News Releases

New Study: Generic Drug Prices in Canada and US the Same

Toronto, January 9, 2006 – Canadian and US prices for generic prescription drugs are, on average, the same, according to the most recent and comprehensive study ever undertaken on prices of generic drugs in Canada and the United States.

The report, Retail Price Comparisons of Generic Drugs in Canada vs. US: A Comprehensive Study released today by Professor Joseph D’Cruz of the Rotman School of Management at the University of Toronto, examined 207 active ingredients common to both Canada and the US, representing every comparable drug product common to both countries. The generic pharmaceutical products examined had more than $1.3 billion in sales in Canada in 2005, representing 56% of the Canadian generic pharmaceutical market.

The results of the study clearly indicate that:

• In the years 2000 and 2001, US prices were 28 per cent higher, on average, than those in Canada
• During the years 2002 and 2003, average US prices fell below those in Canada ranging from one to six per cent lower
• Over the past two years, 2004 and 2005, there has been parity in generic drug prices in Canada and the US

The data was obtained from IMS Health, the world’s leading source for prescription drug sales information, for the six years ending in June 2005. The study is the broadest-based analysis possible of generic drug prices in Canada and the US, and the data is the most recent ever used in such a comparison.

Professor D’Cruz said the results of today’s report have major implications for Canadian policy makers: “Politicians, governments, private insurers and consumers can now be assured that, on average, Canadian prices for generic drugs are just as good as prices in the US.

This study will provide policy makers with a clear understanding of pricing in the market they are regulating. The Patented Medicine Prices Review Board (PMPRB), which has been asked by Canada’s health ministers to compare international prices of non-patented drugs, should examine the methodology used to conduct this study, as it is the most rigorous and comprehensive ever employed.”

The report notes there are several previous studies comparing prices of generic drugs in Canada and the US. These studies vary in terms of the data used, the time period covered, the analytical and statistical methodologies used, as well as the underlying assumptions.

“As a result of these differences in overall approach, the conclusions vary significantly from one study to the next. It is therefore difficult to draw conclusions about the overall relative price of generic prescription drugs in Canada and the US based on past studies.” said Professor D’Cruz. “The methodology for this study is broader in terms of scope and the percentage of the market covered. It is also far more careful in the sense of making the price comparison at the most precise level possible.”

The team from the Rotman School led by Professor D’Cruz compared prices for every generic medication in Canada and the US only when five characteristics of the drug in question could be matched in Canada and the US: the active ingredient, the dosage form (e.g. capsule, tablet, injectable), unit by which strength is measured (e.g. mg, ml), strength, and pack size.

“We show that studies that do not match based on all of these characteristics result in comparisons that are misleading,” said D’Cruz.

The study received a grant from the Canadian Generic Pharmaceutical Association (CGPA), which 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. The industry plays an important role in controlling health-care costs. In Canada generic pharmaceuticals are dispensed to fill more than 43% of all prescriptions yet account for only 17% of the $16-billion spent annually on prescription drugs.

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	Comparisons of Retail Prices of Generic Prescription Drugs in Canada vs. United States
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