Canada is needlessly bleeding money on generic drugs
TheStar.com – Opinion/Commentary – It’s time to abandon the arbitrary way provinces control generic drug prices, and start using competition, as other countries do
Feb 17 2016. By: Amir Attaran
The German language is full of incomparable nouns, like das Backpfeifengesicht. It means “a face that should be slapped.” That sums up my thoughts, and probably yours too, on the smirking mug of Martin Shkreli, the American generic drug boss who took an old, cheap medicine and raised the price to a whopping $750 a pill, over the howls of patients and doctors.
Canada has homegrown Backpfeifengesichten too, like those at Quebec’s Valeant Pharmaceutical, which suddenly raised generic drug prices by up to 2,500 per cent. And while slapping is extreme, the whole generics industry in Canada deserves the stink eye for systematically overcharging us.
Earlier this month, the federal government’s drug price watchdog, the Patented Medicine Prices Review Board, released a brilliantly researched report proving that Canada’s generic drug prices are too high: depending how one measures, typically 19 per cent to 31 per cent above prices in Europe, the U.S., Australia and New Zealand. With generic prescription drug sales totaling $5.4 billion annually, do the arithmetic and Canadians are being gouged between $1 billion and $1.67 billion.
In perspective: pull $29 to $48 out of your wallet. Per Canadian, that is how much is wasted by overpaying for generic drugs.
Why? Because of the numbskulled way that the provinces control generic drug prices. Instead of bargaining for a low price, the provinces pay an arbitrary percentage of the price charged by the company that, many years before, first marketed the drug that the generic is copying. For example, if the original drug is $1 per pill, Ontario’s Ministry of Health and Long Term Care usually aims to pays 25 per cent (so 25 cents) for the generic version. Different provinces use different percentages, but all are locked into this basic system, as are private health insurers or individual Canadians.
Naturally, this arbitrary, anti-competitive system creates opportunities for price gouging.
Take for example Apotex. Headquartered in Toronto, it calls itself “Truly Canadian,” and all its medicines come from Canada, having been manufactured or tested here. Yet oddly, Apotex’s medicines are priced lower in far-flung New Zealand than here in Ontario.
Consider Apotex’s version of amoxicillin, a basic antibiotic that just about everyone has taken: New Zealand’s government pays $0.039 per 500 mg capsule, but Ontario’s pays $0.342 — eight fold higher. Or Apotex’s version of amlodipine, a common blood pressure drug: New Zealand pays $0.027 for a 10 mg tablet, but Ontario’s $0.359 — 13 fold higher.
Something is obviously wrong when “Truly Canadian” drugs are priced in this anti-Canadian way. In principle, prices should be lower in Ontario than New Zealand, because Apotex avoids the export/import costs to the antipodes, and there are more Ontarians than Kiwis, meaning that the volume discount should work in our favor, not theirs. Yet somehow, even at New Zealand’s bargain basement prices, Apotex carries on happily doing business.
The lesson here is simple: instead of using arbitrary percentages to set prices — a uniquely Canadian stupidity that leads to us being gouged — we should use competition, as other countries do. Even in the United States, land of infamously expensive drugs, when the American government uses competition it pays less for generics than we do. I agree with the Canadian Generic Pharmaceutical Association’s call for “generic companies to compete against each other in the marketplace.” They’re right about that.
Presently, a golden political opportunity exists to solve this problem, thanks largely to Ontario Health Minister Dr. Eric Hoskins and federal Health Minister Dr. Jane Philpott. Both worked as doctors in the poorest parts of Africa; they are adept at wringing value out of a tight health budget. They are at the forefront of reviving the national health accord that Stephen Harper allowed to lapse, which includes a new working group of Canada’s health ministers addressing equitable, affordable access to appropriate medicines. That’s hard, not just because Apotex and its ilk may battle to keep their corporate welfare, but because the ministers want a solution for the 10 per cent of Canadians who cannot afford their drugs, without disrupting the private insurance market that other Canadians depend on.
The ministers’ vision deserves the support of the premiers and the prime minister. If it ends the price gouging on generic drugs, those savings could pay for getting everyone the medicines they need, so nobody goes without. Now that would be Truly Canadian.
Amir Attaran is a scientist, lawyer, and professor in the Faculty of Law and Faculty of Medicine at the University of Ottawa.
< http://www.thestar.com/opinion/commentary/2016/02/17/canada-is-needlessly-bleeding-money-on-generic-drugs.html >
Tags: budget, economy, globalization, Health, ideology, mental Health, pharmaceutical, standard of living
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