Ontario's sweet drug deals threatened by disclosure of rebate terms

It seems that the drug companies are freaking out over a freedom of information request in Ontario that could embarrass them:

Helen Stevenson, the high-profile bureaucrat in charge of drug policy, will often refuse to list new medications on the provincial formulary, and in some cases threaten to delist drugs already on it. Her justification usually comes down to price and value relative to the competition. But then the drugs will wind up being listed, ostensibly at the same price as anywhere else.

In reality, the government pays much less than the listed price, because the companies return part of the money through rebates. To avoid other governments and private drug plans demanding the same deal, those rebates are kept confidential.

To maintain that secrecy, both the government and the industry have had to spend a lot of time fighting freedom-of-information requests. But in late February, acting on orders from the province's Information and Privacy Commissioner, the government finally released a big chunk of records.

Those records don't explicitly list off the discounts on specific drugs. So government officials seem to think they've held up their end of the deal.

Manufacturers aren't appeased. They're afraid that from the available information – including the names of 47 drug companies, and the amount they gave back to the government in quarterly lump-sum payments – it will be possible for informed interests to deduce some of the specific discounts.

In an urgently worded four-page letter to provincial officials, obtained by The Globe and Mail, the president of Canada's Research-Based Pharmaceuticals Companies – the national association more commonly known as Rx&D – spelled out those fears.

“It appears that highly sensitive and commercial information of our members has been disclosed, despite the [Health] Ministry's attempts to resist disclosure,” Russell Williams wrote.

From the Globe. And why, you might ask, would this be so harmful to the drug companies? Perhaps because they charge a lot more for the same drugs in other jurisdictions:

If that information becomes public, companies will come under pressure from other provinces to offer comparable savings there. It will also cause a great deal of friction with Ontario's private plans, which generally pay the listed price rather than the discounted one.

But the manufacturers' biggest concern, according to some sources, is how the issue would play beyond Canada's borders. It's not helpful for multinational corporations to highlight the disparity in what different customers pay. And with legislators in the United States trying to curb the highest prescription-drug prices in the world, the timing could be especially problematic.

Because of course, if the drug companies are forced to stop gouging customers in the US -- their biggest market -- the sky will fall.