Thank you.
We appreciate the opportunity to address this committee. Being able to describe what is happening on the ground floor in our businesses can be mutually beneficial for this and future legislation.
I grew up on the farm too, but I ended up owning a pharmacy. I'm the owner of Tofield PharmaChoice. Tofield is a town about half an hour out of Edmonton. I also manage a medical clinic beside it, and I'm the standing president of the Alberta Pharmacists' Association. My opinions today aren't part of theirs; they are my personal opinions.
CUSMA has garnered much attention for changes to the auto and dairy sectors, as we have just heard. The standing committee should be concerned with provisions of the agreement that could have important impacts on pharmacy sectors, and in turn on my patients.
I understand the original CUSMA would have extended the term of protection for data resulting from drug trials from eight to 10 years for a subset of drugs known as innovative biologics. I'll explain what these are.
As pharmacists and patients, we're very familiar with small, simple molecules that have been produced in the past 50 years, such as acetaminophen, codeine and antibiotics. They're easy to duplicate, because we can make a generic product of them, and those products come out at about 25% of a name brand product. We have used these generics since they were introduced about 35 years ago, and I was there right at the start. The availability of generic product has increased medication availability to all patients and saved millions of dollars to private, provincial and federal drug plans.
A biologic is a product that's a little different. It's a large complex molecule, usually manufactured by manipulating living cells to produce a specific protein. The most common one everyone would know is insulin. There are many benefits to biologics, such as being a unique treatment option, either with fewer side effects or better treatment for a disease. Pricing for biologics can be anywhere from five to 10 times that of small, simple molecules. I refer to drugs as molecules.
Generic products of biologics are called biosimilars, because they are not identical to the product, unlike making a generic of a simple molecule. They're very close to the same and they produce the same results in the body for a particular disease. Many provinces treat them as substitutes, although they are not interchangeable, but in comparison they're going to save payers many millions of dollars annually. Biosimilars are here, and we're using them now across Canada.
Current Canadian law provides 20 years of patent protection, which is different from data protection. Patents are just like patents for products. Data protection is a little different. Because a drug needs to be researched, it takes a long time to get it on the market. A protection is offered to companies after the drug comes on the market, because the 20 years wouldn't cover their protection.
Unlike other patents, drugs must go through trials and testing to prove efficiency and safety, which uses a large portion of the patent protection period. Data protection begins when they start marketing the drug, and it effectively provides a minimum period of market exclusivity regardless of the patent status. Data protection will prohibit the use by drug manufacturers in obtaining market approval of the safety and efficacy of the drug. When a patent company tests a product in the generic area, if people were allowed to use some of that data to get their drug on the market, that's basically what this data protection is: It protects the drug for x number of years to allow them to make some money.
Before it was signed in December, the original CUSMA had an additional two years of data protection on biosimilar molecules. This is important because that extra protection would have increased the price of the products and extended the protection for an extra two years. From what I understand, it was changed back to the eight years on the signing day, which I think was December 10 or 11.
In Alberta, we have witnessed recent changes to our publicly administered drug plans that are transitioning patients from biologics to lower-cost biosimilars. These policies were specifically implemented to decrease government drug plan expenditures. The more prevalent the use of biosimilars in Alberta, the greater the cost savings for payers and patients. Alberta spent more than $238 million in the fiscal year 2018-19 on biologic drugs, and these costs are increasing every year.
Costs per patient for original biologics can be more than $25,000 annually, with biosimilar versions costing up to 50% less than the original biologics. Alberta's biosimilar initiative will save approximately $30 million annually, which can be invested in other health services for Albertans. CUSMA's data protection change would have worked directly against Alberta's ability to access affordable biologic drug therapy in the future.
Here are a couple of examples. For a patient arriving at my pharmacy counter, the average price for Remicade, which is a name brand biologic used for rheumatoid arthritis, would run that patient or a third party payer like Blue Cross or VAC $1,553 a month, compared with a biosimilar of $848 a month. This pricing is excluding any fees or markups, and this extrapolates into a savings of about $8,460 annually.
In another example, Lantus insulin costs about $100 monthly, in comparison with $75 for a biosimilar, a savings of $300 annually. The $300 seems like a small amount, but when it is multiplied by the number of diabetics in Alberta, which is increasing, the savings are substantial. The patient on a fixed income with no prescription insurance sees no effective difference between the two products and is using the savings to purchase maybe test strips to better control his diabetes and keep him out of the hospital. We have probably 20 to 25 patients in my pharmacy alone who are making that change.
Nationally, had they extended the data protection to 10 years instead of the eight, it would have cost us over $169 million in 2029. I talk about 2029 because the patents are just being taken out for products that are going to be available then, and those are the ones that CUSMA will affect. From what I understand, for the ones that are presently licensed, there'll be a grandfather clause.
Final terms in CUSMA allow data protection to remain at eight years, from what I understand, giving continued savings to payers such as my patients and third party private and public plans, like government plans, which will allow continued affordability to patients who visit my pharmacy.
I appreciate the opportunity to talk to this committee.
