Jul 10, 2010

Good news from the BC government – with a couple of caveats


The BC government’s announcement July 9th that it had signed a deal on generic drugs with the province’s drug stores is good news. 

As discussed in an earlier blog, British Columbians have been paying far more than consumers in other jurisdictions for generic drugs.  Alberta, Quebec and Ontario had already taken steps to correct this and now BC has joined the group.

Under the BC deal, in coming years the cost of generic drugs in BC will fall from about 65 per cent of the cost of comparable brand name drugs to about 35 per cent of the cost.  Just as important, the deal covers purchases by individuals and employee benefit plans as well as purchases by BC’s PharmaCare.  An earlier interim agreement had only covered drugs purchased under the province’s drug plan.  In Ontario a similar arrangement resulted in costs for individuals and benefit plans rising while purchases by the province’s drug plan fell.

The deal should save hundreds of millions of dollars for the province and individual purchasers but there are a couple of things that will bear watching.

First, while the cost will fall to 35 per cent in BC, Ontario generic drug prices were reduced by legislation to 25 per cent of the cost of comparable brand name drugs.  Quebec has legislation requiring drug companies to match the lowest price they sell to any other province.  That means that the two largest provincial drug purchasers in the country will be saving more than we are saving in BC.  In coming years we will need to look at whether the BC agreement got sufficient value for the money it left on the table.

Second, the province has raised dispensing fees to pharmacies to help make up for the money they are losing.  But they have also capped both mark ups for drugs and dispensing fees for PharmaCare purchases.  These protections have not been extended to private buyers or to employee drug plans.  That raises the possibility that pharmacies will seek to get their money back by raising fees and mark ups for private purchasers.

That may not happen.  Large drug chains may keep their dispensing fees down to bring in customers and large employee benefit plans may be able to negotiate for lower fees.

Information on dispensing fees is available from the province’s pharmacy database so we should be able to find out what is happening.  But the province has apparently been making access to this information more difficult.  If the province begins to shut down access to this kind of information we will have cause to be concerned.

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