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Quebec ends 15-year reimbursement for branded drugs

World News | November 29, 2012


Lynne Taylor

Quebec ends 15-year reimbursement for branded drugs

In Canada, Quebec is abolishing the rule introduced in 1994 to authorise reimbursement for 15 years for innovative drugs supplied through the province's public prescription drug insurance plan, even after their patents had expired and if cheaper alternatives, including generics, were available.

Unique to Quebec, the "15-year rule" was originally brought in to encourage pharmaceutical innovation in the province, but it is no longer having the same effect, says the government. Large drugmakers are changing their ways and outsourcing research, leading to the closure of several research centres and, consequently, a significant decrease in research spending in the province, with the loss of high-value-added jobs, it adds.

The abolition of the 15-year rule has been announced as part of Quebec's 2013 budget. However, the budget also includes a new incentive for the biopharmaceutical sector; the government is increasing from 17.5% to 27.5% the refundable tax credit for R&D salaries in the industry on all spending incurred from November 21 this year to January 1, 2018. 

The government is also providing matching funding of C$125 million over five years for research partnership projects with pharmaceutical companies in the major areas of Quebec's strengths, it says.

Abolishing the 15-year rule will save the government C$175 million a year, said the Canadian Generic Pharmaceutical Association (CGPA), which points out that the measure has cost the government C$750 million since 2008, to the benefit of brand-name drugmakers. 

"Yet these same companies have announced major job cuts and plant and research centre closures over the same period. Various media sources report that these companies have abolished at least 1,500 jobs in Quebec over the past five years," says CGPA.

The industry group also points out that, earlier this year, major private insurance companies announced that they would no longer apply the rule in order to provide significant savings to their customers, businesses and employees.  The costs of the rule are "simply unjustifiable," according to CGPA president Jim Keon.

"Increased utilisation of generic prescription drugs is vital to control rising healthcare costs and ensure the sustainability of public and private drug benefit plans across Canada," he said.

However, Canada's Research-Based Pharmaceutical Companies (Rx&D) said its members are "very concerned and disconcerted” by how the government plans to implement the proposed changes, and at the unintended consequences that could arise.

Rx&D shares the government's desire to maintain and improve Quebec's position as a leader in innovation and life sciences, but to do this, the industry must have "a certain degree of stability," said the industry group's president, Russell Williams.

"We must work with the Quebec government to develop a comprehensive action plan that ensures the future of the life sciences sector and an appropriate transition," he said.

"Rx&D wants to maintain an open dialogue with the Quebec government to better understand its vision for the pharmaceutical industry and take an active role in developing a transition strategy that will enable Quebec to continue to stand out from the rest of Canada and the world and thus keep attracting pharmaceutical research investment," said Mr Williams.

“In the transition phase, which we hope will be as gradual as possible, it will be very important to ensure predictability," added Claude Perron, who chairs Rx&D's Quebec Committee.

"Quebec should also set the objective of quickly developing unique expertise in integrating innovations into the healthcare system and becoming a showcase and model of innovation development," advised Mr Perron, who is vice president and general manager of Shire Canada.

- Meantime, the government of British Columbia is to introduce new pricing regulations from next April 1 which will cut the cost of generic drugs to 25% of the cost of the branded originator products, from 35% at present. Officials say the move will save around C$110 million over a two-year period and will make generic drug prices in British Columbia the lowest in Canada. 

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