Quebec ends reimbursement edge for branded drugs

Advantage generics. Quebec is abolishing a 1994 rule that required public drug insurance to cover branded drugs for 15 years after introduction--even if their patents had expired and cheap generics were available. The rule was designed to encourage pharma innovation in the province, PharmaTimes points out. Thing is, in recent years drugmakers have been cutting back in Quebec, rather than building up.

The Canadian Generic Pharmaceutical Association is understandably happy about the change. The group didn't hesitate to point out the costs of paying for brands rather than generics--$750 million since 2008, CGPA says--or the numbers of jobs cut in the Quebec pharma sector. Branded drugmakers have shed at least 1,500 jobs over the past 5 years, the group figures. Repealing the 15-year rule will save the government C$175 million ($174.5 million) a year.

GlaxoSmithKline ($GSK), Sanofi ($SNY), Johnson & Johnson ($JNJ) and Merck ($MRK) have all scaled back in R&D and manufacturing in the province. Ongoing problems at a Novartis ($NVS) plant in Quebec have triggered production shutdowns and drug shortages.

But drugmakers have been doing some positive things, too. AstraZeneca ($AZN) and Pfizer ($PFE), for example, said this week that they would partner with Quebec's government on a $100 million research center that would bring together Big Pharma, biotech and academic researchers. Eli Lilly ($LLY) earlier this year backed a life sciences fund to invest in biotech ventures. And Merck plowed almost $100 million into another fund to lure pharma companies to Quebec.

Losing branded revenues to cost-saving measures is nothing new for drugmakers these days; price cuts in Europe have made deep dents in Big Pharma's sales. Canada's branded pharma group Rx&D says it's "very concerned and disconcerted" by Quebec's proposed changes, and says it hopes the transition will be "as gradual as possible."

- read the PharmaTimes story