There's almost a 20 per cent gap between generic drug prices in Canada and foreign markets, according to a new report, a price difference one expert called gouging.

The Patented Medicine Prices Review Board (PMPRB) is a federal watchdog on drug prices. In a report titled Generics360 released Tuesday, the board examined the prices of 554 generic drugs representing more than $1 billion in Canadian sales in 2014.

The medications included those commonly prescribed to treat high blood pressure and Type 2 diabetes, reduce  cholesterol, and antidepressants.

Pharmacare 20141005

Canadians are being heavily overcharged for generic drugs, according to a new report. (Jacques Boissinot/Canadian Press)

In the last quarter of 2014, Canadian prices "still continue to be about 19 per cent higher than the international prices," said Tanya Potashnik, the board's director of policy and economic analysis.

In 2010, Canadian prices were 40 per cent higher than in 11 industrialized countries: France, Germany, Italy, Sweden, Switzerland, the United Kingdom, the United States, the Netherlands, Spain, Australia, and New Zealand.

"There has been a shift towards a lower extent of gouging, but basically that's hard to celebrate," said Amir Attaran, a law professor at the University of Ottawa who studies drug pricing.

The latest prices are based on what Canadians pay for a basket of drugs in the final quarter of 2014, Potashnik said.

Both the report's authors and the Canadian Generic Pharmaceutical Association said the data reflects success after provinces banded together to make bulk purchases of some drugs through the pan-Canadian Pharmaceutical Alliance.

However, Attaran said, it would take a national pharmacare program to land the best discounts from drug companies through a competitive bidding process such as New Zealand's.

"Canada spends over $5 billion a year on generic drugs. Now we know they're 20 per cent over. That's a billion dollars. This is a number Canadians have to care about."

Canada hasn't focused on tendering for the lowest bid as other countries have. Also, competition here isn't transparent, Potashnik said. 

Minister of Health Jane Philpott reacted to the report Tuesday, saying in a statement it "demonstrates that prices of generic drugs in Canada remain considerably higher than elsewhere internationally."

"Our government is committed to improving the affordability of necessary prescription medication," she said. "We remain open to exploring further ways we can collaborate with the provinces and territories to do so."

With files from CBC's Vik Adhopia