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Public drug insurance plans not taking full advantage of new medication, according to the MEI

Montreal, October 13, 2004 – The true value of new, patented medication will not be known as long as provincial governments limit their use within the public drug insurance plans, according to Montreal Economic Institute (MEI) research director Valentin Petkantchin.

“For [citizens] to be able to obtain the full therapeutic benefits they consider valuable, it will be necessary to set up a drug insurance system that allows more room for individual choice,” concludes the MEI’s Economic Note, published today.

Its author, Mr. Petkantchin, writes: “It is essential to take account of the individual preferences of patients, who are the ultimate beneficiaries of new products.” He quotes economist John Calfee, who says, “the basic criteria for the value of new drugs should be the benefits to consumers rather than the benefits to governments or other providers of health care.”

The provincial government’s desire to control costs results in a limited number of drugs that appear on their drug formulary. These formularies determine which drugs – among those approved in Canada – will be reimbursed by the public plan and must also be offered by private insurers. For example, in Quebec – which nonetheless has one of the most comprehensive lists in Canada – close to 60% of new medications (133 out of 228) were rejected between 1995 and 2000 by the Conseil du médicament.

Just worthless copies?

As for those who feel that the majority of new, patented drugs are just ‘me-too’ copies with no added value that should not appear on the formularies, the MEI research director criticizes their underestimation of R&D costs and misunderstanding of the nature of innovation, which takes place gradually, regardless of the industry.

“The copies offer greater choice to consumers and to third-party payers – insurance companies, but also governments – and thus strengthen competition,” he affirms.

The existence of several copies has not only an economic advantage but also medical advantages that only doctors and their patients can truly assess: “Each patient reacts differently to drugs, and the existence of various active substances for the same illness allows for treatment to be personalized,” writes Valentin Petkantchin.

The Economic Note is available free of charge on this site. Its author is available for interviews.

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For information and interviews: Patrick Leblanc, Director of Communications, MEI / Tel.: (514) 273-0969 / Email: pleblanc@iedm.org

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