Prices of Commonly Prescribed Drugs Dropping
This past April, the price of almost 70 commonly prescribed generic drugs dropped by 25 to 40 percent, discounted by up to 90 percent of their brand name equivalents.
These generic drugs are a variety of commonly prescribed medications used to treat conditions such as high cholesterol, depression and high blood pressure and are manufactured by multiple companies to help ensure a stable supply. These price reductions were negotiated between the pan-Canadian Pharmaceutical Alliance (pCPA), negotiating on behalf of provinces and territories and the federal drug plan, and the Canadian Generic Pharmaceutical Associations (APP), who represent companies producing generic drugs.
In exchange for these price reductions, the participating provincial drug plans have guaranteed that they will not pursue tendering their drug plans for the next five years. Tendering officially extends the opportunity to other pharmaceutical companies to quote on supplying various drugs to provincial plans publicly. Freezing the tendering process for the next five years has some people concerned but the pCPA feels it is a fair exchange for guaranteed savings. It’s expected that this agreement will result in an estimated savings of up to $3 billion for Canadian public drug plans over its five-year life span. The cost savings are expected to trickle-down to private drug plans.
In response to this news, at least one insurance company has announced an automatic price reduction of 1.5% to health premiums, effective with their August 2018 renewals. It will be interesting to see if other carriers follow suit.
If you have any questions, please feel free to reach out to your group benefits consultant.