Generic drug pricing initiative will save money for drug plans and Canadians
The pan-Canadian Pharmaceutical Alliance (pCPA), consisting of participating federal, provincial, and territorial government public drug plans and the Canadian Generic Pharmaceutical Association (CGPA) have successfully reached an agreement on a renewed three-year pricing initiative for generic medicines that will help public drug plans continue to control their costs.
This new agreement provides a stable and predictable environment for generic manufacturers, who help fill approximately 75% of all prescriptions across Canada, to continue launching new drugs. Continued access to new generics will help public drug plans maintain their costs and provide savings for Canadians who use prescription drugs in participating public drug plans and private drug plans.
This post-pandemic agreement constitutes an important achievement since it maintains the current pricing and savings achieved in previous negotiated agreements and provides additional savings for future new generics at a time when inflation and the rising cost of living are affecting many Canadians. To this end, the price of new generics entering into the pan-Canadian Tiered Pricing Framework will drop automatically to 55% of brand reference price after three months for situations where there is only one generic marketed in Canada. The prior agreement provided for a listing at 75 to 85% of brand reference price for new generics.
The new initiative is effective October 1, 2023, for a period of three years with the option to extend by an additional two years.
Previous joint efforts between pCPA and CGPA have resulted in savings of over $4 billion to participating drug plans over the past 10 years which will only continue to grow over the course of this new pan-Canadian agreement.