Courtesy of Canadian Healthcare Network.
After months of waiting, wondering and worrying, Ontario’s new wave of drug system reforms were announced Wednesday–and they cut much deeper than expected. In a nutshell, effective as soon as legislation can be passed and regulations created, the province will eliminate professional allowances (across the board) and reduce the highest cost it will pay for generic drugs to 25% of the brand equivalent (which has the side effect of reducing pharmacy markups). The new legislation will also introduce the same changes for private drug plans, only those changes will be phased in over a 3-4 year period.
To soften the blow of these cuts, the province will increase the minimum dispensing fee paid by the Ontario Drug Benefit Program by $1, bringing it to $8.00. Pharmacies that meet government ‘rurality’ criteria will be eligible for a fee up to $11. The fee will increase by another 2.5% annually in future years.
In addition, the province has set aside an additional $100 million to cover pharmacy professional services, rural pharmacy services and long-term care pharmacy services.
However, while the cuts will be effective “before summer,” according to Ontario Public Drug Programs Executive Officer and assistant deputy Minister of Health Helen Stevenson, the details of which professional services will qualify for payment, and how and when this will proceed, are still to be determined.
Announcing these changes, Health and Long-Term Care Minister Deb Matthews said the government is sending “a message to big pharmacy that their days of inflated prescription drug prices paid on the backs of patients are over.”
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Matthews was referring specifically to the rebate model on which pharmacy business has operated for decades. Since the Transparent Drug System for Patients Act (Bill 102) was put in place four years ago, pharmacies have been required by regulation to submit reports to the government accounting for the professional allowances received and how they have been used.
According to the latest six-month round of these reports, said Stevenson, 70% of professional allowance funds are being used not to fund patient services, but for operating costs such as wages. The Ministry sees this as an abuse of the allowance system, but pharmacy owners insist the allowances have been needed to fill the gap between the approximately $14 it costs to fill an average prescription and the $7 that the province pays for that prescription.
The Canadian Association of Chain Drug Stores conducted a study to determine the business cost of servicing a prescription, as have several provincial pharmacy associations—all came up with an actual cost per script of between $13 and $15.