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The battle between big drugstore chains and the Ontario government over low-cost generic drugs is escalating.
The Ontario government has decided to seek leave to appeal a court decision earlier this month that gave Shoppers Drug Mart Corp. (SC-T) and rival Katz Group, which runs Rexall store, the green light to launch their own private-label generic prescription drugs.
The drugstore chains want to roll out their own store-brand generic drugs as a way to offset an estimated $750 million that they lost last summer when Ontario outlawed the professional allowances – or rebates – that generic drug companies gave to pharmacies in exchange for stocking their products.
The drugstores view private labels as a way to recapture lost profit because they can save money in the production and distribution of the lines.
Nevertheless, Ontario Health Minister Deb Matthews is concerned that the savings should benefit Ontario consumers.
“Last spring, our government successfully managed to bring down the cost of generic drugs for all Ontarians,” Matthews said in an e-mail statement today. “We knew Ontarians were paying too much for these drugs, so we eliminated professional allowances – unaccountable fees paid by generic manufacturers to pharmacies that were inflating the cost of generic drugs – and brought prices down.
“We’re using the money we saved to improve health care for Ontarians and add more drugs to Ontario’s formulary. Private labelling does not benefit Ontarians and that’s why, today, I am continuing to stand on the side of Ontario taxpayers and patients.”
Last year’s drug reforms slashed the price of generic prescriptions in half, to 25 percent of the price of its branded equivalent from 50 percent previously.