Canada’s Competition Bureau Prescribes Policy Solutions for Generic Drug Sector

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From the desk of Nathaniel Lipkus... ;)

On November 25, 2008, the Canadian Competition Bureau released the second phase of its generic drug sector study, entitled “Benefiting from Generic Drug Competition in Canada: The Way Forward”. The report comes just thirteen months after the Bureau released its initial report, which had found that strong competition exists among generic drug manufacturers, but that in many cases this competition is not passed on to public or private drug plan payers, or to direct consumers.

Bureau Commissioner Sheridan Scott released the report at an Economic Club of Toronto luncheon on November 25. In her remarks, Commissioner Scott stated that the new report provides a “timely prescription for change”, offering several possible ways for achieving savings in both the public and private sectors. She emphasized the importance of swift action, in light of the $800 million in potential savings available to public and private drug plans, which she said would climb significantly over the next three years as blockbuster drugs released in the mid-1990s go off-patent.

The report separately analyses possible policy solutions for Canada’s public and private drug purchasers. Public payer recommendations include alternative mechanisms for listing generic drugs on provincial formularies and revealing the true net prices paid to manufacturers by retailers. The Competition Bureau emphasizes the importance of coordination among provinces in adopting any policy solution. Private sector recommendations draw heavily on the experience of pharmacy benefit managers (PBMs) in the United States, which have been successful in sharing in the savings from increased generic drug utilization.

The Competition Bureau’s report can be found on the Bureau’s website at http://www.competitionbureau.gc.ca/epic/site/cb-bc.nsf/vwapj/GenDrugStudy-Report-081125-fin-e.pdf/$FILE/GenDrugStudy-Report-081125-fin-e.pdf.

Nathaniel Lipkus
Gilbert's LLP