Healthy Skepticism Library item: 5115

Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.

Publication type: news

Walkom T.
Big Pharma versus Ontario government no contest : Major climbdown on drug reform bill
Toronto Star 2006 Jun 10
http://www.thestar.com/NASApp/cs/ContentServer?pagename=thestar/Layout/Article_Type1&c=Article&cid=1149889809525&call_pageid=970599119419

Notes:

Ralph Faggotter’s Comments:

“The multinationals didn’t like this at all, warning that if the government persisted, they might refuse to invest further in Ontario – or even remove their existing processing plants.”

This ‘bluff and bullying’ type of economic blackmail is not unusual for the pharmaceutical industry, but for the government to cave in to it is pathetic.

Full text:

Big Pharma versus Ontario government no contest

Major climbdown on drug reform bill
Jun. 10, 2006. 01:00 AM
THOMAS WALKOM

No one should be surprised that the Ontario government has backed away from plans to make prescription drugs cheaper. The legal drug trade is big and profitable. By threatening these profits, Health Minister George Smitherman made enemies.

The only question facing Premier Dalton McGuinty’s government now is whether it has backed away enough. Pharmacists – who had been adamantly opposed – appear to be on side, now that the government has agreed they can continue to receive kickbacks (renamed “professional allowances”) from the manufacturers of generic, or copycat, drugs. But the most powerful elements of the drug industry, the multinational brand-name manufacturers, have not yet spoken on the government’s change of heart. If they aren’t satisfied, there will be pressure on Smitherman to humiliate himself further.

In April, when the government first revealed Bill 102, it figured it had this thing finessed. Pharmacists would have to give up kickbacks but would receive higher dispensing fees. Generic firms would face stiffer price controls, but potentially they’d get more market share, thanks to a government plan to give druggists greater scope in dispensing generics.

The biggest problem was always the brand-name industry, sometimes nicknamed Big Pharma. To appease it, Bill 102 would have made it easier for the multinationals to get new products listed with the province’s Ontario Drug Benefit plan.

That plan, which subsidizes pharmaceuticals for seniors, welfare recipients and those suffering from certain kinds of catastrophic diseases, is the biggest purchaser of prescription drugs in the country. For manufacturers trying to introduce a new drug into the Canadian market, a listing with the Ontario plan is crucial.

The brand-name companies liked this component of Bill 102. But they were alarmed by others designed to save money.

Prescription drugs are the fastest-growing elements in Canadian health spending, affecting not only governments but individuals who pay out of pocket or through workplace insurance plans. To deal with this, Smitherman proposed a four-pronged attack.

First, he wanted the government to bargain with drug companies over price in an effort to win volume discounts. He also promised to enforce at the wholesale level existing price ceilings on drugs paid for by the province. Currently, many manufacturers charge more than the ceiling price, leaving pharmacists to pick up the difference.

The multinationals didn’t like this at all, warning that if the government persisted, they might refuse to invest further in Ontario – or even remove their existing processing plants.

In its climbdown this week, the government said it’s giving up on plans to enforce price ceilings and, instead, will simply raise these ceilings to the levels already charged by manufacturers. But it still wants to bargain volume discounts.

Second, Bill 102 would have let druggists substitute cheaper generic equivalents for pricey, brand-name drugs in all cases (unless the prescribing doctors specifically objected). Currently, pharmacists are required to do this only for drugs purchased under the provincial plan, or under workplace plans that specifically demand such substitution.

Expanding the use of generics would have saved considerable money for all consumers. But the multinationals hated that, too, arguing that the government should postpone it until further study was done.

This week, the government agreed to do just that.

Third, the original Bill 102 would have given the government the right to expand the definition of generic equivalents to include drugs that, while not chemically identical, were in terms of their active ingredients “similar.”

Big Pharma feared the government might use this to get out of paying for new drugs that, while more expensive, aren’t any better than existing products. This kind of scheme, in use in British Columbia, is sometimes called therapeutic substitution.

This week, the government agreed to define “similar” more narrowly and ban therapeutic substitution explicitly.

Fourth, Bill 102 would have let bureaucrats make the final decision on which drugs to list with the provincial plan. This week, the government agreed to allow the bureaucracy’s decisions to be appealed to an as-yet unspecified board that might include representatives of Big Pharma. It also bowed to the demand of the multinationals that drug policy be dealt with not just as a health issue but as part of an overall economic strategy aimed at promoting investment.

McGuinty government strengthens drug strategy was the headline on the news release announcing this week’s climbdown. “Weakens” would have been a more accurate verb. We shall see whether Ontario’s vested drug interests think this new version of Bill 102 is weak enough.