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Regulations could delay Canadian generics

BY Amanda Baltazar

OTTAWA —Proposed Canadian government regulations look set to further delay the approval of generic drugs in this country, which is bad news for manufacturers, patients needing drugs and the provinces that pay for them.

The changes will mean that brand-name drug companies can reinstate drug patents and hold multiple patents on each of their products. This practice of “evergreening” is, however, considered mostly a delaying tactic against lower-priced generic drugs.

In October 2006 the Canadian government ruled that the practice of using several unrelated patents for one drug was inadmissible. A month later the Canadian Supreme Court corroborated this decision.

So for just over 18 months, Canada has been in the position of seeing more generics come to market, as brand-name patents expire.

But there were some surprises lurking in the background.

“Unbeknownst to us, the branded companies went to the government and said this was a hardship to them,” said Jim Keon, president of the Canadian Generic Pharmaceutical Association.

And the government listened, but it didn’t talk to anyone else, such as generic companies, the provinces (which pay for around 50 percent of medications) or any other payer, he pointed out.

Once the government announced its intention to reverse its former rule, this issue went out for comment. However, in another blow to the generic drug industry and to payers, the comment period was for just 15 days, a drastic shortening of the 30 to 60 days typically granted. The comment period ended May 12.

Keon described this abuse of loopholes as unfairly delaying generic competition. It also ratchets up healthcare spending. He pointed to the example of Lipitor, Canada’s highest- grossing brand-name drug, with 1.1 billion in sales in Canadian dollars every year. A generic version of the drug will mean savings of C$500 to C$600 annually, he pointed out, greatly alleviating the financial burden of Health Canada (the government department responsible for national public health).

A decision regarding the patent regulations is likely to come from the government any day now, and Keon’s not expecting much. “It seems the intent is still to go ahead [with the regulation reversal].”

However, he is hopeful that CGPA will discover that making regulations like these is beyond the government’s power. “If [the government] goes ahead, we’ll have to look at the regulations and see if we can take them to court. The speed at which they moved and the short comment time make me think that they’re likely to move quickly.”

If the patents regulation is reversed, Keon expects to see a small flood of patents coming onto a list held by Health Canada, as well as some patents being added retroactively. It’s all very bad news for generics.

“The reality is that in a country like Canada, where the drug companies have such power, the government listens to them instead of looking at what’s best for the provinces, which are the payers,” asserted Jack Kay, president of the Canadian arm of generic manufacturer Apotex. He added that the government tends to bow to the branded companies because it sees them as essential to bringing research and development to the country, rather than simply importing from the United States.

Opponents of the status quo also argue that some branded drug companies don’t stand by their promises.

When pharmaceutical patent protection in Canada was increased in 1987, brand-name drug companies promised to invest 10 percent of their Canadian revenues into research and development. However, Canada’s Patented Medicine Prices Review Board, which monitors this spending, reports that the brand-name industry has failed to meet this commitment for six consecutive years.

Kay also pointed out that since there is no 180-day exclusivity period for the first generic drug to market, this new regulation not only delays his revenues by around two years, but also allows competing generic companies to catch up.

The cost differential between brand-name and generic drugs is less than it is in the United States, although it’s still substantial. According to IMS Health, the average brand-name prescription in Canada costs C$66, while the average generic costs C$24.

Canada’s Research-Based Pharmaceutical Companies which represents branded companies and their employees, did not return calls seeking comment.

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CVS Caremark to expand headquarters, add positions

BY Antoinette Alexander

WOONSOCKET, R.I. CVS Caremark has announced expansion plans for its headquarters over the next two years, a move that will help support the company’s continued growth and current hiring expectations of more than 200 new positions on its corporate campus.

The nature of the new jobs was not disclosed. In Rhode Island, the company currently employs 5,800 associates.

The plans are to build two new 150,000-square-foot office facilities in the Highland Corporate Park in Cumberland, R.I. The company has been based in Highland Corporate Park, which is jointly located in Cumberland and Woonsocket, since 1982. The company significantly expanded its customer support center facilities in 1988 and again in 2000.

“Our company was founded in Rhode Island more than 40 years ago and we feel fortunate to be able to continually reinvest in our home state,” stated Tom Ryan, chairman, president and chief executive officer. “As the largest company in Rhode Island we are looking to further expand our base of operations to support our continued growth and, as a result, increase our workforce over the next few years.”

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A&P announces fiscal Q1 improvements

BY Antoinette Alexander

MONTVALE, N.J. A&P, which operates 446 stores under such banners as A&P, Pathmark and Waldbaum’s, announced on Friday improved results for the first quarter as it nears the completion of the Pathmark integration.

“The first quarter of 2008 clearly demonstrates our continuing progression in operating improvement with the achievement of our fourth straight quarter of comparable store sales of over 3 percent,” stated Eric Claus, president and chief executive officer. “Further, Pathmark is already achieving positive results with comparable store sales climbing above 3 percent for the first time in many years. The company is also well underway with the completion of the Pathmark integration, as many of the planned milestones have been achieved. As of the end of the first quarter, our annualized run-rate of synergies is approximately $100 million.”

Sales for the quarter totaled $2.9 billion compared with $1.7 billion in the year-ago period. Same-store sales rose 3.2 percent, which excludes sales for Pathmark stores acquired in December 2007. Same-store sales for Pathmark, measured during the same period, rose 3.1 percent.

Net income from continuing operations was $3.8 million, with a net loss per diluted share of 48 cents after adjusting for non-operating income related to fair value adjustments. This compares with income of $61.4 million, or $1.45 per diluted share, in the year-ago period.

The company did not break out pharmacy sales results.

As previously reported by Drug Store News, the company announced during the quarter an integral step in its transformation—the conversion of the majority of SuperFresh stores in the Philadelphia market to the recently premiered Price Impact format under the Pathmark Sav-A-Center banner and a number of SuperFresh locations retaining the Fresh format with significant upgrades.

Also during the quarter, the supermarket chain completed the remodel of A&P Fresh in Holmdel, N.J., to the updated Fresh format and began remodeling additional stores. The company also premiered its Price Impact format in the Irvington and Edison Pathmark stores.

“The remainder of fiscal 2008 will be focused on progressing the company further toward operating profitability by: moving forward our operating and aggressive merchandising strategies; maintaining cost control and reduction disciplines throughout the business. Integral to our drive to profitability is the continued and ongoing execution of capital improvement projects all geared for maximum return, and particularly weighted to value propositions,” stated Claus.

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