Generic drug prices skyrocketing in Canada: study

TORONTO (Reuters) - Canadian government policies have driven up prices of generic prescription drugs so dramatically that they are more expensive than their U.S. counterparts, a study showed on Tuesday.

Prices of generic prescription drugs in Canada were, on average, 115 percent higher than U.S. prices, a study by Canada’s Fraser Institute showed. However, Canadian brand-name prescription drugs were about 51 percent cheaper than those in the U.S.

“Canadians pay more for generic drugs because government policies shield generic drug companies and pharmacy retailers from normal market forces that would naturally reduce prices,” the study said.

Indeed, generic drug prices in Canada have risen compared with a similar study in 2005. At that time, they were 78 percent more expensive in Canada than in the U.S., while Canadian brand-name drugs were 43 percent cheaper.

The institute said “misguided government policies” cost Canadians between C$2.5 billion and C$6.6 billion in unnecessary spending in 2006 alone, due to the inflated prices for generic drugs.

From 2003 to 2006, the total in unnecessary spending was estimated to be as high as C$20 billion, or possibly more than C$26 billion, the report said.

The study showed that 44 percent of the prescriptions dispensed in 2006 were for generic drugs, while 56 percent were for brand-name drugs. In the U.S., 63 percent of prescriptions were for generics with just 37 percent for brand-name drugs.

The report said Canadian drug programs direct public reimbursement of prescriptions to pharmacies instead of consumers, insulating consumers from the cost.

It said provincial drug programs reimburse generic drugs at a fixed percentage of the brand-name original drug which discourages price wars.

“Since the U.S. market is not distorted by the kinds of government policies that exist in Canada, Americans benefit from dramatically lower prices for generic drugs,” Brett Skinner, The Fraser Institute’s director of health, pharmaceutical and insurance policy research, said in a statement.

$1=$1.06 Canadian