THE VALUE OF GENERICS

GENERIC DRUG PRICING AND AVAILABILITY

Jim Keon, PresidentCanadian Generic Pharmaceutical Association

In the last several years, the price of generic drugs has fallen dramatically.

The economic rationale for using generics has never been stronger.

TOTAL MARKET COST (%)

In 2012, of the 559 million prescriptions written in Canada, more than 63% of them were filled using generic drugs.

The cost of these generic medicines represented only 24% of the $22 billion dollars Canadians spent on prescription drugs.

While brand-name drugs were used to fill only 37% of prescriptions, they represented more than 76% of the total cost of prescriptions.

TOTAL NUMBER OF PRESCRIPTIONS (%)

527 MILLION PRESCRIPTIONS

GENERIC

BRAND-NAME

21.1 BILLION DOLLARS

GENERIC

BRAND-NAME

source:

8-YEAR AVERAGE RETAIL PRICE - GENERIC vs. BRAND-NAME

Over an eight-year period the average price of a brand-name drug prescription has risen from $60 to almost $74 which represents a 21% increase.

The average retail price of a generic prescription is $25.04 versus $73.76 for a brand-name prescription.

All provinces provide for price exemptions.

GENERIC vs. BRAND DRUG PRICING MODELS1

1. The data are as of fall 2012.

BRITISH COLUMBIA

ALBERTA

SASKATCHEWAN

MANITOBA

ONTARIO

GENERIC vs. BRAND DRUG PRICING MODELS1

QUEBEC

NEW BRUNSWICK

NOVA SCOTIA

PRINCE EDWARD ISLAND

NEWFOUNDLAND/LABRADOR

All provinces provide for price exemptions.1. The data are as of fall 2012.

ADDITIONA PROVINCIAL COST SAVINGS FOR CANADIANS

Six of the leading generic drugs on the market will be priced at 18% of brand-name drug price

Representing 20% of generic drug sales in Canada

• Atorvastatin

• Ramipril

• Venlafaxine

• Amlodipine

• Omeprazole

• Rabeprazole

TENDERING GENERIC DRUGS: WHAT ARE THE RISKS?

• Potential drug shortages because of less redundancy in the drug supply system.

• Less patent litigation by generic manufacturers resulting in delayed availability of lower-cost generic drugs.

• Less manufacturing of generic drugs in Canada.

• Closure of some generic drugs manufacturing plants in Canada.

• Less competition in the generic drug markets in Canada.

• Less customer service offered by generic suppliers to pharmacies.

• Less free customer service in the remaining pharmacies.

Tendering Generic Drugs: What Are The Risks?

October 24, 2012 – Professor Aidan Hollis, Department of Economics, University of Calgary, and Paul Grootendorst, University of Toronto, Faculty of Pharmacy

VALUE OF GENERIC MANUFACTURER’S LITIGATION

EIGHT OF THE TEN TOP-SELLING DRUGS IN CANADA LAUNCHED AS A RESULT OF GENERIC COMPANY LITIGATION

SAVINGS IN BILLIONS OF DOLLARS

INTERNATIONAL PRICE COMPARISONS

• Measure manufacturer EX-factory prices. Prices DO NOT reflect total cost to payers in each market.

 • Prices are On-invoice Prices. Off-invoice discounts,

free goods, rebates, etc. are not included.

• Canadian prices DO NOT reflect manufacturer’s net prices – only the reimbursed/retail prices.

 • In Canada, retail/reimbursed prices include

significant support for the services that community pharmacies provide to patients.

 • In other countries (e.g. United Sates) retailers

purchase products from manufacturer then mark-up to sustainable prices. NOT the Canadian model.

INTERNATIONAL STUDIES ON PRICES OF GENERIC PHARMACEUTICAL PRODUCTS:

GENERIC PRESCRIPTION MARKET - CANADA VS. U.S.

In the United States generic drugs are dispensed to fill 80% of all prescriptions. In Canada it’s only 60%.

If the use of generic drugs in Canada increased by 20% and matched the America levels, Canada’s health-care system would have saved nearly 3-billion dollars in 2011.

80%

60%

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.

For every one percent increase in the use of generic drugs in Canada, Canadians save an additional 262-million dollars.

Jim Keon, PresidentCanadian Generic Pharmaceutical Association