- The Washington Times - Friday, October 1, 2004

Canadians pay more than most countries for generic drugs, according to a recent economic report.

The study by a Canadian think tank comes as the high cost of prescription drugs and health insurance are debated as major domestic issues in the U.S. presidential election campaign.

Legalized drug importation from Canada has become a big issue nationwide as senior citizens and city and local governments hunt for cheaper drugs. The Montgomery County Council last week approved a drug plan that challenges the Food and Drug Administration’s ban of drugs imported from Canada.

But while Canada’s prescription drugs are cheaper, generic drug prices there are considerably higher than those in eight industrialized countries, according to the Fraser Institute report released in August.

Canadians pay about 30 percent more for generic, or nonpatented, drugs than patients in other countries including the United States, Britain, Germany, Sweden, Italy, France, New Zealand and Australia. Switzerland was the only country in the study that had higher generic drug prices.

Brett Skinner, the author of the study and a research manager at the institute, said he pulled most of the information from public studies done by the U.S. Food and Drug Administration and Canada’s Patented Medicine Prices Review Board.

He concluded that the Canadian government’s price controls on brand-name, patented drugs and restrictions against importing foreign generic drugs have artificially inflated prices for consumers.

The Apotex Group of Cos., a Toronto manufacturer of 150 generic drug lines, called the study a lobbying effort by multinational drug companies to change the Canadian health system.

The Fraser Institute receives 5 percent of its annual funding from the pharmaceutical industry, Mr. Skinner said.

“Generic prices are high, depending on how you look at the data,” said Apotex spokesman Elie Betito.

Generic drugs make up 40 percent of prescriptions in Canada, accounting for 15 percent of the $15 billion spent on prescription medications annually, Mr. Betito said.

Nearly 50 percent of all U.S. prescriptions are filled with generic drugs, up from 19 percent in 1984, according to recent data from Cutting Edge Information, a Durham, N.C., research services company.

U.S. sales of generic drugs increased from $12 billion in 2001 to $15.4 billion in 2002 and are projected to top $22 billion in 2005, the company said in May.

The Fraser report reaffirms claims made by the Food and Drug Administration last November to rebuff advocates of legalized drug importation from Canada. The government agency said U.S. generic drugs are cheaper than brand-name and generic drugs in Canada.

William Hubbard, the agency’s associate commissioner for policy and planning, said prices for generic aspirin or heartburn medicine drops significantly once three or more manufacturers start making the product.

“Whereas, when restricted by price control, the drug comes down some in price. But it does not come down to the ultimate level in the U.S. due to the fact there are not as many manufacturers jumping in to make the drug,” he said.

The price of a patented, name-brand drug, in which a manufacturer has exclusive selling rights to the drug for generally 20 years, tends to drop when the patent runs out and competitors enter the market.

But Canada’s Patented Medicine Prices Review Board, which regulates prices for patented drugs, does not allow new drugs to be priced higher than those in its therapeutic category, Mr. Skinner said. That means an improved version of a patented drug could not be sold at a price higher than its original version.

The pressure to keep name-brand drugs at high prices prevents manufacturers from dropping their prices to compete with generic-drug makers, Mr. Skinner said. “This allows generic drug companies to inflate prices,” he said.

While prices for brand-name and generic prescriptions have risen in the past decade, Mr. Betito said Canada’s generic drugs are still cheaper than brand-name ones.

He pointed to a report by the IMS Health Inc., a Fairfield, Conn., information services company to the pharmaceutical and health care industry, that said the average cost for brand-name prescriptions in Canada surged 75 percent from $33.41 in 1993 to $58.32 in 2003. During the same period, the average cost of generic drugs jumped 42 percent from $15.86 to $22.56.

But Canadians could save $810 million this year if generic drugs were priced at international averages, Mr. Skinner said.

Two companies, including Apotex, control 82 percent of the public spending in the Canadian generic-drug market, Mr. Skinner’s report said. In the United States, the top-10 drug companies control 61 percent of public spending. In France, the 10 biggest generic drug companies in France make up 20 percent of the market.

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