CANADA: Seniors pay more for generic drugs, less for brand names

TORONTO (Canadian Press), June 16, 2005:

A report from the Fraser Institute think-tank says senior citizens face higher prices for generic drugs but lower prices for brand-name drugs in Canada than in the United States.

"Canadian seniors pay 64 per cent more, on average, than American seniors for generic versions of drugs that are among the most recommended by physicians for patients aged 65 years and older," the free-market institute said Thursday.

"Meanwhile, the prices for brand-name drugs most recommended for seniors are 36 per cent lower on average in Canada than in the United States."

The study concludes that "artificial inflation of generic drug prices" applies just as much to seniors as to the rest of the population in Canada.

But as heavy users of generics, the burden "likely falls more heavily on them than it does on younger segments of the population," said Brett Skinner, author of the study and director of pharmaceutical and health policy research at the institute.

The study says government policies limit competition between drug products that are available to consumers, artificially inflating demand for generic products and driving up prices.

"Provincial formulary restrictions, reference-based pricing, therapeutic substitution and other mechanisms often force generic substitution for brand-name products," it says. "When consumer choices are limited, competition for sales is reduced and prices increase."

In addition, government price caps on patented brand-name drugs actually cause higher prices for non-patented drugs "because such regulations interfere in normal price competition after patents expire," the study says.