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Announcement of the Québec drug policy
On Feb 1st 2007, the Québec government issued its long-awaited drug policy which presents 29 objectives for the Québec public drug plan (RAMQ). They follow the adoption of Bill 130 in 2005 and public consultations with 60 stakeholder groups.
In this summary we present the objectives contained in the 80-page document Politique du médicament. It encompasses many aspects with repercussions on all stakeholders, some of which we present here as most relevant to innovative, generic drug firms and wholesalers. We find that several measures are similar to those found in Ontario Bill 102. Note that the deadline for submitting price increases is Friday February 16. The maximum increase is 2.03%.
The policy is aimed at 4 goals:
- ensuring access to medicines;
- establishing a fair and reasonable price;
- encouraging optimal drug use; and
- maintaining a dynamic biopharmaceutical industry in Québec.
The proposed measures in the drug policy will be implemented over a three-year horizon. These are described in more detail below.
1) Access to medicines
a. The therapeutic value remains the main criteria for listing drugs; this reiterates the importance of strong scientific evidence. Once the therapeutic value has been demonstrated, the listing decision will be based on the price, cost-effectiveness and impact on population health and other components of the healthcare system.
b. Starting July 2007, about 280,000 additional low income individuals will be completely exempt from financial contributions. This covers seniors aged 65 and over receiving 94% or more of the guaranteed income supplement, social assistance beneficiaries without severe employment constraints, social assistance beneficiaries with temporary employment constraints and holders of a carnet de réclamation (Claim slip). (Seniors receiving the maximum guaranteed income supplement are already exempt.)
c. Drugs not listed on the formulary will be covered under a simplified exceptions drug process. Measures under consideration include the use of a code on the prescription or the on-line transmittal of the request and its authorization.
Brogan Inc.’s comment: The code is similar to the highly effective Limited Use process recently abandoned by the Ontario Drug Benefit Program.
d. A new “exception drug listing with monitoring” will be created to list drugs whose payment condition require follow-up. Physicians will be asked to provide therapeutic intention, patient’s condition and other information to authorize payment. The government will collect drug specific information to take a decision on transferring the drug to a regular listing or an exception drug listing.
Brogan Inc.’s comment: This measure is akin to conditional listing contained in Ontario Bill 102. The government will need the collaboration of physicians to get the therapeutic intention transmitted to the pharmacist. It is not clear how the information will be transmitted.
e. In order to ensure greater transparency of the listing decision process, the government will publish the work plan of the Conseil du médicament regarding the evaluation of drugs. This will give the opportunity to clinicians and citizens to transmit their comments to the Conseil before the listing decision is published in their newsletter.
2) Establishing a fair and reasonable price
- a. Drug prices have been frozen since 1994. Starting April 18, the drug policy will allow a regulated indexing of prices that follow the rate of inflation. The rules outlined below, generally follow those of the PMPRB.
- i. The maximum increase allowed corresponds to the change in the CPI (2.03% for 2007).
- ii. Price increases will be permitted in April of each year for products listed for at least two years. The deadline to submit for a price increase for 2007 is February 16.
- iii. A manufacturer can accumulate an increase that has not been taken for the past two years, while it may not exceed 1.5 times the maximum increase for the current year.
- iv. On an exceptional basis, an increase might exceed the maximum limit if delisting involves serious consequences on the health of individuals.
- v. In order to obtain a price increase, a manufacturer will have to enter into an agreement with the government on financial contributions to attenuate its impact on the drug plan’s budget. Agreements will have a maximum duration of three years.
- Brogan Inc.’s comment: There is no restriction on prices to the private sector. Our interpretation of the contributions is that it would take the form of hard rebates to the government representing a percentage of the increase, similar to the same provision under Ontario Bill 102.
- vi. Manufacturers are still subject to the obligation of offering the lowest price available in Canada.
- b. Starting June 2007, the price of the first generic will be limited to 60% of the original brand price, and that of subsequent generics will be set at 54%.
Brogan Inc.’s comment: If the same generic drug is also available in Ontario at a price of 50%, it would be submitted to Québec’s « lowest available price » policy.
- c. The maximum wholesale up-charge will be lowered from 9% to 7%. A cap of $28 will be imposed on products worth $400 or more.
- d. Priority review of a submission will be granted for drugs that bring significant cost savings to the drug plan.
Brogan Inc.’s comment: The potential savings threshold is not specified and will be established by the Conseil du médicament.
3) Encouraging the optimal use of drugs
a. The ongoing initiative of computerizing the healthcare system will serve, amongst other things, for the transmittal of the therapeutic intention by the physician to the pharmacist.
Brogan Inc.’s comment: Accurate information on the therapeutic intention might improve significantly the quality of drug utilization analysis.
b. The Conseil du médicament will be authorized to send physicians their therapeutic prescription profile with the objective of encouraging optimal use.
c. Review of the patient’s medication at home by a pharmacist will contribute to a better utilization of drugs.
d. A service Info-Médicaments (Info-Drugs) accessible at all times will be offered in addition to the Info-Santé line (Info-Health) to answer questions on drugs and their utilization.
e. The government intends to regulate the commercial practices to ensure that they do not interfere with the objective of optimal drug use. Part of the conditions of listing new drugs will be commitments on the distribution of samples.
f. The government intends to regulate the professional allowances given by manufacturers to pharmacies. They will be capped at 20% of the manufacturer’s sales and will have to be used to improve healthcare delivery to the population.
Brogan Inc.’s comment: The 20% cap is identical to that implemented in Ontario under Bill 102.
4) Maintaining a dynamic biopharmaceutical industry
- a. The “15-year rule” will be retained. It permits the reimbursement of the innovator at full price for a 15-year period from the date of listing regardless of the availability of a generic copy.
- b. The government rejects a reference drug pricing system as a measure to control costs.
- c. There will be negotiated risk-sharing agreements for specific drugs. The objective is to ensure that manufacturers are responsible in their promotional activities and to prevent run-away costs.
- vii. These agreements might cover exception drugs which the manufacturers would want to be transferred to a regular listing or to an exception listing with monitoring, or drugs currently on a regular listing when a transfer to exception drug listing is contemplated by the government.
- viii. Agreement will include penalties imposed where the Régie expenditure on a drug exceeds the forecasted amount. The manufacturer will have to reimburse 75% of the cost exceeding 5-10% of the target and a higher proportion for excesses between 10-20%. For any cost in excess of 20%, the agreement will be cancelled and the manufacturer will have to pay the totality of the cost exceeding the initial target.
- ix. At the end of the agreement, the drug will either remain listed in the same way or transferred to an exception drug listing.
Brogan Inc.’s comment: The clauses of the risk-sharing agreement are conditioned by a financial logic and do not seem to take into account appropriate use considerations. The strong penalty will create a highly dissuasive effect but may also have negative consequences on access to drugs.
- d. Partnership agreements may be made with all the manufacturers in a therapeutic class in order to correct a class-specific utilization problem.
Richard Lavoie
Senior Economist
© Brogan Inc. 2007
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