The Government of Quebec and the pharmaceutical companies cannot agree on the price of generic drugs. Negotiations have stalled for months, and the Canadian Generic Pharmaceutical Association (CGPA) is asking the Minister of Health to reconsider his position on lowering prices.
In the midst of inflation, when production costs are exploding, lowering the price of generic drugs is nonsense, according to the Canadian Pharmaceutical Association. Prices have been frozen since the last agreement, in 2017, while the reality has changed in five years.
“It’s surprising that the government does not recognize that we are in a period of strong inflationary instability,” said Christian Ouellet, vice-president of corporate affairs at Sandoz, in an interview. “The government must be consistent. On the one hand, he proposes an increase in the price of wine and electricity while on the other, he demands reductions in the price of generic drugs. However, we experience the same constraints. »
The confidentiality agreements between the parties prevent revealing the exact amount of this reduction requested by the government.
The Association has discussed with provincial officials the costs of labour, energy, transportation, raw materials and disruption in the supply chain, but nothing has been done. Negotiations have been ongoing since the spring and are not progressing, says CGPA President Jim Keon.
Considerable reductions have already been in place for 10 years, and generic drugs allow substantial savings to the government.
Jim Keon, CGPA President
The cost of an average prescription for generic drugs has dropped from $23 to $20 while that for brand name drugs has increased from $67 to $121, he says. Generic drugs represent 80% of all prescriptions in Canada and cost only one-fifth of the total bill.
The price of generic drugs is also fixed, raises the Association, while holders of patented drugs can apply for price increases that follow inflation. The Patented Medicine Prices Review Board, an independent body, ensures that claims are not excessive. Generic drug companies are calling for the same kind of system.
A pan-Canadian negotiation
It is the pan-Canadian Pharmaceutical Alliance (CPA), representing the governments of all the provinces, which is negotiating a five-year agreement with the Canadian Generic Pharmaceutical Association, the drug manufacturers. The goal is to fix the price of generic drugs and their access.
The APP is based on prices established in the United States, Australia and Europe.
On the one hand, governments want to get the best rates at the lowest possible cost to taxpayers. On the other hand, pharmaceutical companies say that further price cuts carry risks such as the shortage of certain products and the inability to introduce new products to the market.
“Price reductions do not encourage local production,” points out Mike Dutton, vice-president and general manager of Pharmascience Canada, which has two manufacturing sites in Montreal and Candiac. “I’m not saying that we’re going to move all of our manufacturing sites, but it’s more expensive to manufacture in Quebec than in China or India. »
“With the price going down, we have to find other ways to save money. We will have to stop producing less profitable products,” he continues. A vicious circle, because the consumer must fall back on the original drug, which costs more.
Dispensers Ignored
The Quebec Association of Pharmacy Distributors (AQDP), which is not at the negotiating table, does not understand why it was not consulted upstream. Because the remuneration model for the distribution of drugs in Quebec is precisely based on the price of the drug. “Seeking to save money without analyzing the impacts is worrying,” said Hugues Mousseau, general manager of the AQDP, in an interview.
Hugues Mousseau explains that distributors are paid 6.5% of the price of the drug up to a maximum of $49 even when the drug costs $2,000. “If the drug is $10, we have $0.65 to distribute it everywhere in Quebec, whether in Montreal, Sherbrooke or the Magdalen Islands. Sometimes it is done at a loss in remote areas, for less than the price of a stamp. »
The AQDP also regrets that the manufacturers of the Prodoc (Jean Coutu), Sanis (Pharmaprix) and Civen brands are not part of the work even though they are major players. “It is often these brands that will manage to save the day during a shortage, because they have product availability of 6 to 12 months. It’s not too late to check them out. »
The current agreement expires on March 31, 2023.