Over the years, the United States, a country that has struggled to find a proper way to organize a national health care system, has taken remarkable advantage of generic pharmaceutical drugs and the cost savings generic drugs yield. In fact, as reported by the Generic Pharmaceutical Association in 2013, from 2003 to 2012, generic drug use saved the health care system in the United States more than $1.2 trillion. Moreover, on the private side of health care, from 2003 to 2012, generic drugs saved third-party payers in the U.S. $552 billion.
These are clearly significant numbers, and for a country where health care spending takes up nearly 18% of the GDP, it’s obvious how important generic drug utilization is to its health care system.
Over the past decade, name brand pharmaceutical companies have lost patents to an increasing number of their major drugs. In the media, this has been frequently coined the great “patent cliff”. It’s no surprise, then, that the level of generic drug utilization in other industrialized countries, like Germany and the Netherlands, has been roughly on par with the United States.
One surprising outlier, however, has been Canada. When comparing the level of generic drug use in Canada with its southern neighbor, or with a country like Germany, a stark difference is noticed in Canada’s use of generic drugs. That’s surprising for a country that’s well known for being forward-thinking and cost-conscious when it comes to health care.
The numbers speak louder than anything else. In Canada, the rate of generic use, in other words the market penetration rate for generic pharmaceutical drugs, is roughly 66%. Compare that to an 86% market penetration rate for the United States and an 80% rate for Germany and the difference in generic drug utilization between the countries is even more pronounced.
What’s more eye opening is the amount of money that the Canadian health care system could save if Canada increased its use of generic pharmaceuticals to equal that of the United States.
Indeed, if this had happened in 2013 as example, it’s estimated that the Canadian health care system would have save upwards of $6 billion in that year alone. A major reason for this cost savings is because the price of generic pharmaceutical drugs is on average much lower than brand name equivalents. In fact, the average price of a generic prescription is $22.11, compared to the average price of its brand name equivalent, which is $80.88.
Many organizations in Canada associated with the health care industry understand just how important it is for the country to take greater advantage of generic pharmaceuticals and the savings they provide. Canada does not have a national sponsored drug program and one in ten Canadians cannot afford drug prescriptions. So it’s clear that developing programs that utilize generic drugs can significantly help average Canadians afford the medicines they need.
Canadian manufacturers of generic pharmaceuticals are also doing their part to increase the utilization of generic drugs while raising awareness of just how much cost savings generic drug use can provide.
Apotex Inc, as example, is the largest Canadian-owned generic pharmaceutical company. The company produces over 300 generic prescriptions and its drugs are used to fill over 80 million prescriptions a year.
Those are big numbers. But, what may be more significant to note is how much of a priority the company has placed in increasing the selection of generic drugs available to average Canadians. Over the last ten years, Apotex has spent more than $800 million in challenging drug patents and bringing cheaper, quality generic drug equivalents to market quicker.
As the patent cliff continues and as patents to even more blockbuster drugs come to an end, generic companies like Apotex will continue to steward more cost-saving generic drugs to market. For its part, Apotex has even developed a 5 Point Plan for continuing to advance the use of generics in Canada.
Health care spending in Canada equates to roughly 11.6% of its GDP, a fairly competitive low number. As the country works to create a unified program around generic prescription drugs, look for this number to decrease even more.