E-DRUG: Generic substitution policy (2)
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Generic substitution can definitely save money, but how much depends on a
number of conditions:
1) Is generic substitution going to be mandatory or voluntary. In some
Canadian provinces, generic substitution is not mandatory but the
government will only reimburse the pharmacist for the least expensive
generic equivalent that is listed in the formulary. Therefore, there is no
incentive for the pharmacist not to substitute.
2) How easy is it for prescribers to require that a prescription be
dispensed as written, i.e., no generic substitution. Again, most Canadian
provinces require that the doctor hand write something like "dispense as
written" on the prescription in order to avoid generic substitution.
Otherwise drug companies will supply doctors with prescription pads with
"no substitution" printed on them. In the province of Ontario only about 1
in 200 prescriptions have "no substitution" written on them.
3) How many products have generic equivalents and what are the sales of
the products that do. There probably won't be too much to be saved from
having generic equivalents of say tetracycline because the brand is already
inexpensive, but if there is a generic equivalent of captopril which is
reasonably expensive then there is a lot of money to be saved.
4) How rigid are the standards used to establish bioequivalence between
the brand name product and the generic versions. The more rigid the
standards the more confidence doctors and pharmacists will have in the
quality of generics and the less likely doctors are to write "no
substitution" and the more likely pharmacists are to dispense generics.
5) How many generic equivalents are there on the market. Here in Canada
the first generic usually comes out at about 25% below the brand name
price, but by the time there are 3 or 4 generic versions there is a price
differential of about 50% between the lowest cost generic and the brand
name product.
6) How is the price of the generic established. If prices are not closely
monitored then you get in a situation where the generic may be listed at a
price of say $1.00 per pill but actually be sold to the pharmacist for only
$.80 per pill. The government pays the pharmacist the list price $1.00 per
pill and the pharmacist pockets the difference of $.20 per pill.
Hope all of this is some help.
Joel Lexchin MD
121 Walmer Rd.
Toronto, Ontario
CANADA M5R 2X8
Phone: (416)-964-7186
Fax: (416)-923-9515
e mail: joel.lexchin@utoronto.ca
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