Provincial - Quebec
The “15-year rule:” the old figures no longer hold up
The province of Quebec’s “15-year rule” is intended to extend brand name companies’ market monopolies
beyond the periods prescribed under the Canadian Patent Act, in order to keep jobs and investments in the
province. Unique to Quebec, this rule requires the 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. The old figures: a cost-benefit study of the “15-year rule” published in 2005 concluded that this rule
should be maintained, as its brought in $12 million more than it cost (income exceeding costs to the government).
To summarize these calculations:
- Cost to the government: $25 million (higher drug costs)
- Income for the government: $37 million (taxes and income taxes resulting from economic spinoffs from
the brand pharmaceutical industry)
Present Day Cost Benefit Analysis
Today, costs significantly exceed
benefits: if a cost-benefit analysis of
the “15-year rule” were conducted
today, based on updated 2005
analyses, maintaining the rule could
not be justified.
The CGPA conducted an updated
evaluation of the rule’s true impact
on the cost of the prescription drug
insurance program (higher drug
costs).
Result: in 2009, the government lost out on savings in the order of $160 million (ref: Quebec’s Treasury Board, Expenditure Budget 2010-2011). This is more than six
times more than in 2005 ($25 million)!”
Reasons for this cost explosion?
Mainly:
- Increased use of prescription
drugs;
- Significant reduction in the price
of generic drugs since 2008;
- Appearance of “big sellers” on
the list of drugs protected by
the rule;
- Increase in the price of brand
pharmaceuticals.
And the cost is expected to rise significantly
over the coming years:
the cumulative cost could be close
to one billion dollars within five
years.
Take for instance the case of the
Atorvastatin molecule (better known
under the brand name Lipitor). As of
this summer, on this one medication
alone, the government of Quebec
will be foregoing — if it maintains its
“15-year rule” — potential savings
estimated at $10 million per month
for approximately 20 months, for a
total of $200 million!
The CGPA is not alone in maintaining
that the impacts of the “15-year
rule” warrant constant and strict
monitoring. Other proponents include
committees established by
the government of Quebec:
- Task force on the financing of
the public health care system
(chaired by Claude Castonguay)
in 2008;
- Committee on the relevance
and feasibility of a public
prescription drug insurance
program in Quebec (chaired
by Claude Montmarquette) in
2001;
- These new evaluations of reductions
in both expenditures and
income are not only necessary,
they are urgently required.
Pharmaceutical Industry Trends - 2010 and Beyond
While the presence of the generic drug industry in Quebec is growing significantly, the brand pharmaceutical
industry is experiencing a major reduction: fewer jobs and less research and development in Quebec.
Direct jobs:
- Down 20% since 2005 in the brand pharmaceutical industry in Quebec (from 11,300 to 9,200).
- Up 85% in the generic drug industry (from 2,600 to 4,800).
Research & Development:
- In 2008, for the first time since the year 2000, R&D spending by brand pharmaceutical
companies was lower in Quebec than in Ontario (source: PMPRB).
- Between 2006 and 2008, Quebec’s share of R&D spending by these companies in Canada
dropped from 48.6% to 43.3%.
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Quebec's 15-Year Rule |
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