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Fatten Pharma's Bottom Line, Health Ministry Told

Panel wants BC's medicine buys to boost 'economic development' as well as health.

By Andrew MacLeod 27 May 2008 | TheTyee.ca

Andrew MacLeod is The Tyee's Legislative Bureau Chief in Victoria. You can reach him here.

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Health critic Adrian Dix: 'A massive gift.'

A report written for the B.C. Health Ministry suggests the government should consider economic factors and whether it is supporting "innovation" when it decides which drugs to pay for through PharmaCare.

Health Minister George Abbott said he agrees the people who make the decisions on what drugs taxpayers pay for should take a broad view. But critics argue the economic needs of drug companies should not influence those decisions.

The report comes from a task force that was stacked with people with ties to the drug industry. The panel also heard from industry representatives and patient groups like the Better PharmaCare Coalition that are funded by drug companies.

"The existing process for listing gives insufficient weight to the value of innovation and essentially none to economic development factors," the report said drug industry representatives told the panel.

The government's pharmaceutical services division makes decisions about which drugs will be publicly paid for. Its goal is to "advance the health of British Columbians by supporting optimal drug therapy." Its first goal is to "support citizens to have the best possible health." It also tries to buy "the best drugs at the best prices."

The report said, "Senior PSD staff confirmed that they do not consider economic development factors to fall within their mandate." The authors added, "This means broader economic factors beyond cost management of the PSD budget (e.g. prosperity and economic development indicators) are not addressed by anyone."

'Best interests'

When the government released the task force's report, it announced it was accepting all of its recommendations and that implementing them would be based on six principles. The first listed is that "the best interests of the patient are paramount."

But another principle said, "The B.C. government values a healthy, competitive pharmaceutical industry that will continue to provide both financial and human resource investments in B.C."

Asked to what degree the PSD should be supporting research and innovation in the decisions it makes, Abbott said, "I agree with that."

The province is a leader in medical research, especially related to cancer, he said, and that should be encouraged. That encouragement has to be balanced with keeping the Health Ministry's budget in control, he said. "We don't want to do that by limiting the range or efficacy of the pharmaceuticals that are being used by the public, so we need to do it by negotiating as well as we can to produce the best results that we can."

So, does that mean the province would make decisions on what drugs to pay for based on the economic needs of drug companies? "I don't think they're saying though that we should buy X over Y because one is produced in Canada and the other isn't," said Abbott. "I think they're just saying we should think about that in terms of the broader equation. I hope that's what they were saying."

'Wrong priority for PharmaCare': NDP's Dix

NDP health critic Adrain Dix said it is unclear what exactly the task force meant.

"What economic development factors are they talking about?" he asked. The public drug plan should not be seen as a way to support the economic needs of pharmaceutical companies, he said. "If that's what they're suggesting, that's the wrong priority for British Columbian health and the sustainability of the PharmaCare program."

He also said it is telling that the report failed to address the effect patent laws have on the price of drugs in the province. When Brian Mulroney was prime minister his government extended patents on brand name drugs, as did the federal Liberals when they were in office.

Stephen Harper's minority Conservative government is now extending patents on several drugs for another two years. The extensions drive up prescription drug costs, Dix said. "To not even mention it, and then focus on these other issues? Bias is not a strong enough word to describe what that is."

One of the drugs the federal government is extending the patent on is Lipitor, made by Pfizer Inc. Canadian sales are worth about $1.1 billion a year, he said. Once the patent expires, competition will cut that figure in half. Meanwhile the maker continues to make piles of money from the drug.

Dix said, "This is a massive gift from the federal government, using provincial money and the public's money, to the pharmaceutical industry. That's one drug, in one year. Think about that next time the two governments come out here and offer $2 million to people."

'Convoluted' payments

The panel did however make a case for controlling the amount spent on generic drugs. Generics are chemically the same as brand name drugs, but are sold after a patent has ended and are much cheaper.

About 26 per cent of the drugs bought through PharmaCare are generics. With several popular drugs set to come off patent in the next few years, the report said, by 2012 some 52 per cent of the plan's budget will be spent on generics.

"They really have to attack the cost of generics at this point in time," said George Morfitt, the panel's vice-chair and a former B.C. auditor general.

The problem is not necessarily the price of the drugs, he said, but how they are bought through pharmacies, which get paid a fixed fee by the government, but get rebates from generic companies to offer one drug instead of another. "The whole thing needs to be properly rationalized," Morfitt said. "It's quite murky at the moment. Not so much murky, but convoluted. ...Nobody's quite sure how much money is going to whom and for what."

The Canadian Generic Pharmaceutical Association is prepared to negotiate a new reimbursement system with pharmacies and the government, said the group's director of public affairs, Jeff Connell.

"We think that's good," he said. "We're looking forward to working with the government and our partners in the pharmacy community to develop partnerships to increase the contribution generics make to affordable health care in British Columbia."

Already, he said, 56 per cent of prescriptions filled in B.C. are for generic drugs, but they only take up 26 per cent of the PharmaCare budget. "That's very good. That's value for money."

The NDP's Dix said focussing on the generic makers without looking at the brand name companies is consistent with how the panel was struck. "Everyone knows the main drainer of PharmaCare is the industry themselves, the people who were there on the panel."

The government's acceptance of the task force's recommendations has drawn applause from the industry.

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