Over the past year, there has been a lot of movement from most of the provinces on drug pricing reforms. Last week at the two-day Benefits & Pension Summit, hosted by Benefits Canada, a panel made up of a consultant, a plan sponsor, a pharmacy benefits manager and a pharmacist weighed in on how the changes in prices have affected them.
- Shawn O’Brien, senior consultant, health and benefits, with Aon Hewitt
- Vic Medland, president, group insurance services, with Ontario Teachers Insurance Plan
- Bessie Wang, director, professional services, with TELUS Health Solutions
- Rita Winn, pharmacist with Lovell Drugs
Before launching into the discussion, Wang set the stage by giving a brief overview of what’s been happening with drug reform across the country, indicating that most provinces are taking a three-step approach to drug reform. However, she noted that Nova Scotia’s recent announcement on its drug reform plans (the first announcement to come out of the Atlantic provinces) may be cause for concern for plan sponsors in that region.
Generic pricing, which is expected to be 35% of the brand price by July 2012, will apply only to public plans due to legislative authority. “You know what this means. It’s going to come out as a two-tier pricing system,” Wang said, adding, “Where are [government] going to get the money? The private plans will pay for it.”
She wonders whether—as other Atlantic provinces make decisions on how they will move ahead on the issue—they will look to Nova Scotia as a guide. And, if so, what the potential impacts are on plan sponsors of such a system.
The real crux of the discussion came when the moderator asked each panellist what major issues he or she is seeing arise from the changes to drug pricing.
O’Brien said that Ontario plan sponsors are starting to see savings but they aren’t extraordinary since the generic pricing (25% of the brand) applies only to drugs on the Ontario Drug Benefit formulary. He also noted that any savings they might be seeing could now be moot as more biologics come down the pipeline. “There will be another [cost] spike,” he said, adding, “[Drug reform] isn’t what we originally thought it would be.”
Medland backed what O’Brien said, adding, “There is no question that the easing for generics is helping, but we are at a 52% fill rate for our generic drugs, which is a bit higher than most plan sponsors.” However, Medland knows that there is only so much that can be saved from generic pricing and admitted, “We are looking at plan design, and it’s forcing us to be a bit more creative. How do we work together to take maximum advantage of what is available to us?”
On the pharmacy side, Wang confirmed that pharmacies are increasing their dispensing fees as a way to make up for some of the lost revenue they’ve experience with the lower-cost drugs and the decrease (and eventual elimination) of professional allowances.
However, she debunked the notion that fees will skyrocket. “Even though pharmacies are trying to increase dispensing fees, given that they are operating in a competitive environment, you won’t see a major change here,” she said. But longer waits for prescriptions and fewer service hours at pharmacies are a reality.
Winn was very upfront with the issues that her stores have been facing since the drug reform announcements last year. “I’ve seen an 8% decrease in prescription dollars overall,” she said. “We’ve also seen a reduction in indirect funding, and this has been a big hit to the bottom line. We’ve seen a reduction of about $200,000 per store.”
To combat that, she said her store increased its dispensing fees by $2 and has cut 47 hours. “All of our staff took a bit of a hit, and we didn’t give wage increases last year. These are the raw impacts we have been living with for the past year.”
But not all is doom and gloom. She said the change of revenue source has forced the industry to re-examine the business model, just as plan sponsors are taking another look at their plans and being creative.
“We are now looking at pharmacy services and, that being the core of the business, …allowing [pharmacists] to get paid to sit down and look at a patient drug history, to have access to doctor notes and diagnosis and [to] see why they are on these drugs in the first place. I think we need to get to this point,” she explained.
There was an apparent consensus across the panel that drug pricing reform has had both positive and negative affects on everyone with a stake in the pharmaceutical industry. More needs to be done to educate consumers and providers, and more creative thinking is needed if everyone is going to survive.