1. Canadian Generic Pharmaceutical Association Getting to the Heart of Drug Sustainability – The Issues Canada’s Public Policy Forum - Atlantic Summit On Healthcare And Drug Cost Sustainability, October 30, 2014 Jim Keon, President Canadian Generic Pharmaceutical Association

2. Canadian Generic Pharmaceutical Association THE FACTS Source: Source: IMS Brogan / CIHI 2014 In 2013 Canada spent $211 BILLION Total Health Care Spending Generic prescription drugs account for LESS THAN 3% of total health care spending.

3. Canadian Generic Pharmaceutical Association THE FACTS 2/3 of all prescriptions in Atlantic Canada are filled using generic medicine. Brand-name’s contribution to Atlantic Canada’s total drug costs > 72% Percentage of Total Market (12 Months Ending June 2014) Generic’s contribution to Atlantic Canada’s total drug costs < 28% TOTAL MARKET COST (%) TOTAL # OF PRESCRIPTIONS (%) 33.5 MILLION PRESCRIPTIONS 1.7 BILLION DOLLARS Source: IMS Brogan GenericBrand-name

4. Canadian Generic Pharmaceutical Association Average Price Per Prescription – Atlantic Canada Source: IMS Brogan

5. Canadian Generic Pharmaceutical Association THE FACTS From 2006 to 2012 the average cost of a house increased by 43% * the average cost of a litre of gas increased by 21%. ** +43% GENERIC From 2006 to 2013 the price of generic prescription medicines has decreased by 90% - 90% $140,300 $200,600 $1.05 $1.27 +21% Source: *CMHC Housing Observer, **Statistics Canada Average Atlantic Canada Cost Increase

6. Canadian Generic Pharmaceutical Association THE FACTS Price reductions between 2006 and 2013 have resulted in additional savings every year. 2006 – 65% of Brand-Name Price 2013 – 35.3% of Brand-name Price Additional Savings Due To Price Reductions Source: Generic sales 2013 from IMS Brogan 2013 Average Generic pricing 28.4% of Brand Cost to Atlantic Canada If No Generics Cost to Atlantic Canada With 2006 Generic Prices Cost to Atlantic Canada With 2013 Generic Prices

7. Canadian Generic Pharmaceutical Association This ongoing uncertainty also has dramatic impact on the prescription drug supply chain (pharmacists, and distributors). 03 Perpetual provincial drug reforms making it extremely challenging for generic pharmaceutical manufacturers to plan product development, make decisions about infrastructure and employment levels and difficult to effectively run their business in the Canadian market. 02 The Need for a National Pricing Model Beginning in 2006 Provincial Governments were making dramatic reforms to drug programs – including massive reductions to generic drug prices (applied to both public and private plans). 01

8. Canadian Generic Pharmaceutical Association In 2013, CGPA developed proposals to provide significant savings to the health-care system without jeopardizing the supply of cost-saving generic pharmaceutical products and services available in community pharmacies. Taking Action on National Pricing Model The CGPA proposals were aimed at creating a stable, predictable, and a rational market and pricing regime for generic pharmaceutical products in Canada. 03 Rational 02 Predictable 01 Stable Canadian Generic Pharmaceutical Association

9. Engagement on CGPA Pricing Model 2013 May/June July Consultation Fall 2013 CGPA consults with key stakeholders on proposed pricing model: Pharmacy Sector Distributors Private Sector Payers Academics Provincial Governments (staff and political) Announcements Provincial Premiers announce consideration of further unilateral price reductions on 10 generic pharmaceutical products. Council of the Federation CGPA engaged to develop a more comprehensive long-term, sustainable, and predictable pricing and reimbursement model.  PMPRB Study on international generic pricing  Study on Canadian Market (Hollis/Grootendorst) CGPA/CACDS/CoF

10. Canadian Generic Pharmaceutical Association 03 The Council of the Federation and CGPA develop a comprehensive 3-Year Pricing Framework. Outcomes from the Two Studies 02 CANADIAN MARKET: there are very high costs to entering Canada’s relatively small market (legal, regulatory, geography, and trade, etc.). 01 PMPRB (problems with database/data): P/Ts benchmark of 18% for high volume multi-source generic drugs is not unreasonable. In countries such as New Zealand, using tendering to control price, there are fewer generic products on the market.

11. Canadian Generic Pharmaceutical Association CoF/CGPA − 3-Year Pricing Framework Pan-Canadian Products  2013 – Six Pan-Canadian products reduced to 18% of brand-name price  2014 – Four more high-volume, multi-source product were reduced to 18% of brand as of April 1, 2014  2015 – Four more products to be reduced to 18% of brand-name price  2016 – Four more products to be reduced to 18% of brand-name price Multi-Source Products (3 or more competitors)  25% pricing model  35% pricing model for non-solid oral dosage forms

12. Canadian Generic Pharmaceutical Association Single-Source Generic Products  85% of brand-name price if no Product Listing Agreement on brand-name version  75% of brand-name price if there is a Product Listing Agreement on brand-name version Dual-Source Generic Products  50% of brand-name price On-Going  Council of the Federation and CGPA Steering Committee  Council of the Federation and CGPA Implementation Working Group CoF/CGPA − 3-Year Pricing Framework

13. Canadian Generic Pharmaceutical Association THE FACTS More than 30% of the generic drug sales in Canada are priced at 18% of the brand-name drug. Over term of 3-year framework, Atlantic Canada will save $560M Atorvastatin / Lipitor Rosuvastatin / Crestor Amlodipine / Norvasc Ramipril / Altace Venlafaxine / Effexor XR Omeprazole / Losec Rabeprazole / Paviet Pantoprazole / Pantoloc Citolopram / Celexa Simvastatin / Zocor Pan-Canadian Products To Date GENERICBRAND-NAME

14. Canadian Generic Pharmaceutical Association Generic Utilization by Province (percentage) Source: IMS Brogan Canadian Generic Pharmaceutical Association

15. 86% THE FACTS Generic Prescription Market U.S. Versus Atlantic Canada In the United States generic drugs are dispensed to fill 86% OF ALL prescriptions. IN ATLANTIC CANADA IT’S ONLY 65.9%. Valuable savings are still available through increased use of high quality, effective generic medicines. If the use of generic drugs in Atlantic Canada matched the levels in the U.S., Atlantic Canada’s health-care system would have saved an estimated 443 MILLION DOLLARS IN 2013. 65.9% Source: IMS Brogan 65.9%

16. Canadian Generic Pharmaceutical Association THE FACTS Savings For Every 1% Increase In Use of Generics For every one percent increase in the use of generic drugs in Atlantic Canada, more than $22 MILLION DOLLARS in savings can be achieved. Source: IMS Brogan / CIHI Using independent, third party data from IMS Brogan and the Canadian Institute for Health Information (CIHI) the CGPA has calculated the savings available to each province for every one percent increase in the use of generic drugs.

17. Canadian Generic Pharmaceutical Association Other Jurisdictions (United States) Canadian Generic Pharmaceutical Association

18. Other Jurisdictions (Europe) Canadian Generic Pharmaceutical Association

19. The CoF/CGPA framework promotes market stability and on-going supply of cost-saving generic prescription medicines. Focus must now turn to increasing generic utilization. Thank you. Jim Keon, President Canadian Generic Pharmaceutical Association