Generics Not Saving Consumers Money in Canada

Competition in the Canadian generic drug market has not driven down the prices consumers pay for generics sufficiently, according to a new report.

Recent studies of generic drug costs drove the Competition Bureau, an agency responsible for enforcing Canada’s Competition Act, to conduct its own. One study released in July by the Fraser Institute found that 2006 generic drug prices were twice as high in Canada as in the U.S.

The bureau found that although generic manufacturing has become more competitive over the past 15 years, it is not reflected in prices paid by individual consumers or public or private health plans. This is because manufacturers compete to have their products stocked by pharmacies by offering them rebates on invoice prices, but pharmacies have little incentive to pass the savings along to payers.

To help bring savings to consumers, the Competition Bureau is recommending a regulatory and market framework that shifts the focus of generic competition from the pharmacies to public and private insurers and consumers. One possible solution would be implementing a competitive bidding process to determine which generic products can be dispensed by pharmacies.

A spokesman for the Canadian Generic Pharmaceutical Association said it is reviewing the report, but the group agrees with the Competition Bureau’s finding that Canada’s generic pharmaceutical industry is highly competitive.

The study is available at www.competitionbureau.gc.ca/internet/index.cfm?itemID=2495&lg=e.