Summary

A report from the Patented Medicine Prices Review Board (PMPRB) compares generic drug prices in Canada with those of other industrialized countries. The report was released on December 1, 2014 and highlights the changes that have taken place with generic drug pricing in Canada from 2011 to the first (Q1-) and second (Q2-) quarter of 2013.

Canadian generic-to-brand price comparison

The price of generic drugs in Canada has been markedly reduced in recent years with the implementation of provincial generic drug pricing policies. The PMPRB’s analysis compared the price of generic drugs in Canada to the brand product and found that gap between brand and generic prices is widening. The typical price of generic drug fell from 56% in Q1-2011 to 39% of the brand price in Q1-2013.1 In Ontario, it is reported that in Q2-2013, the price of generic drugs was 31% of the brand price.

Foreign-to-Canadian generic drug prices  

Although the price of generic drugs in Canada has been markedly reduced, generic drugs prices are still more expensive in Canada than in comparative foreign markets2. The PMPRB reports that the average foreign price for generic drugs by Q1-2013 was 32% lower than corresponding Canadian drugs.

The foreign-to-Canadian price comparison was also analyzed by major therapeutic class3, which confirmed that foreign prices are typically lower than Canadian prices. The results from this analysis also reveal that the gap between foreign and Canadian generic drug prices is larger where the market size is larger. For example, foreign prices are 39% lower than Canadian prices for drugs with annual sales in Canada of greater than $10 million. This is notable since generic drugs with medium to large size markets ($5 million or more in annual Canadian sales) made up more than 80% of the 2013 generic drug sales in Canada.  

Foreign-to-Ontario generic drug prices

The PMPRB  also conducted foreign-to-Ontario generic drug price ratios, which showed that generic drug prices in Q2-2013 were less than Q1-2013, however, the top-selling generic drugs are still on average 25% lower in foreign markets. The pan-Canadian Generic Value Price Initiative, which aims to reduce the price of 18 drugs to 18% of the brand price by April 1, 2016 was implemented in April 1, 2013, with 10 of the most common generic drugs currently being priced at 18% of the brand price.4 

Although the additional generic drug pricing reductions that occurred in mid-2013 are not fully captured by this report, the data suggests that the pan-Canadian Generic Value Price Initiative can reduce the gap between Canadian and foreign generic drug prices in the future.

Link to report:

Generic Drugs in Canada, 2013 (December 2014)