Archive for July, 2007
July 31st, 2007
Canadian prices for generic prescription drugs in 2006 were on average more than double American prices for identical drugs, according to a new study from independent research organization The Fraser Institute.
The study, Canada’s Drug Price Paradox 2007, found that Canadian prices for generic prescription drugs were on average 115 per cent higher than U.S. prices. At the same time, Canadian prices for brand name prescription drugs were on average 51 per cent lower than American prices. An earlier version of the study published in 2005 found that prices for
generic drugs were 78 per cent higher in Canada. By contrast, prices for brand-name drugs were 43 per cent lower in Canada on average. “These new findings show that prices for generic drugs in Canada have increased relative to the U.S., while prices for brand-name drugs have decreased,” said Brett Skinner, The Fraser Institutes’s Director of Health,
Pharmaceutical and Insurance Policy Research and co-author of the study. “Canadians pay more for generic drugs because government policies shield generic drug companies and pharmacy retailers from normal market forces that would naturally reduce prices.” This study estimates that in 2006 alone, misguided government policies cost Canadians between $2.5 billion and $6.6 billion in unnecessary spending due to inflated prices for generic drugs and inefficient use of medicines. Over the four years from 2003 to 2006, the total amount of money wasted could range from as high as $20 billion to more than $26 billion. “Since the U.S. market is not distorted by the kinds of government policies that exist in Canada, Americans benefit from dramatically lower prices for generic drugs,” Skinner said. Some key Canadian policies that distort generic drug pricing include:
- Drug programs direct public reimbursement of prescriptions to pharmacies instead of consumers. This insulates consumers from the cost thereby removing incentives for comparative shopping that would put downward pressure on prices.
- Provincial drug programs also reimburse generic drugs at a fixed percentage of the brand name original drug. Under fixed-percentage reimbursement, there is no incentive for retailers to undercut each other to win sales. This is because the buyer (government) offers
every seller the same price, and the price is known in advance.
- Large established generic companies exploit the reimbursement system to offer rebates to retailers that are “bundled” across many products in exchange for exclusive distribution rights. This frequently results in a virtual monopoly within particular retail pharmacy chains for a particular generic label. Because pharmacies are reimbursed directly, discounts are not passed on to consumers.
- Governments also force generic substitution for brand-name drugs. Under these circumstances, generic products no longer have to compete on price to overcome consumer loyalties toward brand-name drugs. Consumers who need the drug will buy it at a higher price because they have no choice.
Skinner notes that while Canadian governments try to force patients to use generics in place of brand-name medicines, U.S. governments tend to let consumers make their own choices.
“Despite government efforts to force generic use in Canada, the evidence shows that Americans substitute generics for brand name drugs at much higher rates than Canadians,” he said. The study found that of the total prescriptions dispensed in Canada in 2006, 44 per cent were for generic drugs and 56 per cent for brand name drugs. In the U.S., 63 per cent of prescriptions were for generics with just 37 percent for brand name drugs.
“Price incentives in a free competitive market encourage efficient substitution of generics for brand name drugs when appropriate while preserving consumer choice,” Skinner said.
“Canadians would be much better off if federal and provincial governments repealed policies that distort the market for prescription drugs. That would lead to lower prices and greater voluntary use of generics. And in the absence of massive cross-border demand from American consumers, Canadian prices for brand-name drugs should remain significantly below U.S. prices.”
The Fraser Institute is an independent research and educational organization based in Canada. Its mission is to measure, study, and communicate the impact of competitive markets and government intervention on the welfare of individuals. To protect the Institutes’s independence, it does not accept grants from governments or contracts for research.
July 30th, 2007
WASHINGTON — The Food and Drug Administration, beset by a lack of funding and staffing, is failing to keep up with the growing volume of generic drug applications and meet its obligation to approve the lower-cost prescription medicines in a timely fashion.
Although the FDA gave the go- ahead to more than 500 generic drugs last year, the agency’s backlog of pending applications grew to 1,291 last month, from 780 at the end of 2005. The median approval time for new generic applications has been stalled at more than 16 months for several years, despite a statutory requirement that generic drugs be reviewed within 180 days.
Generics — which now account for more than 60 percent of all prescriptions written in the United States — are copies of expensive brand-name medicines, often selling at prices 20 percent to 80 percent lower than the originals. According to the National Association of Chain Drug Stores, the average retail price of a brand-name drug in 2006 was $111.02, while the average price of a generic was $32.23.
“The impact of the (FDA) delays is higher costs for consumers,” said William Vaughan, a senior health policy expert for Consumers Union.
Gary Buehler, director of the FDA’s Office of Generic Drugs, said his staff is “working as efficiently as it can” with the resources available to approve new generics.
“Unfortunately, we are not processing as many applications as we are getting, and that is the reason we have a backlog,” he said in an interview last week.
Buehler said his office will end up receiving between 800 and 900 generic drug applications this year, with little chance of getting out from under the heavy caseload.
Ira Loss, a senior pharmaceuti cal analyst for Washington Analysis, an investment research firm, said the Bush administration and Congress have shortchanged the FDA and consumers by not provid ing adequate revenue for the agency to do its job.
“The simple answer is the FDA is underfunded, and part of underfunding is in the generic drug area, where application numbers are increasing,” Loss said. “This has the effect of not reducing the drug prices as quickly as otherwise might be the case.”
When a brand-name drug patent expires, generic pharmaceutical companies seek FDA approval to market their version of the innova tor’s medicine. The generic firms must show their medicines are the same as the brand-name drug in chemical composition, dosage, safety, strength, how it is taken, quality, performance and intended use.
July 26th, 2007
Rwanda is the first country to come forward and ask for Canada’s help in supplying cheaply priced, generic drugs to fight HIV/AIDS.
Three years ago, Canada’s Access to Medicines Regime was created with the intention of supplying inexpensive medication to developing nations to fight public health threats.
Not one pill has been exported due to bureaucratic red tape and flaws in the legislation.
The central African nation notified the World Trade Organization on July 17 that it asked Canada to supply about 18 million tablets of Apo-triAvir, a triple combination AIDS medication made by Canadian generic drug giant Apotex Inc., over the next two years.
That’s a year’s supply of drugs for 260,000 people, said Elie Betito, Apotex director of public and government affairs.
But now that Rwanda has come forward and stated its intention to buy the medication, it doesn’t mean Apotex can just make and ship the drugs.
The generic firm must get permission from two brand name drug companies, Boehringer Ingelheim (Canada) Ltd. and GlaxoSmithKline Inc., which make the drugs used in Apo-triAvir, to move forward.
Ian Mills, president and CEO of Boehringer Ingelheim (Canada) Ltd., said the company just sent a letter to Apotex yesterday allowing them to proceed.
GlaxoSmithKline’s Leanne Kitchen-Clarke, director of corporate communications and stakeholder relations, said the company had been contacted by Apotex and was “working diligently” on its response.
Under the legislation that was originally passed in 2004, a voluntary licence is granted to the generic firm to make the drugs. The process is strewn with obstacles.
“Yes, they can give you the approval initially but they can withdraw it at any time,” Betito said. “Nothing is simple, nothing is certain.”
Last August at the International AIDS conference in Toronto, federal Health Minister Tony Clement ordered an immediate review of the legislation.
In April there were three days of committee hearings, but a report won’t be debated in Parliament until mid-September at the earliest.
The voluntary licensing requirement makes the process largely unworkable, Betito said.
“We’ve told the federal government, if you’ve got a country, just do a compulsory licence, just do it and get it done. But no one has done anything.”
Richard Elliott, deputy director of the Canadian HIV/AIDS Legal Network, called Rwanda’s intention to use the Access to Medicines Regime an important first step.
“We are being cautious in our optimism,” he said.
“This is the closest we’ve come so far to seeing the regime achieve what it’s meant to do.”
July 26th, 2007
While it may be easier on your wallet to buy the generic version of the drugs you need, are they just as good for your health as the brand names?
You may not know it, but chances are if you filled a prescription in the last year, you have probably taken a generic drug.
Of the close to 4 billion prescriptions dispensed in the United States last year, a whopping 61% of them were filled with generics, and that number is on the rise.
Despite their increased presence in medicine cabinets across the country, public opinion of generic drugs is still mixed.
Skepticism can be found on websites like ‘the people’s pharmacy’, where consumers post messages about problems when switching from brand to generic drugs.
While experts agree that patients’ complaints should not be taken lightly, some argue the stigma attached to generic medications can often cause a placebo affect.
“When generic substitution occurs, there may be a change in the color or shape of pill and that tends to heighten concern,” said Dr. Roger L. Williams.
“We began hearing from people that generics were not working as well as we hoped they’d be. They said, ‘My blood pressure started to go up when I went on a generic.’ Or, ‘My blood sugar went up.’ Or, ‘My diabetes wasn’t controlled as well,” added Pharmacologist Joe Graedon.
Proponents of generic medications insist their drugs are as safe and effective as brand name products and cost 30 to 80% less.
They also say generic medicines are highly regulated by the FDA.