Report Claims Cost of Generic Drugs too High in Canada

A recently released paper by the Fraser Institute links government policies to relatively high prices of generic and non-patented drugs in Canada. The paper compares the pricing of generic drugs in Canada to that in other countries, and asserts that pricing generic drugs at median international levels, as is already done with patented medicines in Canada, would bring savings of $810 million a year to Canadian consumers. The study contends that policies of the Canadian government favouring the generic drug supply − in order to reduce the cost of social programs and assisting the development of domestic generic drug manufacturers by creating a domestic market − have lead to the Canadian market being dominated by only a few generic companies. The argument is made that the concentration of market power creates a barrier to potential competitors, leading to higher prices than would otherwise be the case. In addition, it is claimed that these policy-induced differentials in prices may reduce incentives for innovation in the generic drugs sector. Following the release of the report, the Canadian Generic Pharmaceutical Association rejected the findings made in the Fraser Institute's report. For a copy of the Fraser Institute report, visit: http://www.fraserinstitute.ca/shared/readmore.asp?sNav=pb&id=685. For more information on the Canadian Generic Pharmaceutical Association's response to the report, see: http://makeashorterlink.com/?R10D21D29. Summary by: Sue Diaz