Retail News Breaks
Ontario goes ahead with Rx reform plan
June 8th, 2010
TORONTO – Operators of drug stores in Ontario had their hopes dashed this week when the provincial government opted to proceed with a health reform plan that stands to halve prescription drug reimbursement for pharmacies.
Ontario health minister Deb Matthews announced Monday that the changes to the province's prescription drug benefit plan will take effect July 1.
The Ontario Ministry of Health and Long-Term Care in mid-May had said it would postpone enactment of the drug reform plan by about a month in order to field comments from pharmacy operators and other stakeholders, who have waged an intense campaign to protest the proposed cuts in pharmacy payments and get the government back to the bargaining table.
In announcing the enactment of the reform plan, the Ontario health ministry said the price of most generic drugs will be lowered by 50%, and professional allowances paid by drug companies to pharmacies will be eliminated.
The ministry also said it will raise the dispensing fees paid to rural pharmacies by up to $5 per prescription filled and expand its MedsCheck program to help people with diabetes, long-term care patients and people who have difficulty traveling to their local pharmacy. Additionally, a transition fund will be created to assist pharmacies in adapting to the new system.
"We're getting Ontarians lower drug prices, cleaning up a system that was open to abuse and strengthening pharmacy services in this province," Matthews said in a statement. "All Ontarians are going to benefit from these changes."
However, pharmacy operators have said the drug reform plan will have a huge impact on their business — as well as on patient access to important health care services.
The draft regulations of the plan are estimated to reduce income for Ontario pharmacies by an average of $300,000 (Canadian) apiece, for a total of about $500 million across the province. According to the Ontario's Community Pharmacies Coalition, the reform plan overall stands to cut $750 million in funding to front-line health care providers.
"Sadly, pharmacists will now be forced to make very difficult choices, as they evaluate the level of care they provide to all patients, especially seniors and the chronically ill," Rita Winn, general manager of Lovell Drugs, said in a statement.
Winn noted that the health ministry's brief postponement didn't end up providing the give-and-take that pharmacy stakeholders had hoped would enable them to directly convey their concerns.
"The extended consultation period set out by the government resulted in very little consultation with all pharmacy stakeholders," she stated. "In fact, one has to question the legitimacy of the entire process and why the guidance and expertise of those who lead the industry was outright ignored."
Under the reforms, the cost of generic prescription drugs reimbursed by the government-sponsored Ontario Drug Plan would be halved to 25% of the branded product price and those paid for by private payers by stages to the same level. Professional allowances paid by generic drug makers in both the public plan and for private payers are to be phased out by 2014.
Modest hikes in dispensing fees — to $8 from $7 for most pharmacies and to between $9 and $11 for special-case pharmacies — also are to be introduced along with small incremental increases over a four-year period.
None of the dispensing fee adjustments stand to bring the remuneration up to the current average cost of filling a prescription in an Ontario pharmacy. According to a study performed for the Canadian Association of Chain Drug Stores, that cost was reckoned to be $14.
Leading Canadian drug chains have taken immediate action to deal with the proposed cuts.
Katz Group's flagship Rexall drug store chain in April said it was enacting a hiring freeze for its corporate head office, which also includes the elimination of pharmacy student and intern programs in Ontario. The chain also said it will start charging customers for prescription deliveries.
Shoppers Drug Mart, meanwhile, is reducing store operating hours, scaling back the times that seven stores in London, Ontario, will stay open. Two of those stores will also implement what is known as "lock-and-leave," when the pharmacy is closed while the rest of the store remains open. The is also scrapping plans to hire 350 pharmacy students this summer in the province.
On Tuesday, the Ontario Pharmacists' Association expressed "concern and disappointment" with the provincial government's decision to move ahead with the regulatory changes.
"We are extremely disappointed that the government did not choose to invest more in pharmacy or provide the support to help pharmacists deal with these unprecedented changes to funding," Dean Miller, chairman of the Ontario Pharmacists' Association, said in a statement. "What the government is providing in return is clearly insufficient, and more investment is necessary to help pharmacists deliver the care that patients need."
Miller said pharmacists will be forced to make some difficult choices as they evaluate the level of care they will be able to provide. He explained that patients may experience reductions in clinic services and pharmacy hours, and direct access to pharmacists may be limited. "These changes will affect everyone in community pharmacy — owners and staff alike — but will be particularly hard on independent pharmacists and their patients," he noted.
The Independent Pharmacists Association of Ontario (IPO) stated Tuesday that the government's lower funding levels will make it impossible for pharmacists to continue to provide their current levels of patient services.
"It can only be called catastrophic," commented Ben Shenouda, IPO's president and a community pharmacist in Brampton, Ontario. "Ontario already had the lowest overall funding for pharmacy care in Canada."
Emad Nossier, an IPO board member and community pharmacist in Mississauga, Ontario, stated, "We expect that independent pharmacies will begin to shut down within the next few months. The average pharmacy was making between 4% and 5% profit after expenses and taxes. The government's actions will now make almost all independents essentially insolvent. Each pharmacist-owner will have to make their own hard decisions, but in the short-term I know I'll have to begin charging patients for some health services, eliminating others, and laying off pharmacy staff. Within a few months, I'll have to consider whether I can stay in business at all. Most independents will be in the same situation."
Alasdair McKichan contributed to this story.
*Editor's Note: Article updated June 9 with comment from Ontario Pharmacists' Association.
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