Generic Manufacturers Call for Review of Ontario Regulations Reducing Drug Prices

It was previously reported that Federal and Provincial governments would likely begin to exert downwards pressure on the prices of generic drugs (see E-TIPS®, "National Pharmaceuticals Strategy Report: Concern about Generic Drug Prices in Canada" Vol 5, No 8, October 11, 2006). On October 1, 2006, such pressures were exerted in the province of Ontario when a number of amendments to the Regulations under the Ontario Drug Benefit Act (ODBA) and the Drug Interchangeability and Dispensing Fee Act (DIDFA) came into effect. These two statutes govern public drug reimbursement and interchangeability of drugs in Ontario. The amendments ushered in substantial change to ODBA and DIDFA pricing conditions. Prior to the amendments, a so-called "70/90" pricing condition was used under both statutes. The first generic entrant listed on the formulary would be listed at 70% of the originator price, while subsequent generics were priced at 90% of the first generic (that is, 63% of the originator price). The 70/90 formula has now been replaced with an across-the-board 50% price cap, substantially lowering the reimbursement rate for both the first generic entrant and subsequent entrants. The amendments were ushered in to support Ontario's plan to reform the drug system as described in the Transparent Drug System for Patients Act, 2006 (Bill 102). Bill 102 contained a government commitment to seek and consider public input regarding proposed changes to the system. Several generic manufacturers have applied for judicial review of the new Regulations, arguing that the amendments are beyond the power of the Ontario government because of the government's failure to seek or consider public input. Although the Ontario Ministry of Health and Long-Term Care (Ministry) posted a description of the proposed amendments on its web site on July 24, 2006, the description lacked any mention of a change to the pricing conditions of either statute. It will be argued that the inadequate posting did not constitute notice of the actual amendments. For the Ministry's Notice of Regulation Amendments (July 24, 2006), see: http://makeashorterlink.com/?T5042390E For O Reg 201/96, as amended to O Reg 459/06 under the ODBA, see: http://www.e-laws.gov.on.ca/DBLaws/Regs/English/960201_e.htm For Regulation 935, RRO 1990, as amended to O Reg 458/06 under DIDFA, see: http://www.e-laws.gov.on.ca/DBLaws/Regs/English/900935_e.htm For the Ministry's press release describing the amendments, visit: http://makeashorterlink.com/?B2142390E Summary by: Michael Migus