Soaring drug bills in Canada could be cut if doctors simply paid attention to the cost of the medications they prescribe, a new federal report says.

The study, commissioned by Industry Canada, found that Canadian physicians are generally oblivious to drug prices and often prescribe an expensive over a cheap pharmaceutical.

Doctors, who are bombarded with marketing materials promoting brand names, simply do not consider the cost burden to the patient or to government pharmacare plans when writing prescriptions, says the report.
(CBC)

"In Canada, there is no formal mechanism that credibly brings cost into the physician's decision-making process" when issuing prescriptions, says the report, by IMS Health Consulting Inc.

The situation is better in the United States and Great Britain, where health-management systems take drug prices into account, helping reduce pharmacy bills.

"Incorporating appropriate cost considerations into the medical decision-making process could offer reduced costs to the health care system," the report concludes.

The Feb. 1, 2007, document was obtained by the Canadian Press under the Access to Information Act. IMS Health Consulting fought its release in Federal Court for several months before recently withdrawing the legal challenge.

Brand name drugs typically win out

The study examined what happens to drug sales when cheaper generic versions of pharmaceuticals go on sale after the expiry of Canada's patent protection for the brand-name equivalent.

After several months, the generic version typically supplants the brand-name version, and brand-name drug companies stop promoting their own version.

The process in Canada is driven by provincial drug formularies that allow pharmacists to quietly substitute the generic version even though a doctor might have prescribed a brand name, allowing provinces to save on pharmacare programs.

But the appearance of a generic drug has almost no impact on sales of closely related medications in the same class, the study found, citing the example of statins — drugs that lower cholesterol levels.

Although the generic statin known as simvastatin is now available, it has not cut into sales of the more expensive Lipitor, another statin that has become Canada's first drug to hit $1 billion in sales.

Lipitor, which remains protected by patent, is chemically similar to simvastatin, though it is not the same molecule.

However, health-care experts say the cheap generic is often just as effective for patients as the more expensive brand-name drug in the same class.

But doctors, who are bombarded with marketing materials promoting brand names, simply do not consider the cost burden to the patient or to government pharmacare plans when writing prescriptions.

Need for more awareness

The study suggests that if a mechanism was in place to make them aware, the health system would save money. In the U.S., HMOs, or health maintenance organizations, raise awareness of drug costs while keeping a close eye on the bottom line.

"My experience is that doctors in this country are remarkably ignorant about price," Gordon Guyatt, a health professor at McMaster University in Hamilton and a doctor with 25 years' experience, said in an interview.

"It's not that people aren't interested — it's all the pressures of everything you've got to remember and deal with. It's very easy to ignore."
   
The IMS study cautions that any move to make drug prices an integral part of doctors' decision making will have to be "balanced" to ensure brand-name drug companies still have sufficient revenues to invest in research.

The untendered contract with IMS cost taxpayers $74,200. An Industry Canada spokeswoman said the study was distributed internally to the Competition Bureau, Health Canada and other federal organizations.