March 26, 2012
Residents to Benefit from New Generic Drug Pricing Policy
A new generic drug pricing model is being implemented to help ensure the people of Newfoundland and Labrador obtain quality prescription drugs at reasonable prices. The bill titled An Act to Amend the Pharmaceutical Services Act will receive second reading in the House of Assembly today. Once fully implemented, residents of this province will benefit from lower cost generic prescription drugs.
“Our government is committed to continuing to provide affordable access to prescription medication for beneficiaries of our prescription drug program,” said the Honourable Susan Sullivan, Minister of Health and Community Services. “We are also committed to ensuring that residents of our province, whether or not they are beneficiaries of our public drug program, pay reasonable prices for their generic drugs, including those in rural Newfoundland and Labrador. Introduction of a new generic drug pricing policy will help to ensure this.”
The new generic drug pricing policy will provide savings to residents who pay for their medications out-of-pocket and to employers and employees who pay through private drug benefit plans. The policy will also provide savings through the Newfoundland and Labrador Prescription Drug Program.
“Savings that are realized as a result of the new generic drug pricing model will not be at the expense of residents – on average, residents can expect to pay less for their prescription medications as a result of this policy,” said Minister Sullivan.
When compared to other provinces in Canada, Newfoundlanders and Labradorians pay higher prices for generic drugs than provinces who have implemented generic drug pricing policies.
The new pricing policy will be phased in between April 1, 2012 and April 1, 2013:
- From April 1, 2012 to September 30, 2012 all generic drugs, except for a small number that will be considered for exemption, will be priced at no more than 45 per cent of brand.
- From October 1, 2012 to March 31, 2013 all generic drugs, except for those approved for exemption, will be priced at no more than 40 per cent of brand.
- From April 1, 2013 onward, all generic drugs, except for those approved for exemption, will be priced at no more than 35 per cent of brand.
Currently, when buying generic drugs residents of this province pay approximately 60 per cent of the brand drug price. The proposed new generic drug policy, once fully implemented, will see that drop to 35 per cent of the brand drug price. In recognition that not all products can be brought to market at 35 per cent of the brand price, a process will be established where the manufacturer will have to demonstrate extraordinary production or manufacturing costs to justify an exemption being granted for a particular drug.
In addition, a portion of the savings achieved by the Provincial Government through this policy will be reinvested directly into the health care system for the benefit of Newfoundlanders and Labradorians, particularly seniors. Modifications will be made to the Newfoundland and Labrador Prescription Drug Program 65Plus Plan that will come into effect with the introduction of the new generic pricing model, to help ensure that lower income seniors do not pay more for their prescriptions.
In addition, through negotiations with the Pharmacists' Association of Newfoundland and Labrador, savings will also be reinvested in pharmacies. Initiatives from these negotiations may include such things as dispensing fees, the payment of professional (cognitive) services and the introduction of other targeted investments.
“Our government understands that our province faces unique geographic and demographic challenges in terms of the location of our communities and the distribution of our population,” said Minister Sullivan. “The health care services that pharmacies provide in rural parts of our province are essential to these communities and the residents who benefit from their services and expertise. We recognize that this model will reduce the amount of professional allowances that some pharmacies are currently receiving from generic drug manufacturers. To help offset any loss in revenue the Provincial Government will be reinvesting a significant portion of its projected savings to assist pharmacies in adjusting to their new market reality.”
Currently six other provinces have introduced generic drug pricing models. The planned policy has drawn on the experiences of these provinces to ensure that the decisions made by the Provincial Government are based on best practices. The Provincial Government invests approximately $151 million annually in the Newfoundland and Labrador Prescription Drug Program. The program provides financial assistance for the purchase of eligible prescription medications for residents of the province with five main plans; the Foundation Plan, 65Plus Plan, Access Plan, Assurance Plan, and, Select Needs Plan.
- Video of news conference (17 MB)
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Media contact:
Jennifer Tulk
Director of Communications
Department of Health and Community Services
709-729-1377, 699-6524
jennifertulk@gov.nl.ca
2012 03 26
12:45 p.m.