Quebec making right decision by removing price freeze on provincially reimbursed drugs

    TORONTO, Jan. 31 /CNW/ - The Quebec Ministry of Health's plans to remove
its price freeze on drugs reimbursed through provincial drug plans
acknowledges the policy is not sustainable and reinforces the findings of a
2005 Fraser Institute study comparing Canada and U.S. drug prices, says Brett
Skinner, the Institute's Director of Health, Pharmaceutical and Insurance
Policy Research.
    Skinner's 2005 study, Canada's Drug Price Paradox: The Unexpected Losses
Caused By Government Interference in Pharmaceutical Markets, found evidence
showing governments could not blame the prices of patented medicines for the
unsustainable growth in government health expenditures. The study found that
Canadian prices for brand name drugs were on average 43 per cent below U.S.
prices for identical drugs. In fact, 93 per cent of the 100 top selling brand
name drugs that were common to both Canada and the US were found to be less
expensive in Canada.
    By contrast, Canadian prices for generic drugs were on average 78 per
cent higher than US prices for identical drugs, and 74 per cent of the 100 top
selling active drug ingredients that were available in generic form in both
Canada and the U.S. were found to be more expensive in Canada.
    "The study was key to making Canadian consumers aware of the ways in
which various misguided federal and provincial government policies can lead to
the unnecessary inflation of generic drug prices. It also showed how a freer,
more competitive pharmaceutical market in the United States is able to produce
prices for generic drugs that are much less expensive," Skinner said.
    "The net effect of faulty federal and provincial drug pricing policies
was an estimated $2 billion to $5 billion in lost savings annually for
Canadians. Those savings could have been used to fund access to a lot of extra
health care."
    Canada's Drug Price Paradox: The Unexpected Losses Caused By Government
Interference in Pharmaceutical Markets analyzed a sample of the 100 most
commonly prescribed brand name (mostly patented) drugs and the 100 most
commonly prescribed generic (copies of patented drug inventions) drugs in
Canada in 2003. The sample represented about three-quarters of the entire
brand name drug market and two-thirds of the entire generic market in Canada.
Canadian data was matched against observed U.S. retail prices, which were
verified as representative against list prices, known bulk discounts, and
published third-party reimbursement prices for the same drugs. Comparisons
were made on the basis of a sales volume weighted common dosage unit and
prices were adjusted to account for differences in the purchasing power of
Canadian and U.S. currencies.
    It was the most authoritative data sample yet published on Canadian and
U.S. drug prices and the findings were consistent with other research
including analyses published by Canada's own federal drug price regulator, the
Patented Medicine Prices Review Board (PMPRB) as well as the U.S. Food and
Drug Administration (FDA).
    In the summer of 2006 Skinner presented the findings to the Canadian
House of Commons Standing Committee on Health. Since the study was published,
the House of Commons has asked the PMPRB to expand its mandate beyond patented
medicines to monitor and report on the prices of generic drugs.
    "Economic reality is a hard teacher. When governments attempt to free
ride on pharmaceutical development, it is patients who pay the price in lack
of access," Skinner said. "Quebec's recent decision to remove the price freeze
on provincially reimbursed drugs is an important step in the right direction
that will maintain economic incentives for innovative drug makers to continue
supplying new medicines to recipients of public drug programs."

    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 Institute's independence,
    it does not accept grants from governments or contracts for research.

For further information:

For further information: Brett Skinner, Director, Health, Pharmaceutical
and Insurance Policy Research, The Fraser Institute, Tel: (416) 363-6575, ext.
224, Email:; Dean Pelkey, Associate Director of
Communications, The Fraser Institute, Tel: (604) 714-4582, Email

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