Generic Drug Pricing and Substitution in Private Drug Plans in Canada

Purpose: To estimate the willingness and ability of private plans to manage costs during the generic drug procurement reform era that began in 2006 in Canada. Two cost management aspects were assessed; the prices paid for generic drugs and the extent to which private plans have enacted measures to increase generic substitution. Methods: IMS-Brogan Pharmastat data was used to estimate the price of commonly prescribed generic drugs and generic share of prescriptions, by plan type, province and quarter from 2003 to 2012. Results: Prices did not decline unless the provincial governments mandated the reductions. Savings from this mandate was approximately $264 million in Ontario. Rates of generic substitution were unaffected by the price reductions, possibly because the rates were high beforehand. Conclusion: Private plans did not independently obtain lower generic prices. Due to already high substitution rates, there may have been limited potential for additional savings from mandatory substitution controls.MAS