Some of the material on this page is written by guest bloggers. We appreciate their opinions. However, please note that they are not necessarily those of the Health Council of Canada.

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This guest blog is a letter from Mr. Jim Keon, President of the Canadian Generic Pharmaceutical Association to Health Council of Canada CEO, John G. Abbott, in which Mr. Keon responds to our discussion paper, “Generic Drug Pricing and Access in Canada: What are the Implications?”, and to issues faced by Canadian-based generic drug producers generally. Mr. Keon offers insight into the dynamics of generics pricing and access from industry’s perspective, with specific comments on the Quebec and U.S. markets. We invite you to read our discussion paper and Mr. Keon’s response, then give us your thoughts on this important issue.

Dear Mr. Abbott:

Thank you for your invitation to the Canadian Generic Pharmaceutical Association (CGPA) to comment in writing on the public discussion paper entitled, Generic Drug Pricing and Access in Canada: What are the Implications? commissioned by the Health Council of Canada.

There are many aspects of the discussion paper that are quite useful and deserve further exploration and debate. It is, however, unfortunate that media coverage of the paper focused almost exclusively on sales data for reimbursed or retail prices of generic drugs in Canada that is more than five years old. This sales data is no longer reflective of the Canadian market due to major changes to the system for generic pricing and pharmacy compensation that have occurred in approximately 90 percent of the Canadian market since its original publication.

Given the changes to generic pricing and pharmacy compensation that have occurred in the past five years, the most relevant aspects of the discussion paper are related to access of generic prescription medicines and how Canada can improve generic utilization to maximize savings for governments, employers, unions and patients.

Below, I will address both price information and issues related to access.

1) Data on retail/reimbursed prices for generic drugs is five years old and no longer reflects the Canadian market

The data used in the discussion paper to support the notion that retail or reimbursed prices for generic drugs are too high in Canada come from a 2006 Patented Medicine Prices Review Board (PMPRB) report that examined sales data from 2005. The PMPRB reported on retail or reimbursed prices of generic drugs in several countries, not net prices charged by manufacturers in these jurisdictions. As the paper notes, Canadian retail or reimbursed prices for generic prescription medicines include significant support for the services community pharmacies provide to their patients.

Since the publication of the PMPRB report, retail or reimbursed prices for generic pharmaceutical products have been dramatically reduced in Canada, including in the provinces of Ontario, Quebec, Alberta, British Columbia, Manitoba and Nova Scotia. In fact, retail or reimbursed prices for generic drugs have been reduced by 75 percent in the Province of Ontario, Canada’s largest pharmaceutical market. In addition, alternative mechanisms for the funding of pharmacy services in Canada are also being addressed.

It must also be noted that generic drugs provide excellent value for Canadians. According to IMS Health, the world’s leading source for prescription drug sales information, in 2009 generic drugs were dispensed to fill more than 54 percent of all prescriptions in Canada yet accounted for only 24 percent of the $21.5-billion spent on prescription medicines.

2) Prices don’t matter if Canadians don’t have access to lower-cost generic medicines

While it is true that retail or reimbursed prices for generic pharmaceutical products have been significantly reduced in Canada over the past four years, Canadians are still not fully benefitting from the savings available from lower-cost generic prescription medicines.

Faster generic formulary listings

The discussion paper correctly points out that the current formulary listing process in some provinces can take several months from the time the drug has received Health Canada approval. This delay in listing newly approved lower-cost generic versions results in drug plans paying additional money for a brand-name drug even though a cost-saving generic equivalent is available.

Provincial governments should list lower-cost generic versions on their formularies immediately following Health Canada approval to maximize savings. This should take no longer than one month as in provinces such as Ontario.

Generic drug use: public Sector vs. private sector

The use of generic drugs by provincial drug plans in Canada is considerably higher than generic drug use by private sector payers. According to data from IMS Health and Brogan Consulting, generic drugs are dispensed to fill more than 60 percent of prescriptions paid for by public drug programs but only 47 percent of private sector prescriptions.

Changes to the pricing and reimbursement system for generic drugs and pharmacy compensation implemented by the provinces are lowering retail or reimbursed prices for private sector payers as well. Private payers in Canada must now examine their drug benefit plans to determine why their use of generics is so low and what steps can be taken to increase generic drug use and the related savings.

The discussion paper offers some options for maximizing the use of generic drugs, such as developing appropriate prescribing incentives and protocols, creating more stringent interchangeability laws and tiered formularies. These options and others must be further explored by all payers in Canada to ensure that the most appropriate and cost-effective medicines are being prescribed and dispensed to Canadian patients.

Generic drug use: Quebec vs. the rest of Canada

The Province of Quebec, in particular, is wasting considerable taxpayer dollars by failing to use cost saving generic pharmaceutical products. While generic drugs are dispensed to fill more than 57 percent of prescriptions in the rest of Canada, in Quebec, generics are dispensed to fill only 51 percent.

This discrepancy is due, at least in part, to the Government of Quebec’s “15-Year Rule”. Under this rule, Quebec’s drug plan will pay for the brand-name version of a drug for 15 years after it is listed on the province’s drug plan formulary, even after lower-cost generic drugs become available. According to the Government of Quebec the annual subsidy to brand-name drug companies through the 15-year rule totals more than $161-million.

Furthermore, if the goal of the 15-year rule is to encourage brand-name drug companies to invest in Quebec, it misses the mark entirely.

The 15-year rule provides no advantage to a brand-name drug company that invests in Quebec over a company that invests in any other jurisdiction. They all share $161M annually of Quebec taxpayers’ money. As the latest annual report of the PMPRB shows, brand-name drug companies spend more money on R&D in Ontario than they do in Quebec.

A more efficient way of rewarding pharmaceutical companies that invest in Quebec is to provide an advantage or benefit to companies that actually invest in Quebec. This could be done, for example, by providing some form of tax credit to companies that invest in R&D and pharmaceutical manufacturing in the Province of Quebec.

The other advantage of a more direct policy such as this is that it would equally encourage both brand-name and generic drug companies to invest in Quebec without favouring one side of the industry over the other.

Generic drug use: Canada vs. United States

According to sales data released April 1, 2010 by IMS Health Canada, generic drugs were dispensed to fill 54 percent of all prescriptions in Canada in 2009. In the United States, IMS Health reports that generic drugs are dispensed to fill fully 75 percent of all prescriptions. If generic utilization in Canada increased to levels in the United States, Canadians payers would save an additional $1.6-billion in the first year alone. Given the available savings, it would be beneficial to Canadian payers for the Health Council to further investigate why payers for prescription drugs in the United States are so far ahead of their counterparts here in Canada.

Incentives for generic companies to make the significant investments, and assume the considerable risks, required to bring cost-saving generic drugs to market.

The discussion paper also makes important recommendations regarding incentives for generic pharmaceutical manufacturers to make the significant investments, and bear the considerable risks, required to bring cost-saving generic prescription medicines to market.

The report recognizes that it is beneficial to the health-care system for generic manufacturers to challenge patents and that there must be incentives to encourage generic market entry at the earliest appropriate opportunity. Such litigation results in significant savings for government and private payers.

In the absence of such litigation, brand-name pharmaceutical companies would be encouraged to further exploit the patent system to delay market entry of generic competition, leading to additional expenditures of billions of dollars for prescription medicines. Supplementary patents are becoming extremely common, and the average blockbuster drug in Canada is now protected by many patents.

As the Health Council report notes, such an incentive period for generic companies that successfully invalidate weak and frivolous patents in court to gain market entry is not unique. In the United States, for example, the first generic firm to file an allegation that the brand-name patent is invalid or will not be infringed is granted 180-days of market exclusivity, provided that the generic company prevails in litigation. During the 180-day period, the Food and Drug Administration (FDA) may not approve a subsequent generic competitor.

While it is the view of CGPA that an exclusivity period such as that in the United States may not be appropriate for Canada, an incentive period that rewards generic drug makers for successfully challenging invalid or non-infringed patents to bring cost-saving prescription medicines to market is not only appropriate but a necessity given the price reductions that have occurred in recent years.

In summary, now that the issue of reimbursed or retail prices of generic prescription medicines and pharmacy compensation has, in large part, been addressed in Canada, it is now time for governments, employers, unions, taxpayers and patients to turn their attention to the issue of access. Again, the price of generic drugs does not matter if Canadians do not have access to them. We encourage the Health Council of Canada to expand upon its work on access issues in order to provide further policy options to Canadians for ensuring they maximize the enormous savings opportunities available to them through greater use of cost-saving generic prescription medicines.

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If you’d like to know more about chronic disease management, or better understand the much talked-about issues of generic drug pricing and access in Canada, we hope our latest two releases help inform and guide you in the conversations you’re sure to have with others.

Once you’ve had a look, come back to the discussion board, share your own comments, and see what others have to say. They may agree with you, they may not. You may win them over; they may change your mind. You WILL learn more about the issues than you knew before.

Chronic Disease Management. It’s safe to say that many Canadians want a solid, trusting, knowledgeable relationship with the medical professional who helps manage their chronic health condition(s). Just how important IS that relationship to the quality of your health care? You’ll find answers in our bulletin, Beyond the Basics: The Importance of Patient-Provider Interactions in Chronic Illness Care. Health Council of Canada Chair, Dr. Jeanne Besner, has just summarized the details on the My Better Medicare website. We invite you to read Dr. Besner’s guest blog and our bulletin, then tell us what YOU think on the discussion board.

Generic Drugs. How many prescription drugs do you and your family take? Generic drugs are supposed to be a cheaper alternative to brand name drugs, yet Canadians pay some of the highest prices in the world for our generic drugs. Why is that? Can prices be brought down? There are potential solutions. Browse our commissioned paper, Generic Drug Pricing and Access in Canada: What are the Implications? After you’ve considered the recommendations, come to our discussion space and tell us if you think they’d work. We look forward to hearing from you.

by Terry Glecoff, Outreach Officer, Health Council of Canada

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We are born as patients. We die as patients. For some Canadians, many years between those rites of passage are spent as patients. Yet, how much of a voice does a patient have in their treatment? Not much, according to delegates at the first Canadian Patient Summit, held in Toronto March 28 and 29. More than 100 patients living with chronic medical conditions joined more than a hundred caregivers, health professionals and policy makers in the two-day session to share ideas on how to increase patient involvement in healthcare decisions. Keynote speaker, Ontario Health Minister, Deb Matthews told the summit, “The voice that has been deafening in its silence is the voice of the patient. We need to hear the voice of patients far, far, far more than we do today.” With the birth of the Canadian Patients’ Coalition at the summit, that voice will be taking shape over the next year.

The chair of the summit, Karen Philp, says “Patient-centered care has become a big catchphrase in today’s health care discussions. But that’s a term rooted in the medical community. What we need to establish is ‘patient experience’ as the key phrase in those discussions.”

Delegate John Munroe, a First Nations diabetes advocate from Saskatchewan agrees. “The most important thing about this summit is that we’re all representing the patients’ view, and every patient has a voice. If one patient speaks, it is not heard, but if many patients collaborate, just imagine what we could do nationally.”

So, why is this awareness of patient experience needed? Aren’t there already many organizations representing Canadians dealing with many different diseases and conditions? Yes, but this summit decided what’s needed is a national organization for Canadian patients - a unified voice for greater contribution and impact. Ontario Health Minister Deb Matthews thinks it’s a process of mobilizing realization of patient ownership into effective public engagement.   “If patients designed a system that reflected their needs, we would have a much more highly integrated system.” Matthews challenged all Canadians to be more involved. “It’s your system, you own the system, you pay for the system. The system belongs to you.”

Part of the summit was dedicated to choosing three key ideas for patient engagement following a series of weekend workshops that discussed dozens of proposals. They are: One Patient-One Record, the promotion of electronic health records across the country; Patient Navigators, the establishment of a system whereby patients can access a point person to link them to complete awareness of all available health services and options; and Patient Advocacy, the development of a volunteer-based coalition to advocate for government changes to the health care system based on patient experience.

Toronto MP, Carolyn Bennett, pointed out that patient engagement is a growing movement in other countries around the world. “In Sweden, for example, the number one health goal is public participation.” How could that apply in Canada? One suggestion was to have patient advocates appointed to provincial health ministries. And at the municipal level, there are already citizen representatives on local boards of health. But this coalition would like to see patient representatives, a much more specific link to patient experience. Bennet told delegates, “Every Canadian must be an empowered patient.”

Economist, Mark Stabile, reminded the delegates that the Ontario government wants to cut health care growth from 6% to 3%. So, the key to improving the health care system, in his words, will be getting better value for what money is available. The Canadian Patient Summit delegates believe patient experience can provide the input to help determine what’s needed. When Canada’s First Ministers set out the 2003 accord on health care, they specifically referenced “patient-centered” health care services. More recently, the Health Council of Canada issued a bulletin focusing on chronic health care, Helping Patients Help Themselves . It looks at how increased patient self-management can improve the health care system. The bulletin states, “Ideally, they [patients] will feel they have some control over their health condition, rather than having it control them.” The bulletin also refers to the growing interest in a US-based concept, the Chronic Care Model. It’s based on a philosophy of patients taking an active role in their care, supported by their primary care providers working together with specialists within a supportive community. That would seem to fit in with the summit’s ideal of using patient experience.

Over the year, the nascent Canadian Patient Coalition will carefully develop its public definition. The summit organizers will produce a comprehensive report based on the event. Look for a Canadian Patient Coalition website later this year. Its purpose will be to get Canadian patients talking and engaging to make our health care system better – based on patient experience. For Canadians who wonder how their patient experience can become a deciding factor in the health care system, Professor Kevin Leonard of the University of Toronto’s Department of Health Policy, Management and Evaluation has this simple prescription, “Look in the mirror – it starts with you.”

By Terry Glecoff, Outreach Officer, the Health Council of Canada

(photos courtesy of the Canadian Patient Coalition)

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Have you heard about the Health Council of Canada’s Health Innovation Award? Are you wondering what you could propose to help renew and sustain Canadian health care and why? Here’s a little something that my get your creative juices flowing.

It’s called HealthCampToronto – the “unconference” that brought together more than 75 participants – organizations, patients, government strategists and more – to think about and TAKE ACTION to strengthen Canadian health care now and in the future. Sponsored by IBM and the Health Strategy Innovation Cell, HealthCamp was held on September 16 at the IBM Centre for E-business Innovation.

What did people talk about? Navigation tools for patients with complex health issues, setting up “clinical trials” to test IT solutions in real health care settings, and capturing and distributing aggregate health care data and patterns in a meaningful and useful way. There was more – like the concept of using kids’ “Choose Your Own Adventure” books and DVDs as a model to help patients and their families see what issues might arise for them and where certain decisions could lead. Visit http://www.socialtext.net/hctoronto/index.cgi?the_grid to see the conversation grid that participants populated.

The point is that inspiration for your own contest entry is everywhere. Knowledge and ideas are collateral in this economy, yes. And the knots have been loosened at www.healthcamp.ca so use it as a source of inspiration to release your own idea to help renew and sustain Canadian health care. It’s our future. We have this chance to plan for it.  Send us your entry by December 15th.

Contest Criteria

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Let’s give the drug companies their due. Some drugs have been major advances and we are truly better off for having them. Drug therapy has transformed AIDS from a death sentence into a chronic disease and a few new cancer drugs are significant advances.

 

But despite the claims of Russell Williams, President of Canada’s Research-Based Pharmaceutical Companies, most drugs do not offer any advantages over existing ones. It’s interesting to speculate on the evidence that Mr. Williams uses for his assertion, since virtually all of the trials that drug companies sponsor are either non-inferiority or equivalence trials, that is, they are not designed to show that one product is better than another. Moreover, when a new drug in a class is introduced, it is not tested in people who have failed an existing product in the same class. How then can we know how much additional value new drugs have?

 

The drug bulletin La revue Prescrire looks at new drugs and new indications for drugs in the French market, and between 1996 and 2006 undertook almost 1000 such evaluations. Two products were major therapeutic innovations in an area where previously no treatment was available and 38 had value as important therapeutic innovations but with limitations. Even including drugs with some value but that do not fundamentally change present therapeutic practice, we are still left with 85% of new drugs and new indications that fail to provide any new therapeutic value.

 

When new patented drugs are marketed in Canada, their prices are typically set at the level of the most expensive product in their therapeutic group regardless of whether or not they offer any incremental therapeutic value. Companies charge what they think that the market will bear, not what it costs to research and produce the drug. When drugs come off patent and generic products appear, brand name companies still refuse to engage in price competition.

 

Utilization and demographic changes are partly responsible for driving up expenditures on prescription medications, but Mr. Williams omits one of the major cost drivers which is the substitution of older less expensive drugs by newer more costly ones; newer ones that are generally no better than the existing drugs. Thiazide diuretics cost pennies per day and the ALLHAT study showed that they were at least as good, if not better than, the calcium channel blockers and angiotensin converting enzyme inhibitors that cost dollars per day.

 

One of the main causes of this shift in prescribing patterns is the aggressive promotion of new drugs. Work that I co-authored showed that in the United States companies spend over $57 billion per year promoting products to doctors. While we don’t have any exact Canadian figures, even dividing by 15 means that in Canada companies could be spending $3.8 billion annually, almost 4 times what they spend on research and development. What’s more, most of that promotional spending is going toward new drugs for which we have only very incomplete safety information.

Finally, nearly all of the literature that looks at the relationship between using promotion as a source of information and prescribing behaviour finds that prescribing deteriorates the more doctors listen to the messages from drug promotion.

 

Mr. Williams cites a study that claims that, had the rest of Canada increased drug spending at the rate that Quebec did, we could have saved over a billion dollars in other health care costs. Mr. Williams should have mentioned that this study was sponsored by an unrestricted grant from his organization. A more glaring omission is the fact that Quebec’s policy on paying for medications means that even if a generic version is available, the Quebec government will continue to pay the price of the brand-name version for up to 15 years.

 

We should pay for innovation, unfortunately in the case of drug therapy too often we are paying for the promotion of new drugs that offer no new therapeutic value.

 

By: Dr. Joel Lexchin, Professor, York University’s School of Health Policy and Management

 

To Comment on this blog posting click here

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By Russell Williams, President of Rx&D (Canada’s Research Based Pharmaceutical Companies)

In our continuing dialogue on improving our health care system, I would like to put the issue of drug costs in perspective.

First of all, we cannot assess value for money in isolation. New medicines and vaccines, when appropriately utilized, improve and save lives, while saving costs elsewhere in our health-care system by reducing wait times, hospitalization and surgery.

New medicines and vaccines continue to be an important contributing factor in reducing hospitalization rates in Canada. According to the Organisation for Economic Co-operation and Development (OECD), hospitalization due to ulcers dropped by 71%, diabetes by 37% and breast cancer by 30% between 1980 and 2005. Furthermore, between 1980 and 2004, mortality rates for lung disease decreased by 79% and heart attack by 70%. For HIV/AIDS, mortality rates plunged by 78% and hospitalization by 50% between the mid-nineties and 2004-05.

Several studies clearly show that access to innovative medicines and their optimal use allow patients to avoid more costly treatments such as surgery and hospitalization. For example, a study published in 2007 in PharmacoEconomics journal shows that if other Canadian provinces had increased their spending on innovative medicines in the early 1980s like Quebec did, they would have saved over a billion dollars in health care costs for hospitalization and other services.

Canadians can also be assured that they receive excellent value for their patented prescription medicines, which over the past ten years have been priced, on average, 7% below the international median and have actually decreased when inflation is taken into account. The same cannot be said for Canadian generic drugs, which several studies, including one by the federal Competition Bureau, have shown are among the highest in the world.

While it is true that overall prescription drug expenditures have risen, according to the Canadian Institute for Health Information, this is not due to price, but rather utilization caused in part by an increase in the prevalence of disease, earlier diagnosis, as well as demographic changes.

The cornerstone of our industry is innovation recognising that new technologies and cutting edge treatments hold the key to improving patient outcomes and maximizing value for money in health. Member companies invest over $1 billion dollars each year in research and development in Canada; but, the development of each new medicine or vaccine is both risky and expensive, requiring up to 15 years of research and an investment of about $1 billion.

Timely access to new medicines and vaccines must be a priority as we move towards improving our health system, thus fostering better health outcomes and supporting discovery of new treatments and therapies which will further improve effectiveness.

We need to put the power of innovation to work to improve the health and prosperity of Canadians, while getting the best value for our health-care dollars.

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Some of the material on this page is written by guest bloggers. We appreciate their opinions. However, please note that they are not necessarily those of the Health Council of Canada.

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CanadaValuesHealth.ca is all about getting involved, stimulating the spread of innovative ideas and best practices, and finding health care solutions together. The Health Council of Canada has built this website to make it as easy as possible for you to stay informed about what others are saying, to share your thoughts and experiences, and to contribute to the future of our health system.

Watch this blog for postings from prominent Canadians and key health care stakeholders. Together, they will raise questions and seek answers, looking at what innovations and best practices can tell us about how to sustain and strengthen our publicly-funded health care system.

If something here inspires you to speak up, please log onto the message board. IF you would like to view the videos we have produced to showcase innovation across Canada, please click on our YouTube link.

We look forward to a lively exchange.

John G. Abbott
CEO, Health Council of Canada

 

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