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5 things you didn’t know about prescription drug pricing

There are a lot of complexities when it comes to prescription drug pricing. From patents to pharmacy mark-ups, here are 5 things to know about what determines the cost of your medications.
  1. Each drug has a manufacturer’s list price (MLP) – that is, the price sold to the wholesaler by the drug manufacturer. The wholesaler will sell it to the pharmacy at a wholesale price which includes a distribution upcharge to the MLP. Pharmacies then charge a mark-up on the wholesale price, which can vary by pharmacy and location.

  2. Your pharmacy charges a dispensing fee for filling each prescription. The average dispensing fee in BC is approximately $10.00, but varies by pharmacy and location.

    Many plans have a limit on the amount of the dispensing fee they cover, so any amount charged above this is paid out of pocket by the customer.

  3. In recent years, a number of blockbuster brand name drugs have seen their patents expire. This allows for other manufacturers to produce generic versions of these drugs. Generics are equally as effective, but on average cost three times less than their brand name equivalents.

  4. Individual prices for patented drugs, which include most brand name medications in Canada, are controlled by the Patented Medicine Prices Review Board (PMPRB). The PMPRB regulates what patent holders can charge for drugs sold in Canada to ensure they are not excessive.

    However, the PMPRB regulates only the prices that pharmaceutical companies charge wholesalers and pharmacies. They have no oversight over consumer prices.

  5. The pricing of most generic drugs in British Columbia is legislated by the BC Ministry of Health through BC PharmaCare. PharmaCare has established a Maximum Accepted List Price (MALP) for generic manufacturers. In BC, the maximum accepted generic price is currently set at 20% of the corresponding brand price.

    Pricing for a select group of more popular generics is set by the Pan Canadian Pricing Alliance, which has negotiated 18% of the brand price. Generics that are not listed with PharmaCare are not regulated, and range in price from 50-90% of the equivalent brand drug.

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