Pharmacy Backlash; Provincial Changes

Drugs Wars in Ontario

Since 2006, the Ontario government has made quite a few significant changes to the public drug system, aiming to deliver better value for taxpayer’s money. Recently, the focus has been on reducing the price of generic drugs, which are generally higher in Ontario than in other developed countries.

For example, we pay 51.4 cents for a 10 mg dose of a common generic blood pressure medicine in Ontario, that costs only 10 cents in the U.S.

Generic drug companies pay approximately $800 million a year in “professional services” to pharmacies in return for stocking their medicines. The government permitted this system on the premise that it translates into improved patient care and services. Since professional services fees were first implemented, there has been no system to officially account for how pharmacies actually allocate these funds. Ontario’s Health Minister feels that banning these fees will reduce inflated generic drug prices.

In 2006, Ontario used its purchasing power to cap the prices it would pay generic drug manufacturers at 50% of the brand name drug being copied. These prices only applied to drugs provided under the Ontario Drug Benefit Plan (ODB), which covers seniors and social assistance recipients. It is now being proposed that over 3 years, generic drug makers reduce prices for their medicines to 25% of the equivalent brand-name drugs for Ontario’s public drug system, private employer drug plans, and people who pay for drugs out-of-pocket (i.e., April 2010 – 50%; April 1, 2011 – 35%; April 1, 2012 – 25%).

The announcement made by Ontario’s Health Minister has created a backlash from pharmacies who are defending current practices and pricing. Pharmacies claim proposed reductions will end up costing the consumer — both in dispensing fees and in reduced services. Pharmacies are even paying for advertisements that encourage Ontarians to write their MPPs to stop the proposed changes from happening. Ontario has proposed to increase funding to support access to pharmacy services in rural communities and under-serviced areas and to compensate pharmacists through increased dispensing and service fees.

The impact of these changes on employer-sponsored drug plans will differ depending on plan limitations such as dispensing fee caps and mandatory generic drug substitutions. Taking an active role in promoting wellness within the workplace and educating plan participants about being smart consumers are recommended to help control drug plan costs.

For more information on the proposed plan, visit the Ontario Ministry of Health and Long Term Care’s (MOHLTC) website: www.health.gov.on.ca/en/public/programs/drugreforms/default.aspx

K+A will continue to monitor the situation and inform you of any impact these changes may have on your employer-sponsored drug plans.

Provincial Healthcare Announcements

Alberta
The Alberta government has been making changes to their Health and Wellness Pharmaceutical Strategy over the last few months. As of April 1, 2010 two components of this strategy will come into effect: Reduced generic drug prices and transitional allowances on drugs.

Generic drugs in established interchangeable groupings created after October 1, 2009 will be reduced in price to 45% of the brand drug price (decreased from 56% of brand drug prices). Telus Health Solutions, who manages pharmacy benefits for Standard, Sun, Great-West, and Equitable Life, has indicated that they will implement a 60-day transition policy to allow pharmacies to use their higher costs by submitting drug costs at pre-April 1st Actual Acquisition costs. Effective June 1, 2010, Telus Health Solutions will adjudicate generic drug costs based on new pricing.

Effective April 1, 2010 until March 31st, 2011, pharmacies will apply a $3.00 transitional allowance on all drugs with an acquisition cost of less than $75 (including formulary and non-formulary drugs, applicable to both brand and generic drugs). This change is expected to apply to both private plans and cash-paying customers. Effective April 1, 2011, the fee reduces to $2.00 and then to $1.00 effective April 1, 2012. The fee ends March 31, 2013.

These changes are expected to have little impact on privately sponsored drug plans for the first year, as the lower generic drug prices will be offset by the transitional allowance. All insurers have agreed to cover the fee, however it is unclear whether it will be separately identifiable on the drug invoice for those plans that do not wish to cover it.

Saskatchewan
Saskatchewan is joining virtually all other Canadian provinces (all except for Manitoba) in limiting coverage for chiropractic services. In 2009, the provincial government covered $12.25 per regular chiropractic visit.

Effective April 1, 2010, Saskatchewan has eliminated all chiropractic coverage with the exception of low-income individuals receiving Supplementary or Family Health Benefits, and individuals on the Senior’s Income Plan who will still be eligible for up to 12 treatments a year. The reduction in the universal program will reduce government costs by $10.4 million.

This ultimately will translate into increased costs for chiropractic care covered by the private sector.

British Columbia
Effective January 1, 2010, B.C. Medicare Premium (MSP) increased its full rates by 6% to: $57.00 – One person; $102.00 – Two persons; $114.00 – Three or more.