When a new discovery is made in any field of science the need for price control is not as necessary as in the medical field. For instance in the automotive industry the engineers worked out a method where there was the ability for the car to shift gears automatically. This car was more expensive to buy. At its inception, this discovery was very useful but not essential, and a less wealthy person could continue driving as before with no problem. In the western world today even poor people demand the best health care available but in some cases the treatment could be as high as $100,000 for a year`s treatment. How long patients and insurance companies and governments can continue to fund these type of payments is questionable.

 “There is another problem with pharmaceuticals. If the drug treats only very few people as the illness is not widespread , the company`s originator can sell the rights to it and the buyer company can demand prices that are unconscionable and have absolutely no relationship with the cost of production. A company called Valeant active in Canada has been accused of buying up rights for certain drugs and raising the prices for them beyond the ability for people to pay.

“Biologics”are new drugs formulated from human proteins and in certain circumstances can work miracles with illnesses. It goes without saying they take many years to develop and are very expensive for our health care system. Biologics by 2018 will account for half of European spending on pharmaceuticals. Canada shows the same trend. The generic firms have developed drugs referred to as Biosimilars and are 35% less in cost. Many of the major drug companies like Pfizer, GlaxoSmithKline, Johnson and Johnson and others have moved their research out of Canada to places in Asia, Europe and the U.S. with bigger drug markets and better research commercialization prospects. This does not bode well for Canadian science  and our economy. It is ironic that the discovery of Insulin produced spectacular wealth but not in Canada. Canada has a long history of coming up with amazing new drugs and then giving them away to be commercialized in other countries. Brian Mulroney, a former Prime Minister made a deal with the major companies to extend patent protection in return for the development work to be done in Canada. It has turned into a failure, as the work for reasons mentioned, is done elsewhere.

Health care systems vary country by country. It is astounding that a person can die for lack of a drug in an African country that is freely  and cheaply available in North America and Europe .The distribution and cost of new drugs and even older drugs does not in any way take into account the situation politically in each country. A  Canadian generic firm called Apotex many years ago was willing to give “Zidovudin” or AZT for Africans suffering from HIV free but was prevented from doing so by Glaxo the patent holder. The irony is that the Africans never represented people as customers as they had no money, just the disease.

Sometimes as the drug houses retreat from in house research in Canada, it is very apparent that Canadians are paying twice for the drugs they use. The first time in our universities  to develop the product, which is sent for development outside the country and then we pay higher drug prices for longer periods here ,due to the extended patent protection drug companies claim are necessary for incentives.

The money needed to pay for a medicine after a visit to a doctor comes from  3 sources. (of course inevitably the public pays one way or another). There are public plans managed by provincial and federal governments which pay for about 42% of Canada`s annual drug bill of 35 billion dollar. Next comes private employers and insurance companies which covers 36% of the national cost.. Individuals paying out of there own pocket, some insured and others not pay for 22%. Carleton University analyst Marc-Andre Gagnon has noted that that Canadian Rx expenses almost doubled from 2000-2012, an astounding rise. Mr Gagnon pinpointed a study by a benefits manager of Express Scripts Canada that credited poorer patient decisions result in about 5 Billion over spending annually by private plans. I would take exception to that number as who can figure out after the fact that the decisions were not proper.

There are an estimated 100,000 plus group insurance contracts in Canada. The prices associated with company insurance drug plans have doubled in the past decade. That is due to higher pharmaceutical fees and mark-up and just plain old rising prices on drugs. Mr Tim Clarke at an Insurance consulting company call Aon Hewitt, credits this spectacular rise to a small category of high cost drugs and he mentions by name “Savaldi” a drug introduced in 2014 for Hepatitis C. The drug costs $55,000 to treat a virus that can infect as many as 400,000 Canadian. This is a 2 month supply and the cost for the same drug in Egypt is $800.00. It is quite clear that there is room for prescription cost savings. Mike Sullivan, a pharmacist himself and an analyst with a company called “Cubic Health” blames local pharmacist in Sault Ste Marie with their dispensing fees who he believes have overcharged. He does not mention the extra free service pharmacists give to their customers not charging them, or the insurance companies ,for their efforts. The problems cannot be laid at the door of the individual  pharmacist. Most work for large public corporations as EMPLOYEES, and as well the drugs and their cost prices are set by the drug companies not the drug stores.

About 63 % of all new pharmaceutical entities approved by Health Canada were high priced specialty drugs, such as the previously mentioned “Savaldi”. Some are Biotech based biologic drugs often for rare disorders once considered untreatable. Some are very new drugs for cancer treatment. They can cost patients up to a million dollars annually. Because of patent protection these drugs will bear these costs for a dozen years or more.

A 2014 report from the Canadian Institute for Health Information (CIHI) told the whole story. The amount spent on the most expensive beneficiaries- where the cost is more than 10,000 dollars annually went up nearly 30% between 2000-2013. Forget about the savings generated by low-cost generics. The new drugs have erased any savings generated by them. “Express Scripts”  previously mentioned that is supposed to monitor drug prices is being sued by an American health insurance company for alleged overcharging. They deny the charge.

The problem with these new ultra-expensive drugs is that they are straining the ability of private companies to manage health plans for the benefit of their employees. The old insurance model is on life support. Tim Clarke of Ayn Hewitt says that expensive medication represents 7% of the total health bill of some companies. Is the answer for private firms to build their own pharmacies. I think not. As a retired pharmacy owner the major costs are in the prices charged now for specialty drugs. Helen Stevenson formerly with the Ontario Government in the health department says that drugs are the second largest health expense after hospitals. Stevenson studies reveal that the vast majority of new drugs  are high priced knockoffs  with little or NO extra therapeutic ”  benefits. Jokingly called “ME TOO” drugs. The old practice  of giving rebates to pharmacies is now illegal. Canada is the only Organization for Economic Development (OECD) with no federal drug plan. When insurance companies strike a private deal with a drug manufacturer, it cannot be kept secret .

It is time, past time, for the federal and provincial governments to work together to lower drug prices. No more secret prices for individual buyers. The pharmaceutical industry is the most profitable in the U.S. and is the biggest supporter of political campaigns in the U.S. You can see why!

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Name of author

Name: Murray Rubin

Short Bio: I was born in Toronto in 1931 to a wonderful mother who divorced shortly before my birth. I owe a great deal of my success to her. I am Jewish but not at all religious, yet my culture plays an important part of my personality. I attended Harbord Collegiate and U. of T. Faculty of Pharmacy. A unique mail-order pharmacy was the first of my endeavours in the profession, followed by many stores throughout Ontario. I have a loving wife, 3 children and grand-children and I am now retired from pharmacy. But what do I write about? Everything! My topics are funny, serious, whimsical, timely, outrageous, inspiring, and inventive. I promise that if you take the time to read any one of these topics – you will not be sorry.


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