Retail News Breaks
Shoppers Drug Mart blasts Rx reimbursement plan
April 8th, 2010
TORONTO – Shoppers Drug Mart (SDM) has voiced opposition to the Ontario government's plan to halve its pharmacy reimbursement rate for generic prescription drugs.
The Canadian drug store chain said this week that the proposal "will have a direct negative impact on pharmacy services and patient care in the province of Ontario."
According to SDM, the Ontario government plans to reduce generic prescription prices for patients under the Ontario Drug Benefit Program from the current level of 50% of the equivalent brand-name price for multisource generics to 25% of the equivalent brand-name price. The retailer said the provincial government also indicated that the reductions in generic prescription pricing would be extended to the private sector over a multiyear period.
"It is unfortunate that the [Ontario Premier Dalton] McGuinty Liberal government has taken such a narrow and short-term view in introducing measures to reform Ontario's drug system," Jürgen Schreiber, SDM president and chief executive officer, said in a statement. "In announcing these changes, while ignoring the reform proposals brought forward by community pharmacy, this government is putting at risk the long-term sustainability of community pharmacy in the province of Ontario.
"These announced reductions in drug pricing and pharmacy reimbursement, on the heels of significant cuts just four years ago, will only serve to further commoditize health care and the practice of community pharmacy at a time when Ontarians need it most," Schreiber noted.
SDM said talks about changes to the Ontario Drug Benefit Program have been under way for over nine months and that the community pharmacy sector provided the Ministry of Health & Long-Term Care with proposals that would save the government money, enhance pharmacy services and improve efficiencies, provide greater patient access and help ensure the long-term economic viability of community pharmacy and the drug benefit program.
Proposals included price reductions on new and existing multisource generic molecules for the Ontario Drug Benefit Program, which would have delivered, on average, more than $300 million in gross annual savings; no change to prices for generic prescription drugs in the private sector; a "modest" increase in dispensing fees; and expanding the levels and types of services available through pharmacists.
Also proposed, SDM said, was enabling generic drug makers and pharmacy retailers to negotiate supply pacts in accordance with ordinary commercial terms, eliminating the concept of professional allowances enhancing drug utilization management programs by implementing such measures as therapeutic substitution and increased generic prescription utilization initiatives at the retail pharmacy level — which could deliver additional annual savings of over $400 million.
According to SDM, the announced cuts will require all pharmacies — including the more than 600 Shoppers Drug Mart pharmacies in Ontario employing more than 25,000 people — to review their operating, investing and professional practice models to ensure the long-term sustainability of their businesses. The retailer also pointed out that because there's no government funding of most other services that pharmacies provide — such as educational clinics, compliance packaging, blood pressure and glucose monitoring, telephone counseling and prescription delivery to seniors' homes — the reimbursement cuts likely will negatively impact the health and well-being of patients and customers, since pharmacies would have to scale back their current services.
"These announced changes reinforce our view that in the long term, the successful players in retail pharmacy will be those with size, scale and an ability to leverage operating efficiencies," Schreiber stated. "Shoppers Drug Mart, with the largest integrated pharmacy network in the country and the leading market share, will be challenged in the short term to adjust to the changes announced [April 7] but remains well-positioned for the long term."
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