reviewing the canadian drug landscape and generic pricing models cgpa conference - 26 october 2011...
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Reviewing the Canadian Drug Landscape and Generic Pricing ModelsCGPA CONFERENCE - 26 OCTOBER 2011
François Joseph PoirierPartner
Toronto - 161 Bay Street
Not Peer Reviewed
2MERCER
Agenda
• Overview of recent changes
• New legislations impact on generic pricing
• How are private plan sponsors adapting to changes
• The future ahead of us
OVERVIEW OF RECENT CHANGES
4MERCER
Generic Prices in Transition
• British Columbia– Public and private at 40% to drop to 35% on 04/01/12– Public mark-up at 8%, except on high cost drugs (5%)– Rising dispensing fees to $10.50 on 04/01/12
• Alberta– Public and private at 56% for pre Oct. 2009– Public and private at 45% for post Sep. 2009
• Saskatchewan– Public and private at 45% to drop to 35% on 04/01/12– Rising dispensing fees to $10.25 on 04/01/12– Expanded prescribing authority
5MERCER
Generic Prices in Transition
• Manitoba– Bill 41 to be implemented
• Ontario– Public at 25% – Private at 35% to drop to 25% on 04/01/12– Professional allowances at 35%, 25% in 2012 then 0%
• Quebec– Public and private prices vary by drugs– Some drugs such as Lipitor are at 25%– Rebates still exist
6MERCER
Generic Prices in Transition
• Nova Scotia– Public to drop to 35% on 07/01/12– “In theory” applicable to private sector– Expanded prescribing authority
• New Brunswick– Tabled legislation setting generic pricing
• Prince Edward Island– Legislation being drafted
• Newfoundland and Labrador– Legislation being contemplated
7MERCER
Generic Prices in Transition
• Additional consideration for generics– Variation in time to list from a few weeks in Western Canada
up to 6 months in Quebec and Eastern Canada– Different approaches on professional rebating
8MERCER
Provincial Regulation – Public Payer
Practices Provinces
BC AB SK MB ON QC NB NS NF PE
Fixed Generic Pricing (% of brand)
Lowest price in Canada
Lowest Cost Alternative (interchangeable drugs)
Maximum Allowable Cost/ Reference Pricing (same therapeutic class)
Limit Professional Allowances
Competitive Tender (List price)
Listing Agreements (Manufacturer Payments)
Dispensing Fee/ Mark-Up Limits
Implemented ProposedP
P
Blank = Not Implemented
9MERCER
Provincial Regulation Impact – Private Payer
Practices Provinces
BC AB SK MB ON QC NB NS NF PE
Fixed Generic Pricing (% of brand) *
Most Favoured Nation
Lowest Cost Alternative (interchangeable drugs)
Maximum Allowable Cost/ Reference Pricing (same therapeutic class)
Limit or Eliminate Professional Allowances
Competitive Tender (List price)
Listing Agreements (Manufacturer Payments)
Dispensing Fee/ Mark-Up Limits
Implemented Blank = Not Implemented
IMPACT OF GENERIC PRICING
11MERCER
Pharmacist’s Perspective
• Reduced revenue for pharmacies forcing current business model review– From pills dispenser to pharmaceutical consultant
• Increased fees– In Ontario 32% of pharmacies increased dispensing fees– Generic mark-up increase from 10% up to 19%
• Increased generic pricing– Generics not listed on formulary– Some generics increased to new limit
12MERCER
Pharmacist’s Perspective
• Reduced services
• No apocalyptic store closures as expected
13MERCER
Private Sponsor’s Perspective
• Generic drugs spend has decreased but …– Relatively small percentage of total drugs spend – 8.2% of
Great West Life GroupLine 2010
• … offset by other Rx cost adjustments
• Prescribing pattern to replace brand name coming off patent by another brand name drugs instead of the generic version– Lipitor® with Crestor® (Cholesterol)
– Effexor® with Cipralex (depression)
– Neurontin with Lyrica® (Nerves pain and seizure)
– Napraxen with Celebrex® (Inflamation)
PRIVATE PLAN SPONSORS RESPONSES
15MERCER
Private Sponsors’ Perspective
• The Generics manufacturing industry is creating cost savings opportunities through new medications but retail pharmacies scooping most of overall net savings
• Generics penetration still represents significant savings opportunities but need to implement cost management strategies
THE FUTURE
17MERCER
Not to Sound Too Rosy but …
• Generics industry is well positioned to increase market share if:– Help promoting greater use of generic substitution
Introduction of managed formularies Tiered formulary – higher reimbursement for cost-effective
drugs/two-tier pricing structure to further encourage generics
– Cautious about “expected” patent cliffs of coming years– Keep “pounding” the message that generics substitution is
safe and a cost effective way to improve health
18MERCER
Not to Sound Too Rosy but …
• Generics industry is well positioned to increase market share if:– New marketing techniques to “influence/educate” physicians
prescribing habits and pharmacists – more and more– Innovative ways, i.e. financial rewards, to encourage plan
sponsors to promote generic utilization– Limit the shortage issue compared to brand names– Get involved with “Biosimilars” to ultimately offer alternative
solutions to the biologic drugs– Further lobbying…
Mercer (Canada) Limited