Money left on the table: generic drug prices in Canada

Generic drugs are a major cost-saving opportunity for patients and drug plans. While almost every province has reduced generic drug prices, we have no information on whether these new prices are internationally competitive. Therefore, I compared Canadian prices to those in two other countries.

I used 2009 data from the IMS Brogan Canadian CompuScript and PharmaStat databases and studied the 100 most frequently dispensed generic products in Ontario, which has Canada's lowest generic prices. I compared these prices to those in public drug programs in the United States and New Zealand that use tendering. Using these alternative prices, I calculated the potential savings in Ontario.

Of the top 100 generic products, 82 were listed on an international formulary. In 90% of cases, generic products were less expensive in other countries. If Ontario had obtained the lowest comparator price for these products, the annual public sector and overall drug expenditure savings would have been $129 million and $245 million, respectively. Further, the province could have publicly paid for all these generic drugs - both public and private - and saved $87 million compared to current public sector expenditures.

Even after recent reforms, generic drug prices in Canada remain high by international standards. I found that if Ontario had obtained commonly used generic drugs at international best prices, the province could have publicly paid for all generic drugs and lowered annual expenditures by nearly a quarter-billion dollars.