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Generic pharmaceutical sales accounted for 14.2% of the total Canadian prescription drug market, totaling, $2billion of drugstore & hospital sales. Generic share of retail prescriptions was 40.4% equating to almost 139 million generic prescriptions. Growth of generic prescriptions was 8.7% compared to the previous 12-month period. Apotex and Novopharm lead all companies in prescriptions filled in Canada with 24.2% of the total market including brand name and generic prescriptions.

Prescription drugs are the fastest rising component of health care spending. Total expenditures now total $13.9 billion. A primary reason for this increase is the introduction of costly new medicines, which are replacing older competitively priced medicines, most of which have generic versions on the market.

For example, the report Health Care in Canada: 2002 released May 29, 2002 by the Canadian Institute for Health Information (CIHI) notes that “[b]y 1998/1999, provincial drug plans in Ontario, Saskatchewan, Alberta, and British Columbia were paying more, in total, for drugs introduced after 1991/1992 (“newer” drugs) than for older (“existing”) drugs. Between 1993/1994 and 1998/1999, total drug expenditures climbed, while spending on existing drugs decreased.”

The CIHI Report goes on to say that: “The average cost of new drugs, however, has increased steadily over time, in excess of what would be expected on the basis of inflation alone, New drugs introduced between 1998 and 2000, for example, cost, on average, $114.41 per prescription in 2000.”

As the chart following illustrates, according to 2002 IMS Health data, the average cost of brand-name prescriptions now exceeds $55.00, while the average cost of a generic prescription is $21.53.
 

The average price of a brand-name prescription increased by 40.5% over the last 5 years. In comparison the average cost of a generic prescription grew by 14.5%.

The generic share of retail prescriptions has grown from 26.2% in 1990 to a high of 42.0% in 1998. Currently the share is 40.4%. The generic share of dollar purchases by drugstores and hospitals has grown from 9.3 percent in 1990 to 14.2% for 12 months ending June 2003. This increased share for generics is as a result of changes to provincial and private sector drug programs which are relying more on generics as one of the best ways to constrain fast rising drug program costs. The variance of the generic share of prescriptions vs. dollar purchases can be explained by the pricing differences of generic products vs. brands.

The national share of generic prescriptions for 12 months ending June 2003 was 40.4%. The generic share of prescriptions by province ranged from a low in Quebec of 36.2% to a high of 46.3% in Saskatchewan. Drug programs implemented in each of the provinces, contributed to this variance.

Source: IMS Health, Canada