When Canadian drug companies develop new drugs, they do so under their brand name and under a patent. This protects the investment they have made in the drug research, and the patent gives them the sole right to manufacture and sell that brand name drug while the patent is in effect. Some of these drug patents are for prescription medications, and others are for over-the-counter medicines.
What about drug patents?
In Canada, a generic drug firm cannot apply for regulatory approval by establishing its bioequivalence to the reference brand drug, until the brand drug has been on the market for six years. It cannot receive regulatory approval until the brand drug has been on the market for at least eight years. A six-month extension to these minimums is granted for drugs that have undergone clinical trials in pediatric populations.
The rationale for the data protection regulations is that the clinical trials mandated by Health Canada can use up much of a brand drug’s patent life. In these cases, the period of effective market exclusivity may be too short. Drug companies frequently file for extensions to their protected patent period.
Pricing of Branded Medicines in Canada
In Canada, the Patented Medicines Prices Review Board (PMPRB) oversees patented medicines to ensure they are not sold at an excessive price in Canada. This is why the same patented medication in Canada is less expensive than in the US. The US does not directly regulate or negotiate the price of drugs.
There have been a number of changes to Canada’s pharmaceutical patent regulations over the past few years, and the federal government has also been considering regulations to lower the prices of patented pharmaceuticals in Canada. Although patented pharmaceuticals are less expensive than they are in the United States, they are much higher in Canada than they were a decade ago. They are also much higher than in many European countries.
Implications for Employee Benefits Plans
In Canada, more than 600 million prescriptions are filled every year, and about a third of those are filled with brand-name medications. That means that every day, more than one million prescriptions are filled with generic medications. Benefits plans rely on the preponderance of generic prescriptions to keep their drug costs lower.
Since April 1, 2018, sixty-seven (67) of the most commonly prescribed generic prescription medicines are available at up to a 90 percent discount off the price of the brand-name versions. Millions of Canadians use these medicines every day to treat conditions such as high blood pressure, high cholesterol, and depression. In 2021 in Alberta alone, the province saved $68.4 million by increasing the use of generic prescription medications by only 1%.
Employee benefits plan managers are keenly aware that increased use of generic medications within the public health care system, and their own benefits plan, will collectively help to lower the costs of their drug plans for their employees.
At Health Risk Services, we help Benefits Managers create plans that meet their employees’ needs and the employers’ budgets. We provide in-depth knowledge of where company savings can occur while offering employees comprehensive and desirable plans. Health Risk Services can complete a full review of the drug parameters on your current benefits plan, and through this process, we may reveal that you have options that you have not considered.
To schedule your Complimentary Consultation with Health Risk Services, please call 403-236-9430 OR email: [email protected]