Revelations that 47 drugmakers have paid large rebates to Canada’s provincial government of Ontario, bringing prescription drug prices there to 40% below the market rate, could lead to the government of Quebec to sue those drugmakers.

An agreement negotiated between Quebec and the industry four years ago for the province’s publically-funded drug benefit requires drugmakers to match the lowest price for prescription drugs anywhere in Canada. However, the “secret” deal with Ontario - which came to light when the government there announced that it was slashing the maximum price at which pharmacists could sell generic drugs and abolishing the “professional allowances” or rebates paid by generics makers to pharmacies and drug stores – could mean legal action by Quebec if requests for similar rebates are refused, say government officials.

The Health Ministry is currently evaluating the situation, Ministry official Karine Rivard is reported as saying.
“There’s a provision in the arrangement that states that drug manufacturers must offer Quebec the lowest price in Canada. If prescription drugs sold in Ontario were the lowest in the country, then Quebec should have been offered the same price. If Quebec was cheated, we will take appropriate action,” she said.

Under Quebec’s 2006 agreement, drugmakers supplying products to the provincial benefit’s formulary receive the full negotiated price for their products for five years after patent expiry, after which the maker of the first generic version receives 64% of the branded product’s price, and the second and subsequent versions receive 50%.

In return, the firms undertake to offer the “best available price” to the drug plan, which was established in 1997, is open to all Quebeckers without private health cover and cost the province C$3.7 billion last year. The scheme is credited with attracting industry investment to Quebec, where as much as 45% of all prescription pharmaceutical R&D in Canada is estimated to be taking place.

Meantime, Ontario health officials have dismissed claims by drugstores and pharmacies there that the new regulations, which will cost the industry revenues worth up to C$1 billion next year, will lead to job cuts, shorter opening hours and store closures.

The industry made the same claims when the government introduced its first wave of reforms in 2006, but instead of closing stores, as threatened, the sector has since then opened 140 more, said Ontario Health Minister Deb Matthews.

However, Ontario is home to 80% of Canada’s generics manufacturing industry, and it employs around 9,000 local residents, primarily in R&D, scientific and highly-skilled manufacturing jobs, Jim Keon, president of the Canadian Generic Pharmaceutical Association (CGPMA), points out.

“Member companies of CGPA have 12 facilities in Ontario, eight of which are used for production and seven of which are focused on R&D. Generic pharmaceutical exports from Ontario are valued at more than C$1 billion annually. In seeking significantly lower prices for medicines that already provide excellent value, the government of Ontario must not jeopardise the jobs and economic activity it aspires to promote,” said Mr Keon.