Ontario Proposes Changes to Generic Drug Benefit Pricing

The Ontario Ministry of Health and Long-Term Care (the Ministry) has proposed amendments to the regulations made under the Ontario Drug Benefit Act, which would impose new caps on the prices of generic drugs. The Ministry is accepting comments on the proposed amendments until December 21, 2014.¹

The Current Regulations

The regulations under the Ontario Drug Benefit Act set out the maximum benefits payable by the Ministry for brand or "reference" drug products, and for generic drug products that are interchangeable with a reference drug product. Under the current regulations, benefits payable for most generic drugs are capped at 25% of the price of the reference drug product, or 35% for non-solid dosage forms such as liquids and creams. The Ministry has some discretion to consider exemptions to these limits. For instance, where there is only one generic drug available, then the only restriction on the Ministry’s discretion is that the benefits payable for that generic drug must be less than what is payable for the reference drug product.

The Proposed Amendments

Under the proposed amendment, the following rules will apply to publicly reimbursed generic drugs:

• If there is only one generic drug available in Canada, the maximum benefit payable for that drug will be 75% of the reference drug product benefit, or 85% if the reference product manufacturer has not agreed to provide a volume discount to the Ontario Public Drug Programs;
• If there are two generic drugs available in Canada, then the maximum benefit payable for those generic drugs will be 50% of the reference drug product benefit; and
• If there are three or more generic drugs available, then the current 25% and 35% rules will apply.

The proposed amendments would also require that the maximum payable benefits for a sole-source or dual-source generic drug decrease as other generic drugs become available in Canada.

When determining the maximum benefit for a generic drug where the reference drug is no longer sold in Ontario, the price of the reference drug may be adjusted based on the Consumer Price Index for Ontario for up to ten years after the reference drug was discontinued in Ontario.

The proposal does not specify when the proposed amendments would come into force if they are approved; however, the current draft of the proposed amendments indicates that they will come into force immediately upon filing.

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¹ "Proposed amendments to Ontario Regulation 201/96 made under the Ontario Drug Benefit Act," Proposal Number 14-HLTC013, online: Service Ontario <http://www.ontariocanada.com/registry/view.do?postingId=16622>.