A better generic drug deal for B.C.

It sounds good, but according to Michael Law of the UBC Centre for Health Services and Policy Research, 25 per cent is still considerably more than the price of the same generic drug found in other countries.

Last spring B.C. Health Minister Mike de Jong sang the praises of an agreement between our province and the pharmaceutical industry that established the price of generic drugs. Others quickly pointed out at the time that the bottom line added up to $150 million more than what the government of Ontario was paying for the same drugs. However, he responded that, unlike Ontario, our province didn’t have enforcement and monitoring costs, but didn’t explain why that would pertain there and not here. Mainly, he considered it important that B.C. had negotiated the price of generic drugs whereas Ontario had resorted to a legislated approach.
 
Later in the year the minister admitted B.C.’s pricing arrangement was not saving as much as expected. In fact, it fell $50 million short of target. Then early in March of this year he announced the agreement he was so high on a year earlier will be cancelled. And guess what? He intends to introduce legislation this spring based on the Ontario law. One cannot help but observe that, in terms of time and money, it’s been a rather steep learning curve for our minister.
 
The price of a generic drug in Ontario is set at 25 per cent of the more costly brand-name version. It sounds good, but according to Michael Law of the UBC Centre for Health Services and Policy Research, 25 per cent is still considerably more than the price of the same generic drug found in other countries.
 
He suggests that rather than unilaterally setting the price that each and every generic drug manufacturer can charge, B.C. should use a competitive tender system. In New Zealand, for example, drug manufacturers compete for the right to supply the generic versions of brand-name drugs to that country’s public drug plan.
 
The prize offered to the lowest bidder is exclusive access to a market of several million people. It sounds like a win-win for both the company and the government.
 
Mr. de Jong would do well to explore this option.
 
Not only does it represent an opportunity to save B.C. citizens millions of dollars, but it might very well avoid yet another long and costly lesson in basic economics.
 
Bill Brassington
New Westminster News Leader
April 03, 2012