BC turfing generic drugs contract over issue of exemptions
Posted February 29, 2012 4:30 pm.
This article is more than 5 years old.
VICTORIA (NEWS1130) – The provincial government is ripping up a contract in a move that is expected to lower the cost of generic drugs. The deal with the BC Pharmacy Association and Canadian Association of Chain Drug Stores was signed in 2009.
Under the terms of the contract, the cost for most generic drugs was supposed to drop to 35 per cent of their name-brand equivalents. The Health Ministry complains there were too many exemptions.
“The government takes seriously any agreement it has,” says Deputy Minister of Health Graham Whitmarsh, “but this is an agreement where we do feel we were let down by the other parties. They did not follow through with their part of this and provide the savings. So in the current year that we’re just coming to the end of we’ll be about $36 million short of what we hoped to achieve when we signed the deal.”
The contract allowed drug manufacturers to apply for exemptions, letting them charge more for drugs in special cases, such as medicines new to the market or expensive to make. Whitmarsh says that part of the contract was abused.
“We believe that it’s been exploited by the generic manufacturers in a way that’s undermined our savings, and therefore we can’t live with the current deal,” he says.
“When the agreement was signed, we anticipated there would be a number of exceptions. But in reality, about a third of the drugs were classed as exceptions by the manufacturers. And this high number of exceptions is what has caused the deal to fail. It was unforeseen.”
The agreement is going to be terminated on April 1 of this year. It would have expired in April, 2013. The contract will be replaced with legislation that has not yet been introduced in Victoria.
“What will happen as a result of this is we will still see generic drug pricing come down to 35 per cent, as was provided in the original agreement,” says Whitmarsh, “because this is governed by individual agreements between [the provincial government] and the generic manufacturers, so that price will still come down.
“There will be no impact on patient services at pharmacies, but some of the adjustments and investments that were provided for in the deal around dispensing fees will not happen.”
The Deputy Minister says there will be no impact on patients as a result of the changes announced today. He says the province is acting within its powers to terminate the agreement, and no penalties are anticipated.
