04/24/2012 05:39 EDT | Updated 06/24/2012 05:12 EDT

B.C. Generic Drugs Getting A Price Cut

VICTORIA - The B.C. government has brought in legislation to cut the price of generic drugs after scrapping a deal with the pharmacy industry that was aimed at reducing prices.

When Health Minister Mike de Jong tore up that deal in February he said it wasn't bringing the savings the government wanted because drug makers were asking for too many exemptions.

De Jong says he's now turned to legislation to regulate drug pricing, following a similar bill introduced by Ontario in 2010.

"The legislation creates a framework to save the province's taxpayers significant amounts of money which can be reinvested in the health care system," the health minister said when introducing the bill.

"It will save patients and families money as well, and it is about ensuring that our Pharmacare program is protected and sustainable over the long term."

Right now, generic drugs cost 35 per cent of their brand-name counterparts, but de Jong said the proposed legislation will bring that price down to 25 per cent of brand-name drugs.

The government said in February its generic drug pricing deal with the B.C. Pharmacy Association and the Canadian Association of Chain Drug Stores was saving far less money than the province had hoped.

De Jong said then the deal fell short because of the high number of requests from drug manufacturers to exempt certain drugs from price reductions.

Originally, the ministry thought the deal would save $329 million in gross drug costs, but new forecasts showed a net savings shortfall of $91 million.

PharmaCare, which provides drug-cost coverage to British Columbians, is one of the fastest growing areas of the health-care budget. Since 2001, the PharmaCare budget has increased by approximately 74 per cent, from $654 million to more than $1.1 billion for 2011-12.

A spokeswoman for the B.C. Pharmacies Association said in February the decision to end the deal came as a disappointing surprise.

Ontario's 25-per-cent generic drug pricing law prompted legal battles last year between the province of Ontario and pharmacies, which started stocking their own store-brand drugs to recover profits lost when the Ontario legislation banned rebate programs.

A rebate program is a payment to a pharmacy from a drug company in exchange for stocking its products.

Earlier this year in Nova Scotia, pharmacies campaigned against the government's 35-per-cent cap on generic drug prices, saying it's gradually affecting their bottom line and some businesses were considering cutting hours for some employees.

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