Inside This Issue - News
Ontario pharmacies receive stay
June 7th, 2010
by Alasdair McKichan
TORONTO – Community pharmacies in Ontario construed somewhat positively the announcement on May 17 by Deb Matthews, the provincial Minister of Health and Long-Term Care, that she intended to postpone the introduction of new regulations governing pharmacy remuneration for about a month.
They saw the development as possibly signaling some modifications in the specifics of the government’s plans. Previously, Matthews had indicated the stringent draft regulations published in April go into force on May 15.
As they stand, the draft regulations would reduce income for Ontario pharmacies by an average of $300,000 (Canadian) each, for a total of about $500 million across the province.
The minister had asked that comments on the draft regulations be in her hands by May 8.
The fact that she set aside only a week to consider responses from pharmacy operators and others seemed to indicate that she did not plan to spend much time considering the reactions. The brief period also meant there would be little opportunity for legislators or regulators to make significant wording changes in the regulations if proposals for amendment required them.
Retail pharmacy leaders hope that the vigorous campaign mounted over the last several weeks by a coalition of professional and trade organizations — directed at the public as well as legislators — has given Matthews and her cabinet colleagues second thoughts.
The campaign illustrated the likely effects of the funding cuts for patients, pharmacies and front-line medical services. It was one of the most vigorous programs to rally public support behind a trade or profession ever carried out in Ontario — or, for that matter, in Canada.
Involving full-page newspaper ads by the coalition and major pharmacy chains, the campaign also used in-store material, radio spots, fliers and direct telephone calls to residents in particular areas from local pharmacists. The electoral districts ("ridings" in Canadian parlance) selected for special treatment were those where campaign organizers judged that the sitting member of the provincial parliament might be vulnerable to defeat in the next election.
The proposed reforms involve lowering the cost of generic prescription drugs reimbursed by the government-sponsored Ontario Drug Plan immediately by 50% to 25% of the brand product price and those paid for by private payers by stages to the same level.
Professional allowances paid by generic drug manufacturers in both the public plan and for private payers were to be phased out by 2014. Permitted markups for all but rural pharmacies and those in underserved areas were frozen. An increase from 8% to 10% was to be permitted for the favored categories.
Modest increases in dispensing fees — to $8 from $7 for most pharmacies and to between $9 and $11 for the special-case pharmacies — were to be introduced along with small incremental increases over a four-year period.
None of the proposed dispensing fee adjustments would bring the remuneration up to the current average cost of filling a prescription in an Ontario pharmacy. That cost was determined, in a study performed for the Canadian Association of Chain Drug Stores, to be $14.
Pharmacy operators maintain the income reductions will force them to close stores, cut staff and scale back operating hours. Some also claim they will be less able to offer patients the in-depth consultative services that the government has been encouraging.
Shoppers Drug Mart, a public company, has already announced a reduction in capital expenditures for the current year. Some privately held retailers are likely making similar plans. SDM says it will not announce the full extent of its cost-saving and other strategies until after the government’s full intentions are known.
Revenue reductions would have the biggest effect on independent pharmacies, which depend more than the chains on prescription drug revenue. Usually their premises are too allow for expansion of front-end assortments or additional services. Significant reduction in pharmacy income will likely induce many independents to sell their prescription files to a larger corporate entity. This is probably the issue giving government the most reason to reassess its policy.
However, the government will probably not backtrack too far. Ontario is under cost pressures. Health expenditures are squeezing out budget allocations to other high-priority programs. Drug expenditures have been rising faster than any other category of health-related spending. As the baby boomer generation ages, there is little prospect that demand for health care services will fall off.
Commenting on the reasons for the implementation delay, ministry spokesman Ivan Langrish said: "We just want to take the time to get this right and consider all the submissions carefully. Our resolve to get lower drug prices, eliminate professional allowances and compensate pharmacy for services has not changed one bit."