Unlike other Canadian provinces and jurisdictions, the Quebec government imposes rules and constraints on private drug plans that affects pharmacy costs.
For example, in all provinces except Quebec, the amounts billed by pharmacies to private drug claims are controlled through the following measures: fees are displayed in pharmacies so patients can compare — however, the markup may vary and isn’t displayed; and the maximum allowable amount for pharmacy dispensing fees, drug costs and markups are negotiated by and programmed into the payer’s system.
In addition, Quebec is the only province where:
- The owner of a pharmacy must be a pharmacist, which hinders competition because it’s difficult for other chains to establish themselves. They must modify their model based on a “manager” who manages the pharmacy of the chain.
- Owner pharmacists are required to belong to the Quebec Association of Owner Pharmacists (AQPP) and to pay a membership fee.
Would abolishing these two specificities force Quebec pharmacy chains to evolve, as in other provinces where fees are lower, because competition is fierce? Probably.
Fixed to public, variable to private
Quebec residents without a private plan are insured by the province’s public drug plan, which is managed by the Régie de l’assurance maladie du Québec (RAMQ), which negotiates the allowable claims amount with the AQPP.
Pharmacies claim the cost of the ingredient, which includes wholesaler fees, zero per cent markup and approximately $9.60 fee per prescription, regardless of pharmacy or drug price.
In addition, the provincial government negotiates the price of all drugs on the mandatory list with the manufacturers. It also imposes a maximum markup on wholesalers, which varies little between pharmacies. Therefore, the amount claimed by RAMQ claimants for the same prescription doesn’t vary between pharmacies, so there’s no need to shop around between pharmacies and compare the claimed amounts.
Under the agreement negotiated between the AQPP and the RAMQ, pharmacists believe they aren’t paid enough for expensive drugs. To compensate, these pharmacies can invoice annual fees of more than $200,000 to a claimant insured by a private plan while they invoice $1,000 in fees to the RAMQ for the same treatment.
The Ministry of Health and Social Services, the RAMQ and the treasury board are aware of this. From 2015 to 2019, a prescribed drug cost 17.6 per cent more, on average, for Quebecers covered by private drug insurance compared to people who were insured by the public plan, according to a study by the University of Montreal.
For drugs sold in Quebec in 2021, Telus Health estimated that, on average, pharmacist fees were $19.49 per prescription in private plans, more than double the RAMQ. For private plans in Quebec, insurers have negotiated an agreement with the AQPP based on “usual and customary” costs.
Insurers rely on free competition to regulate prices, but free competition doesn’t exist: claimants don’t understand that prices vary between pharmacies and their portion is only fraction of the total amount claimed. Since Sept. 15, 2017, pharmacists have been required to detail their costs on drug receipts issued for drugs covered by RAMQ, but the majority of claimants don’t look at or understand them.
The cost of the ingredient is negotiated by the government so doesn’t vary between pharmacies. On the other hand, the fees and the markups sometimes vary by hundreds of dollars: the AQPP forbids dissociating these two elements and suggests that pharmacies don’t make a profit.
The case of high-cost drugs
Unlike other provinces, payers haven’t programmed maximum fees and markups into their systems for Quebec claimants
Ideally, all payers should implement a maximum for fees and markups for plans in all provinces. In the absence of these controls, plan sponsors must individually implement a personalized algorithm that takes into account the ingredient cost, fees and markup.
AQPP agreement with third-party payers
Private payers have negotiated an agreement with the AQPP for the adjudication of private drug plans. Several clauses of this agreement would raise plan sponsor’s eyebrows if they could read a copy. For example:
- Clause 18.01 prohibits insurers from disclosing dispensing fees and markups, separately from the cost of the ingredient. The AQPP tried to get rid of its obligation to provide this information, but lost in court twice. This information is printed on the receipt, but claimants don’t pay attention to fees charged by their pharmacy;
- Clause 5.01 iii) provides that plan sponsors can ask the payer to prefer certain pharmacies — for example, a higher percentage of reimbursement for a lower cost pharmacy;
- Clause 7.01 provides for a committee to study the fees billed for expensive drugs, but nothing has been settled yet.
The agreement ended on March 31, 2023, but was renewed for 12 months because the insurers didn’t terminate it on Jan. 1, 120 days before the expiry date.
Insurers say they have no negotiating power but persist in signing a “bad” agreement with the AQPP, which doesn’t provide for a maximum allowable amount for fees and markup. I suggest they implement an algorithm with the same values as the RAMQ for all private plans — the claimant would have to pay the difference without accumulating these out-of-pocket amounts in the maximum $1,161 per adult as permitted by article 8.2. of the Act respecting prescription drug insurance. I believe the AQPP will have more openness to negotiate a more “reasonable” maximum allowable amount.
Private payers would finally be treated as partners that agree to pay more than the RAMQ, especially on expensive drugs, but not excessive fees.
In conclusion, private drug plan sponsors must demand that payers stop signing an agreement with the AQPP that doesn’t provide for a maximum for fees and markups. And all payers should implement the same controls in all provinces.
If plan sponsors mobilize, will they succeed in changing the regulatory environment and the business model of pharmacies in Quebec as in the other provinces? To ask the question is to answer it.
Johanne Brosseau is a consultant at ConsultMed Consulting