Ontario targets pharmacists

Matthews told a Toronto audience that the fifty-fold difference in the price of drugs between consumers in the U.S. versus Ontario is proof that pharmacy industry rules are being abused and action must be taken.

A statement on the Ministry’s website outlined $750 million in professional allowances that drug manufacturers reported paying to pharmacy owners in 2009—70% of which went to rebates as opposed to patient care, according to the pharmacists themselves.

“In addition, during the past year, at least 100 pharmacy owners failed to provide any documentation related to the payments they’ve collected and 650 pharmacy owners provided incomplete reports,” the statement noted. “Some pharmacies have also been involved in a re-sale scheme in order to receive professional allowances multiple times for the same product—a practice that has resulted in the government taking legal action against them.”

As a result, the government has added to their recent Budget document a series of measures that aim to eliminate the professional allowances paid to pharmacists and replace them with fees for services such as chronic disease counselling and delivering injections.

Other proposed changes include:
• lowering the cost of generic drugs by at least 50%, to 25% of the cost of the original brand name drug for Ontario’s public drug system, private employer drug plans, and people who pay for drugs out-of-pocket;
• compensating pharmacists through increased dispensing and service fees; and
• supporting access to pharmacy services in rural communities and under-serviced areas with new funding.

Ambushed
The pharmacy industry is reacting with shock and anger, as both sides have been involved in bi-lateral discussions for past nine months and Wednesday’s announcement caught the industry by surprise.

A statement from Shoppers Drug Mart explains that the industry has proposed several cost-cutting measures for the benefit of both public and private plan sponsors and their members, including:
• price reductions on new and existing multisource generic molecules;
• a price freeze for generic prescription drug products in the private sector;
• a minimal increase in dispensing fees;
• expanding the levels and types of services available through pharmacists;
• allowing generic drug manufacturers and pharmacy retailers to negotiate supply agreements in accordance with ordinary commercial terms, thereby eliminating the concept of professional allowances; and
• enhancing drug utilization management programs by implementing such measures as therapeutic substitution and increased generic prescription utilization initiatives at the retail pharmacy level.

According to Independent Pharmacists of Ontario president Ben Shenouda, the government’s move will ultimately result in lower standards of patient care.

“They are putting an enormous amount of financial pressure on the pharmacy industry. This will prevent pharmacists from delivering services such as diabetes counselling, drug management and chronically ill patient care.”

As for the compensation being offered to pharmacists in lieu of professional allowances, Shenouda says it amounts to one-third of what they currently receive and will likely result in the closure of many pharmacies.

“If this goes through, there will be fewer pharmacies in Ontario, making it difficult to access patient care.”

Impact on benefit plans
There are three likely outcomes for plan sponsors and their members, according to Thomas Holloway, president of Oakville, Ontario-based Equitus Consulting. The first involves rising costs for plan sponsors as dispensing fees rise as much as two dollars per prescription. Secondly, costs may be passed on to the plan member at the counter through a direct price hike. A third, less likely scenario involves an increase in paper reimbursement rather than drug card claims.

“For example, on a $100 prescription, the drug card company may tell the pharmacist that they’re only willing to pay $90,” explains Holloway. “With these new rules, the pharmacy may ask the patient for the outstanding amount, which today they generally don’t do.”

David Jensen, a spokesperson for the Ontario Ministry of Health and Long-Term Care, explains that while the main beneficiaries of the proposed regulations will be Ontario Drug Benefit members, there will also be positive effects for private plans, such as lower generic drug costs.

“We think this was a necessary measure to take,” he says. “These professional allowances were not helping patients. We had limited them to 20% and insisted they be linked to patient care, but we’ve had documentation showing that, in fact, that hasn’t been happening. It’s been going to salaries, fringe benefits and bonuses. There is no benefit to these professional allowances for patients, and they need to be eliminated so that we can use the savings to bring down the price of generic drugs.”

Minister Matthews’ announcement has been greeted with praise from the Canadian Life and Health Insurance Association and the Ontario Federation of Labour. However, Shoppers Drug Mart said it is “strongly opposed” to the changes and believes they will negatively affect pharmacy services and patient care in the province. “It is inevitable that pharmacies will have to make reductions to their current service offerings,” said the company in a statement.

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