BC cancels agreement for purchase of generic drugs

The government is terminating its generic drug purchase agreement with BC pharmacy groups because it wasn't saving enough money.

The B.C. government is terminating its generic drug purchase agreement with provincial pharmacy groups after savings to the Pharmacare program fell short of expectations.

Health Minister Mike de Jong said the three-year agreement with the B.C. Pharmacy Association and the Canadian Association of Chain Drug Stores will end April 1, a year early.

“We negotiated an agreement on a certain set of expectations, savings to be sure, to Pharmacare and to the purchasers of drugs in B.C., and they have not been realized,” de Jong told reporters at the legislature Wednesday. “Of the roughly $69 or $70 million in savings the parties had agreed would be realized over the first two years, we’re about $36 million short.”

De Jong said legislation will be presented soon to end the agreement, in which Pharmacare bought generic equivalent drugs in bulk on behalf of insured patients for a fraction of the cost of the original brand-name medicines.

The agreement called for the price of generic drugs to decline to 40 per cent of the original patented medicines by this year. De Jong said generic drug manufacturers have insisted on many more exceptions to the price cap than the health ministry expected, eroding the savings from Pharmacare purchases.

Pharmacare buys more than $300 million worth of generic drugs a year, and seniors and other patients buy another $500 million worth directly or through their medical coverage.

De Jong declined to comment on B.C. following the lead of Ontario to end the practice of pharmaceutical companies paying rebates to drug stores to stock their brands of generic drugs.

The health ministry conducted market tests and found it could buy equivalent drugs from other suppliers for less than those offered under the agreement. It began delisting the more expensive drugs for a year and then decided to end the agreement.