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BC Government Cancels Generic Drug Pricing Agreement

The Ministry of Health has announced it is terminating its generic drug pricing agreement with the BC Pharmacy Association and the Canadian Association of Chain Drug Stores effective April 1, 2012.

The agreement reached in July 2010 was intended to significantly lower the price of generic drugs and result in significant savings. However, Health Minister Michael de Jong says, “much of those savings did not materialize.”

Generic drugs currently cost 40 percent of the brand name price and will lower to 35 percent on April 2, 2012. This is the last cost decrease scheduled under the agreement.

The government now plans to introduce legislation this spring aiming for a reduction of generic drug pricing to 25 percent of the cost of the brand name drug by April 1, 2013. This is the same as cost savings imposed through legislation in Ontario.

When Ontario first drafted legislation to capture savings on generic drugs, the focus was limited to the public plan—this resulted in cost shifting through which private plans ended up being charged substantially more. The Ontario legislation was later changed to include private payers, however the schedule of cost reduction was slower than that for the public plan.

Pacific Blue Cross expects legislation in BC to continue to include private payers and is seeking clarification to gain a better understanding of the impact of this decision on plan sponsors.

Pacific Blue Cross takes the issue of drug cost containment seriously. Together with the Canadian Life and Health Insurance Association (CLHIA), we believe that drug pricing agreements should extend to all stakeholders.

What should plan sponsors know? Read our fact sheet

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