Getting to the Heart of Drug
Sustainability – The Issues
Canada’s Public Policy Forum - Atlantic Summit On
Healthcare And Drug Cost Sustainability, October 30, 2014
Jim Keon, President
Canadian Generic Pharmaceutical Association
Canadian Generic Pharmaceutical Association
THE FACTS
Total Health Care Spending
In 2013 Canada spent
$211 BILLION
Generic prescription
drugs account for
LESS THAN 3%
of total health care
spending.
Source: Source: IMS Brogan / CIHI 2014
Canadian Generic Pharmaceutical Association
THE FACTS
2/3 of all
Percentage of Total Market
(12 Months Ending June 2014)
TOTAL # OF PRESCRIPTIONS (%)
TOTAL MARKET COST (%)
33.5 MILLION PRESCRIPTIONS
1.7 BILLION DOLLARS
prescriptions in
Atlantic Canada are
filled using generic
medicine.
Generic’s contribution
to Atlantic Canada’s
total drug costs
< 28%
Brand-name’s
contribution to
Atlantic Canada’s
total drug costs
> 72%
Generic
Brand-name
Source: IMS Brogan
Canadian Generic Pharmaceutical Association
Average Price Per Prescription – Atlantic Canada
Source: IMS Brogan
Canadian Generic Pharmaceutical Association
THE FACTS
From 2006 to 2012
the average cost of
a house increased
by 43%* the average
cost of a litre of gas
increased by 21%.**
Average Atlantic Canada Cost Increase
+43%
From 2006 to 2013
the price of generic
prescription
medicines has
decreased
by 90%
+21%
$200,600
$1.27
$140,300
$1.05
GENERIC
- 90%
Source: *CMHC Housing Observer, **Statistics Canada
Canadian Generic Pharmaceutical Association
THE FACTS
Additional Savings Due To Price Reductions
Price reductions
between 2006
and 2013 have
resulted in
additional
savings
every year.
2006 – 65% of
Brand-Name Price
2013 – 35.3% of
Brand-name Price
Source: Generic sales 2013 from IMS Brogan
2013 Average Generic pricing 28.4% of Brand
Cost to Atlantic
Canada
If No Generics
Cost to Atlantic
Canada
With 2006
Generic Prices
Cost to Atlantic
Canada
With 2013
Generic Prices
Canadian Generic Pharmaceutical Association
The Need for a National Pricing Model
Beginning in 2006 Provincial Governments were making dramatic
reforms to drug programs – including massive reductions to
generic drug prices (applied to both public and private plans).
02
Perpetual provincial drug reforms making it extremely
challenging for generic pharmaceutical manufacturers to
plan product development, make decisions about
infrastructure and employment levels and difficult to
effectively run their business in the Canadian market.
03
01
This ongoing uncertainty also has dramatic
impact on the prescription drug supply chain
(pharmacists, and distributors).
Canadian Generic Pharmaceutical Association
Taking Action on National Pricing Model
In 2013, CGPA developed proposals to provide significant
savings to the health-care system without jeopardizing the
supply of cost-saving generic pharmaceutical products and
services available in community pharmacies.
01 Stable
02 Predictable
03 Rational
The CGPA proposals were aimed at creating a stable, predictable,
and a rational market and pricing regime for generic
pharmaceutical products in Canada.
Canadian Generic Pharmaceutical Association
Engagement on CGPA Pricing Model
2013
Announcements
May/June
Consultation
CGPA consults with
key stakeholders on
proposed pricing
model:
Pharmacy Sector
Distributors
Private Sector Payers
Academics
Provincial Governments
(staff and political)
Provincial Premiers
announce
consideration of
further unilateral
price reductions on
10 generic
pharmaceutical
products.
July
CGPA/CACDS/CoF
Fall 2013
Council of the Federation
CGPA engaged to
develop a more
comprehensive
long-term,
sustainable, and
predictable pricing
and
reimbursement
model.
 PMPRB Study on
international
generic pricing
 Study on
Canadian Market
(Hollis/Grootendorst)
Fall 2013
Canadian Generic Pharmaceutical Association
Outcomes from the Two Studies
01
PMPRB (problems with database/data): P/Ts benchmark of 18%
for high volume multi-source generic drugs is not
unreasonable. In countries such as New Zealand, using
tendering to control price, there are fewer generic products on
the market.
02
CANADIAN MARKET: there are very high costs to
entering Canada’s relatively small market (legal,
regulatory, geography, and trade, etc.).
03
The Council of the Federation and CGPA develop
a comprehensive 3-Year Pricing Framework.
Canadian Generic Pharmaceutical Association
CoF/CGPA − 3-Year Pricing Framework
Pan-Canadian Products
 2013 – Six Pan-Canadian products reduced to 18%
of brand-name price
 2014 – Four more high-volume, multi-source product were
reduced to 18% of brand as of April 1, 2014
 2015 – Four more products to be reduced to 18%
of brand-name price
 2016 – Four more products to be reduced to 18%
of brand-name price
Multi-Source Products (3 or more competitors)
 25% pricing model
 35% pricing model for non-solid oral dosage forms
Canadian Generic Pharmaceutical Association
CoF/CGPA − 3-Year Pricing Framework
Single-Source Generic Products
 85% of brand-name price if no Product Listing
Agreement on brand-name version
 75% of brand-name price if there is a Product Listing
Agreement on brand-name version
Dual-Source Generic Products
 50% of brand-name price
On-Going
 Council of the Federation and CGPA Steering Committee
 Council of the Federation and CGPA Implementation
Working Group
Canadian Generic Pharmaceutical Association
THE FACTS
Pan-Canadian Products To Date
GENERIC
More than
30% of the
BRAND-NAME
Atorvastatin
/
Lipitor
Rosuvastatin
/
Crestor
are priced at
18% of the
Amlodipine
/
Norvasc
Ramipril
/
Altace
brand-name drug.
Venlafaxine
/
Effexor XR
Over term of 3-year
framework,
Omeprazole
/
Losec
Rabeprazole
/
Paviet
Pantoprazole
/
Pantoloc
Citolopram
/
Celexa
Simvastatin
/
Zocor
generic drug
sales in Canada
Atlantic Canada
will save $560M
Canadian Generic Pharmaceutical Association
Generic Utilization by Province (percentage)
Source: IMS Brogan
Canadian Generic Pharmaceutical Association
THE FACTS
In the United States
generic drugs are
dispensed to fill
86% OF ALL
prescriptions.
Generic Prescription Market
U.S. Versus Atlantic Canada
86%
IN ATLANTIC
CANADA
IT’S ONLY 65.9%.
Valuable savings
are still available
through increased
use of high quality,
effective generic
medicines.
If the use of generic
drugs in Atlantic
Canada matched the
levels in the U.S.,
Atlantic Canada’s
health-care system
would have saved an
estimated 443 MILLION
DOLLARS IN 2013.
65.9%65.9%
Source: IMS Brogan
Canadian Generic Pharmaceutical Association
THE FACTS
Savings For Every 1% Increase
In Use of Generics
For every one
percent increase
in the use of
generic drugs
in Atlantic
Canada,
more than
$22 MILLION
DOLLARS in
savings can
be achieved.
Using independent, third party data from IMS Brogan and the Canadian Institute for
Health Information (CIHI) the CGPA has calculated the savings available to each
province for every one percent increase in the use of generic drugs.
Source: IMS Brogan / CIHI
Canadian Generic Pharmaceutical Association
Other Jurisdictions (United States)
Canadian Generic Pharmaceutical Association
Other Jurisdictions (Europe)
Canadian Generic Pharmaceutical Association
The CoF/CGPA framework promotes
market stability and on-going supply
of cost-saving generic prescription
medicines.
Focus must now turn to increasing
generic utilization.
Thank you.
Jim Keon, President
Canadian Generic Pharmaceutical Association
Canadian Generic Pharmaceutical Association