotiate price. There is the unit price that shows up on the shelf, the cost of the drug to the pharmacist and the price that, eventually, is charged to provincial Pharmacare plans. They can vary wildly between provinces.

Ontario recently moved to eliminate one factor feeding into that variation -- a rebate known as a "professional allowance" that companies pay to pharmacists, which can be as high as 85 per cent of the shelf price. It believes that eventually this will drive down the cost of generic drugs to 25 per cent of the brand name. To buffer the pain of that, Ontario has agreed to hike -- here's another element of the cost -- dispensing fees pharmacists can charge, which can equal the price of the drug itself. That cost is borne by the consumer.

Manitoba is watching how that move shakes out, whether consumers ultimately benefit. Manitoba believes that through its agreements with manufacturers, it already gets the best or close to the best Canadian price for both generic and brand-name drugs, and through its agreements, ensures all consumers pay the same.

But all provinces cut deals with drug firms, including volume discounts. In Manitoba, such payments are not keyed to volume, but are negotiated in some agreements. (The money is used for new purchases or other elements of Pharmacare, such as education programs.) The payments are not publicly disclosed, so Manitoba can check its negotiated drug price against other provinces' approved drug lists, but it can't know if it is getting a better deal.

All the provinces have their own strategies and while they talk to each other, in effect they compete. In 2003, provinces tacitly agreed to collaborate on a national strategy but have yet to do that. The western provinces recently decided to collaborate, a useful decision.

Better, though, that all provinces and territories would work together, leveraging their combined heft against manufacturers that sell globally and offer better prices in countries with greater buying power than any individual province in Canada could muster.

Republished from the Winnipeg Free Press print edition May 13, 2010 A14

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