Drug-pricing deals draw fire in Canada

There's a dust-up in Canada over drug prices. First, Canadian drugstores objected to a new bargain-basement pricing deal on generic drugs in Ontario. Now, Quebec says it's entitled to the same low prices on branded drugs that Ontario gets under what was a secret agreement with drugmakers.

The drugstores came out swinging against a healthcare reform proposal in Ontario that would slice reimbursements on generic drugs to 25 percent of the brand-name price from the current 50 percent. The retailers called that reimbursement rate "unreasonably low." Stock analysts that follow drugstores went further: They cut their ratings on Shoppers Drug Mart, for one, calling the government plan "draconian."

Meanwhile, officials in Quebec say they're entitled to the same rebates that Ontario is getting from branded drugmakers. Apparently, there's a provision in Quebec's supply contracts that requires pharma companies to give the province the lowest price in Canada. If Ontario's prices were lower, "Quebec should have been offered the same price," Ministry spokeswoman Karine Rivard told The Globe and Mail. "If Quebec was cheated, we will take appropriate action."

Quebec buys a lot of meds because it instituted a mandatory universal drug benefit plan more than 10 years ago. Citizens without private insurance coverage pay into a publicly funded system. Under its deal with drugmakers, Quebec continues to pay the full negotiated price for branded meds for five years after their 10-year patent protection has expired. Generics makers get 50 percent to 64 percent of the brand price. But in Ontario--under a deal made public just last month--47 drug companies rebated lump sums to the government, bringing the price paid in that province down to 40 percent below market.

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