Tony Clement, the federal Health Minister, has waded into the long-standing feud between generic and brand-name drug industries, complaining that an "oligopoly" propped up by the provinces has given Canada some of the highest generic medicine prices in the world.
Provincial drug-benefit plans should change their policies to make the generic industry more competitive, the minister said in an interview. Until they do, the federal government is unlikely to fund a new national pharmaceutical program, he said.
"I have nothing against the generic industry, but I do have a problem if people are using their market power and are profiting greatly and the system itself is paying double [U.S. prices] for generic products," said Mr. Clement.
"We want the generics to be successful in our country, but it doesn't necessarily mean it should be the same three generic companies all the time. They shouldn't get an automatic oligopoly."
The minister lauded a report earlier this week by the Fraser Institute, a conservative think- tank, that concludes generic drugs are on average 115% more expensive in Canada than in the United States.
The institute blames the discrepancy largely on provincial drug plan policies, including:
• Reimbursing pharmacies instead of customers, so patients have no incentive to shop for the best-priced verion of a drug;
• Paying a fixed amount for generic versions of drugs, removing any incentive for stores to undercut each other's prices; and
• Forcing patients to substitute generics for brand-name medicines, so generic firms have less impetus to keep prices down.
The report "almost changes the whole debate," said Mr. Clement, referring to drawn-out discussions over a national pharmaceutical strategy. Such a program would, among other things, cover all Canadians for "catastrophic" medication costs.
"This is no longer a discussion about how much Ottawa is going to cut the cheque for," he said.
"This is going to be a discussion about how can we, together, restructure our pharmaceutical system in this country so we can reap the advantages that we can for the taxpayer so we can afford to pay for the new drugs coming on line."
A spokesman for the generic drug industry, though, took strong exception to the minister's comments, and questioned the methodology in the Fraser Institute report.
Canadian generic manufacturers are, in fact, waging cutth ore business, said Jeff Connell of the Canadian Generic Pharmaceutical Association.
"They compete very aggressively to sell their products to their pharmacy customers," he said.
"Between eight and fifteen companies compete when new generic products are launched."
A report by the Patented-Medicine Price Review Board last year, however, concluded that generic prices in Canada are on average 26% higher than in other industrialized nations.
Analysts have noted that the jockeying for pharmacy business between generic companies is not reflected in the price actually paid by consumers - or the governments and insurance companies who fund drug benefit plans.
The "rebates" given by generics to pharmacies as they compete for shelf space equal at least 40% of the retail price of generic drugs, but those discounts are not passed on by the stores to customers, according to a federal-provincial report last year.
The Ontario government tried to address that discrepancy with its controversial bill 102, which reduced the amount it reimbursed pharmacies for generic drugs by 21-29%, and required that a new version of manufacturer rebates be applied only to direct patient care in pharmacies. Quebec has proposed similar changes.
Regardless of the comparison to other countries, lower-priced generic drugs still save consumers and governments money, argued Mr. Connell, making up 45% of the drug prescriptions issued annually, but just 18% of the $18 billion in prescription-drug costs.
The main problem with drug prices lies with brand-name pharmaceuticals, which face no competition at all until their patents expire and generics are allowed, said Michael McBane of the Canadian Health Coalition, a union-backed lobby group.
"Canadians are not burdened by the fact we have generic replacements - that's a lifeline for access to essential medicines," he said.
"It's actually sort of Orwellian to accuse the generics of [being] an oligopoly ... To me, what we see reflected here is lobbying for the brand-name pharmaceutical industry."
Mr. Clement, however, said his government has been even-handed in its treatment of the two competing industries, extending patent protection for brand-name medicines, but curbing the practice of "evergreening," where pharmaceutical companies use sometimes questionable means to lengthen the patent period.
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