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Price Increases for Brand-Name Drug Makers Won’t Fix Drug Plan
Government proposals to increase prices for brand-name drugs while cutting generic prices “doesn’t add up”

Quebec City, April 20, 2005 – Giving price increases to brand-name drug makers while imposing deep unilateral price cuts on generic drug makers won’t reduce costs and help sustain Quebec’s financially troubled drug plan, Jean-Guy Goulet, Chair of the Canadian Generic Pharmaceutical Association (CGPA), said during public hearings on the future of the Quebec government’s drug plan.

In its drug policy paper released in December 2004, the Quebec government proposes allowing price increases for brand-name drug makers, while cutting the price of lower-cost generic drugs by 14%.

“If the goal is to control costs and build a sustainable drug plan, it makes little sense to give price increases to brand-name drug companies that control 88% the market while proposing a unilateral 14% price cut for generic drugs, which account for only 12%,” said Goulet.

As an example, Goulet said that applying a 2% across-the-board price increase for brand-name drugs would add an additional $70-million to prescription drug costs in Quebec.

“The generic pharmaceutical industry wants to be a partner in helping build a sustainable provincial drug plan in Quebec. In fact, proposals from our industry can save an additional $200-million in drug costs in the first year alone,” said Goulet. “But the government must recognize the key role the industry plays in controlling health-care costs, and in jobs and investment in Quebec.”

Goulet said that before a realistic reimbursement price for generic drugs can be determined, the Quebec government must first establish the rules for the market.

For example:

• the proposed code of marketing practices must be put in place, and
• the proposed agency to monitor these marketing practices must be put in place.

“Only after the rules are established can the generic industry and the Quebec government have meaningful discussions about the proper reimbursement price for generic drugs based on the reality of market conditions,” Goulet said.

The generic industry also questioned why, in a time of financial crisis, the Quebec government seems determined to continue to subsidize brand-name drug companies through the so-called “15-year rule.”

“The 15-year rule cost Quebec taxpayers $75-million last year alone, and has added $275-million to the cost of Quebec’s drug plan since its inception,” said Jim Keon, President of CGPA. “The government should not be using its drug plan as an industrial subsidy to very wealthy companies, particularly when the plan is going broke.”

About the Canadian Generic Pharmaceutical Association

The Canadian Generic Pharmaceutical Association represents Canada’s generic drug industry – a dynamic group of companies that specialize in the production of high quality, affordable generic drugs and fine chemicals and in conducting the clinical trials required for government approval of generic drugs. It plays an important role in helping control overall health-care costs by keeping the cost of medications down: generic drugs are priced, on average, 40-45% less than their brand-name equivalents.

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