Inside This Issue - News
Ontario pharmacies reach turning point
May 24th, 2010
by Alasdair McKichan
TORONTO – As of presstime, May 15 was shaping up to be a day of destiny for community pharmacy in Ontario.
It was the date on which Deb Matthews, Ontario’s minister of health and long-term care, had said she would implement changes to the regulations that govern the level of remuneration pharmacies receive for their professional services. If no changes were made to the detailed proposals the minister published on April 8, it is estimated that Ontario pharmacies would lose an average of $300,000 (Canadian) of income a year apiece.
Although the government has said it will allocate some $100 million annually to reimburse pharmacists for the new consultative services they are being encouraged to undertake, the net provincewide annual reduction in pharmacy income is estimated at about $500 million.
Matthews asked that reactions to the government’s proposals be delivered to her department by May 8. Pharmacy owners believe the short interval between that deadline and the implementation date of the new regime means the minister feels that officials do not need time to consider radical changes to the proposals.
Despite that discouraging scenario, pharmacy has been mounting a vigorous information campaign to present its case for more realistic treatment of pharmacy remuneration. The thrust of the campaign has been to educate customers — virtually every Ontario resident — about what implementation of the current proposals would mean to them.
Full-page newspaper advertisements by individual chains and the Independent Pharmacists of Ontario explain how the disparity between the $7 dispensing fee the Ontario Drug Benefit Program (ODBP) pays and the actual $14 cost of that service has until now been substantially compensated for by the professional allowances pharmacies receive from generic drug manufacturers for utilizing their products.
The ads inform consumers that the cuts will force pharmacies to reduce their operating hours or, in some cases, close. They warn that patients will face longer wait times for their prescriptions, charges for home delivery or cessation of delivery services, cancellation of many health education services, and less access to pharmacy staff for advice and consultation.
The Canadian Association of Chain Drug Stores has commissioned ongoing public opinion polling to measure how customer sentiment is moving.
The proposed reforms announced by the ministry include the following:
• On May 15, lowering the generic prescription drug reimbursement by the ODBP by 50% to 25% of the original brand product price.
• Lowering the price of generics reimbursed by private payers to 50% of the brand price on May 15, and sequentially to 35% on April 1, 2011, and 25% on April 1, 2012.
• Eliminating professional allowances paid by generics manufacturers on a phased schedule. Currently at 20% of the cost of ODBP-reimbursed prescriptions, the cap would fall to 5% on May 15 and be phased out entirely by or during 2014. For private payers the cap would be established at 50% on May 15 and then reduced sequentially before being phased out in 2014.
• Changing the permitted markup under the ODBP for rural pharmacies and those in underserviced areas from 8% to 10%. For other pharmacies the 8% markup level would remain in place — provided, in both cases, the pharmacy purchases 75% of the products supplied under the ODBP from a comprehensive wholesaler.
To qualify as a comprehensive wholesaler, a company would have to satisfy a variety of conditions, including being willing to sell to pharmacies other than those carrying its approved banners.
• Increasing the dispensing fee under the ODBP from $7 to $8 for most pharmacies and from $7 to between $9 and $11 for rural pharmacies and those in underserved areas. Dispensing fees would increase incrementally over a four-year period to $8.83 for most pharmacies and up to $12.14 for rural pharmacies and those in underserved areas.
The draft regulations also provide that a retail pharmacy’s private label generic product will not qualify for reimbursement under the ODBP. Shoppers Drug Mart was the only company that had, at the time the proposed regulations were published, announced an intention to enter this type of business.