Unilateral drop in generic drug prices in Quebec - Minister Bolduc off target
for reducing the cost of drugs in Quebec

MONTREAL, June 29 /CNW Telbec/ - Jim Keon, President of the Canadian Generic Pharmaceutical Association (CGPA), considers that Minister Bolduc has clearly fallen short of the mark by unilaterally decreeing a drop in generic drug prices in Quebec, without any serious consultation with the industry. According to Mr. Keon, the minister has badly assessed the consequences of this decision. "This arbitrary decision will distance the Quebec government from its objective: to limit increases in health costs, particularly since this decision could have a major impact on our industry, which accounts for close to 5,000 direct jobs in Quebec," he stated.

In the presence of the key leaders of Quebec's generic drug industry, the CGPA'S president also questioned Minister Bolduc's motives. "It is difficult for us to understand why the Quebec government would seek to weaken, in such way, a generic drug industry that already provides Quebecers with access to quality drugs at a fraction of the cost of their brand equivalents," he wondered, recalling that, in 2009 alone, generic drugs resulted in savings of close to one billion dollars to the Quebec health-care system.

Quebec and Ontario: two very different realities

Quebec is the one place in Canada as well as North America known to be the least open to generic drugs. As a result, Quebecers pay more for brand drugs, which account for more than 82% of drug costs. This is much higher than anywhere else. In fact, Quebec's generic drug market share is almost 40% lower than Ontario's.

Furthermore, Minister Bolduc's decision is nothing less that a truncated adaptation of Ontario's recent decision to reduce the price of generic drugs to an average level of 40% in the province this year, taking into account exceptions and prices applied in public and private markets. By cutting corners and unilaterally reducing the price of most generic drugs sold in Quebec to 25%, the minister's decision will deprive Quebecers of the substantial savings that will be achieved in Ontario.

In fact, generic drug manufacturers intend to re-evaluate some expenses, which they willingly assume in Quebec, including distribution costs, which accounted for approximately $60 million last year. The government will certainly be called to compensate for these costs, which will unquestionably cut into projected savings.

Also, unlike the Ontario government, the Quebec government will not be compensating pharmacists in all regions for the sizeable reduction in professional allowances paid to them in the wake of the price drop. It goes without saying that generic drug manufacturers will be hard put to compensate pharmacists for this significant shortfall. Last year, generic drug manufacturers paid out close to $200 million in professional allowances to Quebec pharmacists, in compensation for the essential services, which they provide to their patients.

After months of consultation, the Ontario government sought to provide at least partial compensation for the effects of the price drop.

Minister Bolduc also chose to uphold the "15-year rule", which seeks to reimburse the price of brand drugs beyond the period covered by their patent, a move that this year alone will cost Quebec taxpayers close to $300 million. The only beneficiaries of this expense will be pharmaceutical firms, which are currently under investigation for failing to meet their commitments to the government, particularly in the area of pricing. These same companies cut their jobs in Quebec by 20% in five years, while moving their research and development (R&D) activities to Ontario. In addition, according to a report made public a few days ago by a Canadian government agency, investments by these companies have fallen 25% short of their commitments.

Heavy consequences for Quebec if the industry is not consulted

Paradoxically, in seeking to save money by lowering the price of generic drugs, the Quebec government could, in fact, end up paying 100% of the price of brand drugs, because their generic equivalents will have been flushed from the market. Indeed, the government's decision could result in the withdrawal of existing generic products and put a stop to the development of products currently at the R&D stage.

There is no question about it: this price change will have an impact on the level of jobs and investments in the generic drug industry, which had enjoyed sustained growth in recent years: more than 85% increase in the number of direct, highly paid, value-added jobs in eight years.

The generic drug industry is an integral part of the quest for access to affordably priced quality drugs, which it should be recalled, accounted for savings of close to $1 billion for Quebecers last year. But the "new business model" proposed by the minister could well affect this industry's ability to help achieve a significant reduction in the cost of the Quebec health-care system.

We are therefore asking the Quebec government to consult us and to consider all options and their overall implications before applying any price drop in Quebec.

About the Canadian Generic Pharmaceutical Association (CGPA)

The Canadian Generic Pharmaceutical Association represents the Canadian generic drug industry - a group of dynamic companies specializing in the production of affordable, high-quality generic drugs and fine chemicals as well as the clinical testing required for securing government approval of these generics. This industry plays an important role in controlling health costs in Canada.

For further information: Daniel Charron, Canadian Generic Pharmaceutical Association (CGPA), Tel.: [phone], Cell: 514 586-1233, Email: [email protected]