This study was designed to assess the potential impact of generic drug competition on prescription prices in Ontario, Canada, and the costs and benefits of the passage of Bill C-22 by the Canadian federal government. Bill C-22, passed in 1987, extended the period during which a patented drug is exempt from compulsory licensing by a generic drug manufacturer, and created the Patented Medicine Prices Review Board (PMPRB). The purpose of the PMPRB is to 'ensure that the prices of patented medicines charged by patentees are not excessive' and to 'report annually on the ratios of research-and-development expenditures to sales for individual patentees and for the patented pharmaceutical industry as a whole'.[1] Lexchin analysed prices in the 1991 Drug Benefit Formulary of Ontario for interchangeable products which were manufactured by more than one company. He also noted the best available price for the highest and lowest priced versions, and the number of manufacturers of that product. Products were then grouped according to the number of manufacturers, and the price of the least expensive version of each product was expressed as a percentage of that of the most expensive version (i.e. the proportional cost). For products marketed by 2 to 6 companies, the data were further subdivided into 4 categories representing 0%, nonmaximal, maximal and 100% generic competition. These levels of generic competition were defined as follows: 0% (all versions sold by innovator companies), nonmaximal (less than the maximum possible number of generic manufacturers in competition with at least one innovator company), maximal (the maximum possible number of generic manufacturers in competition with one innovator company), and 100% (all versions sold by generic manufacturers). The analysis showed that of 1599 products in the formulary, 437 (manufactured by 2 to 9 companies) met the study criteria. Eligible products manufactured by 2 companies represented 44.6% of the total, with the greatest difference in mean proportional cost (29%) when there was maximal generic competition (123 products). The corresponding differences in mean proportional costs for maximal competition with products available from 3, 4, and 5 manufacturers were approximately 45, 60, and 80%, respectively. The author concluded that the price differential between least expensive and most expensive versions of a generic product depends on the overall number of manufacturers, and on the degree of generic competition irrespective of the absolute number of manufacturers. He provided an example of possible savings based on claims paid by the Ontario Drug Benefit Plan for lovastatin prescriptions, using data from his analysis, and concluded that 'loss of generic drug competition will mean an increase in drug costs'.
