Ontario should act cautiously in allowing private label drugs: CLHIA

The Canadian Life and Health Insurance Association is asking the Ontario government to act cautiously in welcoming private label products under the provincial drug program and allowing them to be interchangeable with other products.

Presently, the Ontario Drug Benefit Act doesn’t list private label products as drug products, meaning they’re not eligible for public funding under the drug benefit program. But on Oct. 29, 2018, the provincial government proposed amendments to that legislation, as well as the Drug Interchangeability and Dispensing Fee Act, that would make private label drugs eligible for public funding and pharmacists would be able to dispense them even if a prescription doesn’t specify a private label brand.

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“We think it’s a pretty complex subject and decision to make in such a short consultation period,” says Joan Weir, director of health and disability policy at the CLHIA, referring to the one-month period stakeholders received to comment on the issue.

In a letter to the Ministry of Health and Long-Term Care, the association is recommending that it proceeds on a trial basis to prevent unforeseeable consequences.

The changes could hold different connotations for pharmaceutical companies, insurers, employers and employees, says Weir. “It seems to us the provincial government may really need to consider this as a whole.”

Only a specific subset of the population benefit from the provincial drug plan, says Sandra Ventin, associate vice-president of benefits and health at Accompass Inc. Still, some plan sponsors will be interested in the amendments because they provide health benefits to retirees and older employees, she says.

Read: What’s the landscape for private benefits plans around generic drug prices?

At first look, plan sponsors will benefit from having more private label drugs enter the market because they fall in line with generics, a group that’s had its prices drop drastically earlier this year, notes Ventin. But there’s also a risk that some drug companies will dominate the space and control production, she says. “We want to make sure that longer term we don’t have a market where there’s only a few players.”

Quebec’s legislation puts a percentage cap on pharmacies buying private label drugs, says Ventin. In its proposal, Ontario is considering following suit. It asked stakeholders to comment on whether there should be a limit on the percentage of private label products bought and sold by a pharmacy affiliated with a drug manufacturer.

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It’s a condition that Weir says should be enforced. While other provinces have lifted regulatory restrictions on private label drugs, they’ve also allowed pharmacies to receive rebates, something Ontario currently forbids, she says. “Those two things kind of go hand in hand.”

But for now, the overall financial impact for plan sponsors is unclear, says Ventin. “I think that it’s going to be a little bit of a ‘let’s see what the financial impact is’ because right now, from a private payer perspective, we don’t know what that answer will be.”