News Releases

Generic Drug Makers Table $5-billion in Savings to Help Broker Pharmacare Deal

Toronto, September 10, 2004 – Generic drug makers today put $5-billion in prescription drug cost savings on the table in an effort to help broker a deal between Canada’s First Ministers on prescription drug coverage for Canadians.

“The premiers want a pharmacare deal but the federal government says it’s too costly. We think the generic industry can help,” said Jim Keon, President of the Canadian Generic Pharmaceutical Association (CGPA).

Prescription drug coverage is the fastest rising cost in Canadian health care. The provinces are seeing their drug plan budgets increase by up to 14% a year. These massive yearly increases are taking money away from Canadians’ other health-care priorities like hospitals, nurses, waiting lists and new technologies.

The CGPA has tabled proposals with the federal and provincial governments that would save $5-billion in prescription drug costs over the next 10 years. These proposals include following the lead of the United States by clamping down on the practice of “evergreening” in the pharmaceutical industry. This tactic allows brand companies to delay generic competition, sometimes for years, by adding and litigating additional patents on the same medicine.

Delays caused by these tactics for just two drugs, ulcer medication omeprazole and anti-depressant paroxetine, cost Canada’s health-care system approximately $550-million.

Health-care commissioner Roy Romanow called on the federal government to review this practice in his November 2002 report. In February 2004, the Competition Bureau made the same recommendation.

“While not a complete fix for rising prescription drug costs, our proposals would at least move the First Ministers closer together,” said Keon. “What this bickering between Ottawa and the provinces tells us is that, no matter which level of government ends up paying the bill, something must be done to reign in prescription drug costs.”

Governments must also control marketing/inappropriate prescribing
Keon also warned that more must be done to ensure appropriate prescribing in Canada if costs are to be contained. He pointed to the news release accompanying the Canadian Institute of Health Information’s June 2004 study titled Drug Expenditure in Canada, 1985-2003, that warned: “The increase in drug spending is occurring despite relatively stable drug prices in Canada. This points to a higher volume of drug use and the entry of new drugs, which are generally introduced to the market at higher prices.”

“A key culprit in Canada in terms of rising drug costs is the rapid uptake and prescribing of ‘new’ patented medicines that are almost always more expensive than existing drug treatments but often provide no significant improvement in patient health,” Keon said.

Keon said there are plenty of examples of so-called “me-too” drugs that are minor variations of best-selling drugs that are already on the market.

“What many Canadians don’t know is that brand-name drug companies don’t have to prove their drugs are better than drugs already on the market to get Health Canada approval. If governments are going to address this issue, they will need to curb the marketing of drugs to physicians and the public by brand-name pharmaceutical companies.”

Savings through increased generic usage
In the United States and the United Kingdom, generic drugs are used to fill approximately 50% of prescriptions but in Canada that figure is only 40%.

The CGPA estimates that if use of lower-priced generics in Canada increased to 50%, it would save Canada’s health-care system at least $375-million in the first year alone.

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.

< back to 2004 Index