Retail News Breaks
Ontario pharmacists fire back amid funding cutbacks
April 14th, 2010
TORONTO – Canadian pharmacy groups have responded to a letter by Ontario's health minister that they said disparages the reputation of pharmacists in the province, where the government plans to halve its reimbursement for generic drugs.
The pharmacy groups — including the Ontario Pharmacists' Association, the Independent Pharmacists of Ontario and the Canadian Association of Chain Drug Stores — this week sent a letter that called on Deb Matthews, Ontario's Minister of Health and Long-Term Care, to deliver an apology for her letter, which they said was "an unprecedented attack on the motivations of community pharmacists."
According to the pharmacy organizations, Matthews' letter accuses Ontario pharmacists of abusing the province's system of professional allowances, which they denied.
"Professional allowances cover 25% to 30% of the average pharmacy's operating costs in Ontario," the pharmacy groups' letter read. "This helps to cover the funding shortfall created by the discrepancy between the $14 actual cost of filling a prescription and the $8 reimbursed by the government. Your proposed cut of these allowances deals a direct and severe blow to the ability of pharmacies to continue offering the high levels of service our patients have come to rely on."
The pharmacy associations also said Matthews' letter referred to an incorrect media report that claimed pharmacies temporarily withheld services in response to news of the province's health care funding cut. "This is simply without basis in truth," the groups' letter stated. "Your statement also presupposes pharmacies are colluding to act together in a way that is detrimental to the patients we serve."
"We respectfully request an immediate retraction and apology from you for so unfairly maligning the reputation of a profession that prides itself on a keen interest in providing the highest-quality, front-line patient care possible," the pharmacy organizations' letter concluded. It was signed by Dennis Darby, chief executive officer of the Ontario Pharmacists Association; Nadine Saby, president and CEO of the Canadian Association of Chain Drug Stores; and Ben Shenouda, chairman of the Independent Pharmacists of Ontario.
Under the Ontario government's measure, prices of all generic drugs purchased through the Ontario Drug Benefit Program would be cut from 50% to 25% of the cost of the original brand-name drug. Also, over the next three years, the cost of generic drugs bought out-of-pocket or through private employer drug plans would be more than halved to 25% of the cost of the original branded drug. And by 2014, generic drugs in Ontario would be sold for no more than 25% of the cost of the original brand-name drug.
The Ontario Pharmacists Association also noted that pending legislative approval, all professional allowances paid by generic drug companies to pharmacy owners for drugs bought through the Ontario public drug plan would be eliminated immediately, and all other professional allowances would be phased out by 2014.
On the plus side, however, all dispensing fees paid by the Ontario government would rise by at least $1 for every Ontario Drug Benefit prescription filled, effective immediately, according to the association. Thereafter, dispensing fees paid by the Ontario government would increase annually by 2.5%, and another $150 million — including a new $100 million fund — would compensate pharmacy owners for the professional services that pharmacists provide. As part of that funding, money would be earmarked for rural and long-term care pharmacy services.
Still, pharmacy operators believe they'll be taking a big financial hit from the reductions in reimbursements and allowances. Katz Group's Rexall drug store chain is instituting a hiring freeze, while Shoppers Drug Mart is reducing store hours.
Independent pharmacy owners under the Medicine Shoppe, Guardian and I.D.A. banners also have expressed their opposition to the cutbacks, saying the move will squeeze them financially and force them to re-evaluate their operations and services.
"It is easy for the government to say, 'Pharmacies must change their business model,' but no business can operate for long when their costs exceed their revenues," Winston Clarke, pharmacist-owner of The Medicine Shoppe Pharmacy in Sarnia, Ontario, said in a statement last week. "And costs exceeding revenues is exactly the situation independent pharmacists like myself will be in if these radical changes proposed by the [Ontario Premier Dalton] McGuinty Liberal Government go forward."
Pharmacist Tim Langford, owner of Langford I.D.A. Pharmacy in Waterdown, Ontario, also commented last week, "The changes to the province's drug program will directly impact my business and the pharmacy care my patients have come to expect and need. I'm determined to do whatever I can to continue to serve our patients, but these changes will make it extremely difficult for my business to survive."
Meanwhile, food and drug retailer Loblaw Cos. announced last week that despite the government cutbacks, it will be "business as usual" at its pharmacies in Ontario.
"We are supportive of the overall objectives of the Ontario Community Pharmacists Coalition on this issue, and we recognize that the government's proposed changes will have an impact on our business," Andrew Iacobucci, senior vice president of Loblaw's drug business unit, said in a statement. "However, we believe our customers' interests are paramount, and we will continue to offer the services our customers expect from us."
More Retail News Breaks >>