Potential Generic Drug Pricing Policy Will Lower the Cost of Prescription Drugs

The Honourable Jerome Kennedy, Minister of Health and Community Services, today stated that the Provincial Government is not considering any generic drug pricing policy that would download costs onto residents of the province, including clients of the Newfoundland and Labrador Prescription Drug Program. The policy will result in lower priced generic prescription medication for out-of-pocket payers, those receiving private insurance and beneficiaries of the provincial drug programs, creating savings that will be reinvested into the health care system.

“Our government’s commitment to providing continued, timely access to prescription medication for drug program beneficiaries and other patients, especially in rural Newfoundland and Labrador, has never wavered,” said Minister Kennedy. “In fact, by developing and finalizing a generic drug pricing policy, we know that all residents of our province will benefit from savings, and in turn, potentially save the province $18 to $45 million annually, which we will reinvest in our health care system. The most important aspect to remember is that no patient will pay more for their prescription medications as a result of the introduction of a new generic drug pricing policy in Newfoundland and Labrador.”

The Provincial Government is currently looking to develop a generic drug pricing model to ensure the people of Newfoundland and Labrador get the best price possible for prescriptions. This would significantly decrease the cost of generic prescription drugs in Newfoundland and Labrador. Right now, once a brand drug come off patent, a number of generic brands of the same drug become available to pharmacies. In this province, manufacturers must provide the generic drug to pharmacies at 75 per cent of the brand price or less. In a competitive market, drug manufacturers provide financial incentives called professional allowances to pharmacists in exchange for stocking a particular generic brand.

“Under generic drug pricing models we have studied in other provinces in Canada, these professional allowances have been either significantly reduced by generic drug manufacturers or, in the case of Ontario, outlawed,” said Minister Kennedy. “However, we also recognize that in order for some pharmacies to remain viable, especially smaller independent operations, they will have to be provided with other sources of revenue to replace the professional allowances they were receiving. We are exploring several options to address this, one of which could be increased dispensing fees.”

The Provincial Government maintains that even if an increased dispensing fee is implemented by some pharmacies, the patient will not see an overall increase. The significant reduction in the price of the generic drug will offset any increase in the dispensing fee, and the bottom line is the patient will still pay less for their medication. In addition, individuals with private insurance plans should experience a reduction in their premiums. Under the provincial 65Plus Plan, seniors pay only the dispensing fee. As any policy is developed, work will take place to ensure seniors are protected.

“This government will explore all options to maintain the viability of smaller, independent pharmacies and will work to utilize savings where possible to ensure costs do not increase for anyone,” added Minister Kennedy. “In recent weeks, the issue has been brought to the forefront by a small group of independent pharmacies in this province who are reluctant to see their professional allowances decrease, even if that means significant savings to the public and the health care system. Our government is proceeding with developing this policy for the good of our residents and will be discussing with pharmacists.”

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2011 07 29                                                                                   4:20 p.m.