Wendy future of retail top

Canadian drug chains react swiftly to reimbursement cuts

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TORONTO — While Canada’s largest drug chains have traditionally been reluctant to take on provincial governments publicly, their reaction to Ontario’s plan to reduce the pharmacy reimbursement rate on prescriptions filled with generic drugs by 50% was quick and to the point.

“The company is strongly opposed to the changes announced today, and believes that they will have a direct negative impact on pharmacy services and patient care in the province of Ontario,” Shoppers Drug Mart (SDM) said in a statement that was released on the day when Ontario’s health ministry unveiled its proposal to trim the reimbursement rate for generic drugs covered by the Ontario Drug Benefit Plan (ODP) from 50% of the branded price to 25%.

“The plan indicates an unreasonably low rate of reimbursement compared to what was proposed by community pharmacy, and suggests that the Ontario Liberal government will further interfere in the commercial relationships between the generic manufacturers and pharmacies, and that this government will play an increased role in the regulation of private sector benefit programs — programs that it does not fund or pay for,” the statement from SDM said.

Meanwhile, Andy Giancamilli, chief executive officer of the Katz Group, which operates hundreds of Rexall stores in the province, says the proposed rollback verges on reckless action in health care and could force his company to slash $100 million (Canadian) in costs.

He warns that the cuts could mean that “patients will have to go to hospital emergency departments because drug stores can no longer afford to keep enough pharmacists on staff to deal with all their questions. “I don’t believe the government fully understands the ramifications of its decisions.”

Both SDM and Katz took immediate action to deal with the proposed cuts.

Katz imposed an immediate hiring freeze for its corporate head office, which included the elimination of pharmacy student and intern programs in Ontario, and announced that it will start charging customers for prescription deliveries.

For its part, SDM began what it says is the first in a series of reductions in store operating hours, scaling back the times that seven stores in London, Ontario, 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 drug store retailer adds that it is also scrapping plans to hire 350 pharmacy students this summer in the province.

“In the future we will have less need for pharmacists,” president and CEO Jürgen Schrei­ber says. “We will adjust our business model accordingly.

“With any kind of change like that, you have a different profit situation. Some of this we will overcome through changes in investments and changes in costs, and some we will not. Changes in investments and costs will be absolutely significant, really significant.”


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