Background
The battle between originator and generics firms in Canada continues. Since 2010, provincial governments have brought in a series of regulations banning rebates given to encourage dispensing and capping the price of generics at 25% of that of the originator medicine. Government health programmes have for years required that generics be dispensed if they are available, private employer plans have not.

Faced with this situation, originator firms have been fighting back. Increasingly, they are making coupons available that lower the cost of brand-name drugs for consumers but not for insurance companies. The coupons sometimes indicate the firm will pay the difference between the generic drug and the brand-name. But because the pharmaceutical company is the payer of last resort, the drug plan actually picks up most of the tab, and the drugmaker covers only the patient’s share, according to Ms Barbara Martinez of Mercer Canada, a consultant who advises group health plans.

The result is the patient pays the same amount – or even less – to get the brand-name instead of the generic drug, while the employer that finances the health plan is saddled with a much higher cost, she said.

Such coupons first began appearing in the US, stirring up controversy there. A consumer group and four health plans launched a class-action lawsuit in March 2012, alleging that the American coupon programmes violate US bribery laws and boost healthcare costs unduly.

The response from health insurers
The difference between the average cost of a prescription containing brand-name meds (CAN$ 72) compared to one for generics (CAN$ 27) is sufficient to threaten the long-term viability of drug plans, in the view of two major private health insurance companies. So on 11 September 2012, Sun Life and Great West Life announced that from now on they would be rejecting claims for brand-name medicines when a generic drug is available. The companies have also seen a rise in the number of doctors insisting on brand-name products over generics. For example, prescriptions that require the Lipitor (atorvastatin) brand, which fell sharply in 2011, have this year bounced back.

The pharmaceutical industry has complained about the change. ‘We are concerned about patients having the choice to use the medication they are most comfortable with and that benefits them the most,’ Ms Shannon MacDonald, Vice President of Canada’s Research-Based Pharmaceutical Companies trade group, told the National Post.

A Sun Life Vice President replied that if doctors provide a medical reason why a patient needs a brand-name drug, then patients can get it. Also, he pointed out, consumers may always pay the extra cost themselves.

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