Quebec has reached an agreement with the Canadian Generic Pharmaceutical Association to lower drug costs by $1.5 billion over five years, thereby putting an end to the province’s plans to issue tenders for generic drugs.

The new agreement will take effect on Oct. 1, 2017, with costs savings coming from price discounts and the launch of new generic prescription medicines, according to a news release from the generic association.

Read: Generic industry asks Quebec to abandon ‘risky path’ on drug tenders

Quebec didn’t disclose the details of the new negotiated prices because generic drug manufacturers are having similar discussions with other provinces, Health Minister Gaetan Barrette told Bloomberg News. But he noted the province would save 40 per cent on drug costs and private insurers would also benefit from the new prices.

The association representing insurance companies in the province welcomed the news.

“The insurance industry has always supported lower prices for prescription drugs because this benefits members of supplementary health plans, so we are on board with the minister’s announcement,” said Lyne Duhaime, president of l’Association canadienne des compagnies d’assurances de personnes. “The details of the agreement are still confidential, but we are very hopeful that we can all work together, the government, pharmacists and insurers, to make sure that Quebec consumers and plan sponsors all benefit from this initiative.”

Read: Quebec move on drug bids ‘one to watch’ as private plans expected to benefit

However, the scant details led to questions about whether plan sponsors will actually benefit from the deal, says Mike Sullivan, president of Cubic Health Inc. in Toronto. “If there’s no infrastructure in place to actually transparently lower list prices and there is no mention of how they’re actually going to do it, then it won’t impact the plan sponsors,” he says. “If it’s all effectively just rebating behind the scenes, it won’t change the list price.”

Sullivan says he isn’t confident the government will reflect the new lower prices on its drug formulary. “If they do change the list price, the problem with that is they’re setting a very substantial precedent for other provinces as well. I can’t imagine the generic association would have been too open to doing that.”

While Sullivan notes he could be wrong, he notes a transparent deal would start “an interesting domino effect” in terms of drug negotiations with other provinces.

Read: Quebec drug reform likely to fall short on promised cost savings

Quebec and the generic industry returned to the negotiating table after the province said it would issue tenders for generic drugs in late June.

“Through this agreement in principle, the government of Quebec is clearly recognizing the value of the generic pharmaceutical industry to Quebec’s health-care system and economy, and the importance of ensuring there exist incentives for generic pharmaceutical manufacturers to invest in bringing new, cost-saving prescription medicines to Quebec and Canada,” said Jim Keon, president of the Canadian Generic Pharmaceutical Association, in a news release.

Note: Story updated to include comment from l’Association canadienne des compagnies d’assurances de personnes.

Copyright © 2018 Transcontinental Media G.P. Originally published on benefitscanada.com
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Johanne Brosseau:

This benefits members of supplementary health plans because RAMQ is first payer and amounts claimed to the public plan automatically adjust to lower acquisition cost. Different story for private drug plans in Quebec as there is little or no control over what pharmacists charge: prices of generics are on average 91% higher than Ontario (ESC). This is why Lyne Duhaime mentions we have to work to make sure that Quebec consumers and plan sponsors all benefit from this initiative. Without controls, pharmacists have historically not lowered the amount claimed to private plans to reflect a decrease in acquisition cost: they increased their profits.

Tuesday, July 18 at 12:41 pm | Reply

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