The Magic
Pill
Following a flurry of propaganda from all sides of the Ontario Government
v. Ontario Pharmacists standoff on the matter of reduced generic drug
prices and professional allowances, the Ontario Government has finally
made its final decision concerning the legislative regulations.
On July 1, 2010, the Ontario Government will bring into force its
final regulations, which basically achieve the following for private
sector plans:
Generic Drug Price Reductions
• July 1, 2010 –
Reduced to 50% of brand name
• April 1, 2011 – Reduced
to 35% of brand name
• April 1, 2012 – Reduced
to 25% of brand name
Elimination of Professional Allowance
(These fees not currently regulated by private plans)
• July 1, 2010 –
Reduced to 50%
• April 1, 2011 – Reduced
to 35%
• April 1, 2012 – Reduced
to 25%
• April 2, 2013 – Eliminated
There are other aspects of the regulations that address application
to the Ontario Drug Benefit (ODB) and which are not addressed in this
bulletin. For full details, visit www.ontario.ca/drugreforms
What Does this Mean to Your Benefit
Plan?
The obvious response is that private plan drug costs are expected
to reduce. While some are speculating a 3-5% reduction in drug plan
costs, the amount by which your plan will be affected is dependent
on many factors such as current drug usage and what percentage of
your population is in Ontario. The best way to determine the impact
is to work with your plan advisor and provider to review current drug
utilization trends and costs. If your plan does not use a drug card,
it may be more difficult to obtain specific data about your drug plan
(one major advantage of using a drug card). If you are a K+A client,
we are already looking at these factors and will be in touch shortly.
When we look at the big picture trend in prescription drug use, we
see that due to the lack of new patents and the expiry of existing
patents on highly used drugs (such as Lipitor), the pattern of drug
use now has brand name drugs at the bottom of the list, generics sitting
somewhere in the middle and single source drugs1
taking over the lead. As further statistics tell us that Canada pays
some of the highest prices for generics in the world, it is odd to
think that the generics have officially moved from the cost saver
for private plans to a cost driver. We even see many cases where the
cost of the generic exceeds the cost of the brand name.
Are we going to ever really understand or control these elements to
the degree we desire? Our opinion is, no. Do private plans need to
start taking a different approach to designing coverage and assessing
how the plan dollars are being spent? Yes, and that opens the way
to new and more purposeful ways to deliver this all-important benefit
to our fellow Canadians.
Until next time…
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