Originally published in the Winnipeg Free Press on March 1st, 2011. To go to the Winnipeg Free Press website please click here
Last weekend, workers arrived at the Moosehead Brewery in Saint John near midnight prepared to work the night shift. They were locked out.
Their contract had ended on Dec. 31, 2010 and management and labour, after weeks of negotiation, had walked away from the negotiating table. Workers say the main issue in the contract dispute is retirement benefits. Many of Moosehead’s unionized employees are close to retirement. They are concerned that benefits they were counting on for retirement could be at risk.
Joel Levesque, a senior spokesman for Moosehead Breweries, says the two sides agree that the sticking point in negotiations is retirement benefits. Moosehead pays 100 per cent of the costs of its retirees’ prescription drug benefits. Levesque says the company is asking them to pay 30 per cent of that cost. “In recent years, the cost of drugs has escalated astronomically,” says Levesque. He is correct.
Susan Eng, from the Canadian Association of Retired Persons, says the fight shouldn’t be between workers and their employer. “All of the parties here should be focused on why drugs cost so much” she says.
That, to me, is the issue!
In 2009, prescription and non-prescription drug spending in Canada amounted to $30 billion, 16 per cent of the country’s $183-billion health-care budget, according to figures compiled by the Canadian Institute for Health Information. That figure has jumped radically over the last decade and drugs are now the health-care system’s biggest expense after the $50 billion spent on hospitals.
Who benefits from a rising drug spend?
Insurance companies, drug manufacturers and pharmacies all treat drug benefit plans as a revenue source so they must be complicit. It seems to me that payers (consumers) could benefit from optimizing generic (off patent) usage in plans. Surely, there is opportunity to increase generic drug use without negatively affecting health outcomes.
Americans believe that generics are both helpful and effective. It’s true that generic companies benefit from increased use of generics but if generics could reduce cost for Canadians and maintain healthy outcomes, surely that would be a good thing. We needn’t worry about the branded pharma companies because more and more of them are buying generic companies. Novartis, for example is the third largest branded drug company in the world. They are also the second largest generic company in the world.
The commonly accepted measure of generic drug usage throughout the world is the Generic Fill Rate (GFR). This is a measurement of all generic medications dispensed through pharmacies within a specific period of time. IMS Brogan, a unit of IMS, the world’s leading provider of market intelligence to the pharmaceutical and healthcare industries, with offices in Montreal, Ottawa and Toronto, measured the Canadian GFR at 54 per cent in 2009. That means that 54 out of every 100 prescriptions filled at a pharmacy in Canada were filled with a generic medication. On the surface that appears to be a good number but when you compare the Canadian GFR to the American GFR (also measured by IMS) we come up short. The American GFR is about 75 per cent and the UK is about 80 per cent. Clearly the two countries value the use of generic medication more than we do in Canada.