What is the best way to control the costs of pharmaceutical drugs?

It appears that Canadian provinces could do a better job controlling generic drug costs. According to a study published by Open Medicine, Canadians are paying much more for generic drugs than people who live in other industrialized countries.

How did it end up this way?

In 2013, Canada’s provinces and territories, with the exception of Quebec, made a deal to pay lower prices for six common generic drugs on the market by buying them together in bulk at 18 percent of the brand name price. The nine provinces claimed the deal would save $100 million.

But the 18 percent price our provinces set was completely arbitrary. Even though Canada did save money, it could have saved a lot more if they adopted the price negotiation techniques used in other countries. Sweden, the United Kingdom, Germany and New Zealand all offer lower generic drug prices than Canada. That’s because they can negotiate with drug companies or put out a call for tender and choose the best offer. Canada can’t do that. We are stuck with the current price.

And the costs can be quite high. For example, citizens of New Zealand pay 87 percent less for the blood pressure drug amlodipine.

High drug prices is one of the big reasons why Canada should implement a national Pharmacare program. Under Pharmacare, prescription drugs would be covered through a publicly-funded system rather than expecting people to pay out of pocket. Canada is the only industrialized nation with universal health insurance but no public coverage of prescription drug costs.


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