Calls for tenders enter the pharmaceutical world in Quebec

The Regulation respecting calls for tenders for certain medications covered by the basic prescription drug insurance plan¹ (the Regulation) came into force on April 20, 2017, supplementing provisions in An Act respecting prescription drug insurance² that were added by Bill 81. The Regulation establishes the framework through which Quebec’s minister for health and social services will be able to issue calls for tenders for contracts to be concluded with accredited manufacturers and wholesalers for the listing and distribution of medications in Quebec.

For manufacturers, two distinct mechanisms are established: a “general call for tenders” and a “fixed-price call for tenders.” In the first case, the minister will invite accredited manufacturers to submit a price for a medication or supply. The call for tenders will indicate the number of manufacturers of a particular drug that will be selected for listing on Quebec’s list of medications (maximum of three) and the market share that will be attributed to each one. Such calls for tenders will be conducted in accordance with the Regulation respecting certain service contracts of public bodies,³ regulations that apply generally to public sector contracts in Quebec. In the second case, the minister himself will set the proposed price of the medication or supply that is subject to the call for tenders. The call for tenders will be used to identify manufacturers willing to supply at the stipulated price. In such tenders, all manufacturers submitting a compliant bid will be selected for inclusion on the list of medications.

With respect to accredited wholesalers, calls for tenders will be issued for contracts establishing supply conditions and the profit margin applicable to the wholesale distribution of medications or supplies. The contracts will grant the selected wholesalers exclusivity for the supply of owner pharmacists with the medication or supply in question. These tenders too will be issued in accordance with the Regulation respecting certain service contracts of public bodies.⁴

Exclusivity rights granted a manufacturer or wholesaler following a call for tenders will be for a maximum term of three years, including any renewals.

In the debate surrounding the passage of Bill 81, fears were expressed that issuing exclusive contracts through a tender process will lead to medication shortages, supply disequilibrium, increasing costs for production or services, or the creation of a monopolistic system to the detriment of a competitive one. Indeed, Ontario and Saskatchewan have experimented with calls for tenders but no longer use them. In Quebec, the Regulation is broadly drafted, allowing the minister considerable flexibility in how he may use his powers. In response to the concerns expressed, the minister has pointed to that flexibility as allowing the process to be applied in a way that will avoid the potential pitfalls.

No doubt, stakeholders in this market will be looking to the early instances of the Regulation’s application to gain a better insight into the practical implications of this new initiative. In the meantime, the Canadian experiences, such as the ones in Ontario and Saskatchewan, and international ones, such as in New Zealand and Holland, may provide relevant background for reflection on using calls for tenders in the pharmaceutical world.
 
The authors wish to thank Michèle Giguère, student, for her assistance in preparing this legal update.

Footnotes

¹ Regulation respecting calls for tenders for certain medications covered by the basic prescription drug insurance plan, An Act respecting prescription drug insurance (chapter A-29.01, s. 60.0.0.3; 2016, c. 16, s. 1), published in the Gazette officielle du Québec, April 5, 2017, year 149, no 14.

² An Act Respecting Prescription Drug Insurance, CQLR c A-29.01.

³ Regulation respecting certain service contracts of public bodies, CQLR c C-65.1, r 4.

⁴ Ibid.