Not Peer Reviewed
Reviewing the Canadian Drug Landscape and
Generic Pricing Models
CGPA CONFERENCE - 26 OCTOBER 2011
François Joseph Poirier
Partner
Toronto - 161 Bay Street
Agenda
• Overview of recent changes
• New legislations impact on generic pricing
• How are private plan sponsors adapting to changes
• The future ahead of us
MERCER
April-8-15
1
OVERVIEW OF RECENT CHANGES
Generic Prices in Transition
• British Columbia
– Public and private at 40% to drop to 35% on 04/01/12
– Public mark-up at 8%, except on high cost drugs (5%)
– Rising dispensing fees to $10.50 on 04/01/12
• Alberta
– Public and private at 56% for pre Oct. 2009
– Public and private at 45% for post Sep. 2009
• Saskatchewan
– Public and private at 45% to drop to 35% on 04/01/12
– Rising dispensing fees to $10.25 on 04/01/12
– Expanded prescribing authority
MERCER
April-8-15
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Generic Prices in Transition
• Manitoba
– Bill 41 to be implemented
• Ontario
– Public at 25%
– Private at 35% to drop to 25% on 04/01/12
– Professional allowances at 35%, 25% in 2012 then 0%
• Quebec
– Public and private prices vary by drugs
– Some drugs such as Lipitor are at 25%
– Rebates still exist
MERCER
April-8-15
4
Generic Prices in Transition
• Nova Scotia
– Public to drop to 35% on 07/01/12
– “In theory” applicable to private sector
– Expanded prescribing authority
• New Brunswick
– Tabled legislation setting generic pricing
• Prince Edward Island
– Legislation being drafted
• Newfoundland and Labrador
– Legislation being contemplated
MERCER
April-8-15
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Generic Prices in Transition
• Additional consideration for generics
– Variation in time to list from a few weeks in Western Canada
up to 6 months in Quebec and Eastern Canada
– Different approaches on professional rebating
MERCER
April-8-15
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Provincial Regulation – Public Payer
P Proposed
Implemented
Practices
Blank = Not Implemented
Provinces
BC
AB
SK
MB
ON
QC
NB
NS
NF
PE
Fixed Generic Pricing (% of brand)
Lowest price in Canada
Lowest Cost Alternative
(interchangeable drugs)
Maximum Allowable Cost/ Reference
Pricing (same therapeutic class)
Limit Professional Allowances
Competitive Tender (List price)
Listing Agreements
(Manufacturer Payments)
P
Dispensing Fee/ Mark-Up Limits
MERCER
April-8-15
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Provincial Regulation Impact – Private Payer
Implemented
Blank = Not Implemented
Practices
Provinces
BC
AB
SK
Fixed Generic Pricing (% of brand)
MB
ON
QC
NB
NS
NF
PE
*
Most Favoured Nation
Lowest Cost Alternative
(interchangeable drugs)
Maximum Allowable Cost/ Reference
Pricing (same therapeutic class)
Limit or Eliminate Professional
Allowances
Competitive Tender (List price)
Listing Agreements
(Manufacturer Payments)
Dispensing Fee/ Mark-Up Limits
MERCER
April-8-15
8
IMPACT OF GENERIC PRICING
Pharmacist’s Perspective
• Reduced revenue for pharmacies forcing current
business model review
– From pills dispenser to pharmaceutical consultant
• Increased fees
– In Ontario 32% of pharmacies increased dispensing fees
– Generic mark-up increase from 10% up to 19%
• Increased generic pricing
– Generics not listed on formulary
– Some generics increased to new limit
MERCER
April-8-15
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Pharmacist’s Perspective
• Reduced services
• No apocalyptic store closures as expected
MERCER
April-8-15
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Private Sponsor’s Perspective
• Generic drugs spend has decreased but …
– Relatively small percentage of total drugs spend – 8.2% of
Great West Life GroupLine 2010
• … offset by other Rx cost adjustments
• Prescribing pattern to replace brand name coming off
patent by another brand name drugs instead of the
generic version
–
–
–
–
MERCER
Lipitor® with Crestor® (Cholesterol)
Effexor® with Cipralex (depression)
Neurontin with Lyrica® (Nerves pain and seizure)
Napraxen with Celebrex® (Inflamation)
April-8-15
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PRIVATE PLAN SPONSORS RESPONSES
Private Sponsors’ Perspective
• The Generics manufacturing industry is creating cost
savings opportunities through new medications but
retail pharmacies scooping most of overall net
savings
• Generics penetration still represents significant
savings opportunities but need to implement cost
management strategies
MERCER
April-8-15
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THE FUTURE
Not to Sound Too Rosy but …
• Generics industry is well positioned to increase
market share if:
– Help promoting greater use of generic substitution
- Introduction of managed formularies
- Tiered formulary – higher reimbursement for cost-effective
drugs/two-tier pricing structure to further encourage
generics
– Cautious about “expected” patent cliffs of coming years
– Keep “pounding” the message that generics substitution is
safe and a cost effective way to improve health
MERCER
April-8-15
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Not to Sound Too Rosy but …
• Generics industry is well positioned to increase
market share if:
– New marketing techniques to “influence/educate” physicians
prescribing habits and pharmacists – more and more
– Innovative ways, i.e. financial rewards, to encourage plan
sponsors to promote generic utilization
– Limit the shortage issue compared to brand names
– Get involved with “Biosimilars” to ultimately offer alternative
solutions to the biologic drugs
– Further lobbying…
MERCER
April-8-15
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Mercer (Canada) Limited