The Ontario Ministry of Health and Long-Term Care (MOHLTC) announced, on May 20, 2015, changes to generic drug pricing that are retroactive to April1, 2013. The changes include the introduction of tiered generic drug pricing, and are the result of amendments to the regulations under the Ontario Drug Benefit Act (the ODBA Regulations).

In November, 2014, the MOHLTC gave notice of proposed amendments to the ODBA Regulations in respect of certain drug products approved for listing on the Ontario Drug Benefit (ODB)/Comparative Drug Index (the Formulary), which apply to public and private reimbursement. The existing pricing framework required manufacturers to set generic prices at25% of the brand reference product for solid dosage forms (e.g. tablets, capsules) and 35% for non-solid dosage forms (e.g. solutions, creams).

The amendments to the ODBA Regulations permit the Executive Officer to consider various new exemptions to the 25135% price requirements, including as follows:

  • where a generic product is the only generic product listed on the Formulary (i.e. a single source generic product), the price will be 75% of the brand reference product or 85% if no province has a listing agreement in respect of the brand reference product; and
  • where there are only two generic products listed on the Formulary (i.e. dual source generic products), then the pricewould be50% of the brand reference product.

Where there are three or more generic products available, then the standard 25135% pricing would continue to apply.

Other amendments address potential price increases in respect of generic products listed prior to 2006. For example, under the amendments to the ODBA Regulations, the Executive Officer now has the discretion to adjust a brand reference price based on the Consumer Price Index by a factor of up to 10 years, or more where it is inthe public interest to do so.

Earlier this year, on March 10, 2015, the MOHLTC announced that four additional generic molecules had been selected to be reduced to 18%of the brandprice (clopidogrel bisulfate, gabapentin, metformin, and olanzapine) as part of the Pan-Canadian CompetitiveValue Price Initiative for Generic Drugs, and the Drug Benefit Price for those productswould beeffective as of April1, 2015.

The MOHLTC states that the new tiered pricing framework, resulting from the amendments to the ODBA Regulations, isnot anticipated to impact a large number of generic product listings.