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Regulations drop price BC will pay for generic drugs

Starting in April, 2013, the British Columbia government will drop what it will pay for generic drugs to match the price set in Ontario three years earlier.

On April 1, 2013, B.C. will start paying for generics at 25 percent of the price of the equivalent brand name drug. A year later it will bump that down further to 20 percent.

The government's announcement quoted Health Minister Margaret MacDiarmid saying the reductions will save the government money and enhance patient care. "B.C. families will soon notice that they pay less at the till when they fill their prescriptions," she said.

The move has been three years, and three health ministers, in the making. In April, 2010, then Health Minister Kevin Falcon told The Tyee he was interested in following Ontario's lead when that province reduced what it would pay for generics from 50 percent to 25 percent of the brand name price.

But when B.C. announced its reductions in 2010 from a similar 50 percent starting point, after negotiating with industry groups representing drug stores, it instead set the price at 35 percent of the brand name equivalent.

That reduction was expected to save the province $170 million, but by Sept. 28, 2011 then Health Minister Mike de Jong announced the deal was not on track and the province would save some $50 million less than expected.

In March, 2012, de Jong said the government would terminate its agreement with pharmacy associations and introduce legislation that would allow the province to set generic prices through regulation.

At the time the CEO of the B.C. Pharmacy Association, Geraldine Vance, said she was "surprised and disappointed" by the government's position. Today's announcement quoted her saying the ministry's consultation process was good and her association was glad the government agreed to a "transition period" as it lowers what it will pay.

Prescription drugs are a major expense for B.C., which spent about $972 million on drugs in fiscal 2010-2011. Some $325 million of that was for generics. The price the government pays for drugs also sets the cost for employer or union benefit plans, as well as individuals who buy their own drugs.

Michael Law at the Centre for Health Services and Policy Research at the University of British Columbia has argued that provincial governments could save much more on drugs by bulk buying and taking competitive bids from suppliers.

Andrew MacLeod is The Tyee’s Legislative Bureau Chief in Victoria. Find him on Twitter or reach him here.

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