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Local pharmacies see trouble ahead

Pharmacists in Woolwich are joining their counterparts across the province in protesting cost-cutting measures introduced last week by the Ontario government.

The province is attempting to bring the deficit and health care spending under control by reducing prescription drug costs. Last week Health Minister Deb Matthews introduced two measures to do that: limiting the cost of generic drugs to 25 per cent of the brand name equivalent, and doing away with professional allowances paid to pharmacists by generic drug manufacturers.

Pharmacist Alan Martin is concern that reforms proposed by the provincial government will force him to cut hours and staffing at his St. Jacobs pharmacy.
Pharmacist Alan Martin is concern that reforms proposed by the provincial government will force him to cut hours and staffing at his St. Jacobs pharmacy.

Pharmacists are warning the reforms could force them to cut their hours, reduce staff and start charging for services that are currently free.

“It’s a significant loss in funding to the pharmacies,” said Alan Martin, owner of Martin’s Pharmacy in St. Jacobs.

Martin said the funding shortfall for his pharmacy would amount to a full-time salary.

“I’m the only full-time staff pharmacist and we’re basically going to be losing funding equivalent to one full-time position. There’s only so much cutting I can do based on our hours and staffing.”

Samer Mikhail, owner of Woolwich Total Health pharmacy in Elmira, said he might be forced to start charging for services such as deliveries that are now free. While the cost-cutting measures might save the government money, it is patients who will wind up paying the price, he suggested, arguing the province would be better off trying to save money by streamlining the approval process for generic drugs.

Currently, generic drugs sell for about half the price of their brand name equivalents; the changes Matthews announced would slash that to one-quarter the cost of brand name drugs, which would save the province about $500 million a year.

The province also plans to eliminate the professional allowances drug companies pay pharmacies to stock their products, which totalled $750 million last year.

In Ontario, drug companies are not allowed to offer pharmacies discounts on their products, a practice permitted in several other provinces. Instead, drug companies can provide a professional allowance to pharmacies, money that is supposed to go to direct patient care. Drug companies are required to report to the province how much they paid out in professional allowances, and pharmacies are required to report how much money they received and where it was spent.

The government says the allowances make generic drugs more expensive than they would otherwise be. Matthews likened them to kickbacks, a statement that had pharmacists crying foul.

Mikhail pointed out that the system of allowances is both legal and regulated by the government.

“It is transparent, it is documented, and the majority of those funds are used for direct patient care.”

Martin explained that pharmacists provide a range of services – checking dosage and possible interactions, liaising with doctors, over-the-counter counselling, diabetes education, contacting insurance companies – which the allowances help pay for.

“It’s more than just counting and putting pills in a bottle,” he said.

Opposition parties at Queen’s Park warn that small, independent pharmacies would feel the brunt of the changes and could be forced out of business. Pharmacy-driven business is estimated to make up 50 per cent of revenue at large drug store chains, while Martin noted that his business is 90 per cent prescription-based.

The province has proposed increasing dispensing fees and paying pharmacists for a wider range of services to make up the difference. But the Ontario Pharmacists Association contends that the fee increases will still leave a significant shortfall. The association is urging the government to reconsider, and two large pharmacy chains – Shoppers Drug Mart and Rexall – have trimmed services in protest.

The government has acknowledged that pharmacists are an important part of the health system, Mikhail said, and has proposed increasing their scope of practice to include renewal of certain prescriptions and administering vaccines. The recent changes announced by the Health Minister contradict those assurances and aren’t helpful, he said.

“We are part of the health care system. We need to work together, not against each other.”

1 comment
  1. Kicks-backs

    The basis of all discussions and debates about the Ontario Government’s proposed drug plan reform surrounds the issue of kickbacks that Ontario Pharmacies receive from drug companies. The word kickback has a negative connotation referring to illegal or under-the-table actions taken by companies, usually involving the movement of money from one party to another for the purpose of swaying or influencing a decision in the giving party’s favour. This negative connotation associated with the word kickback is what the Government was banking on when it accused Ontario pharmacies of accepting kickbacks. The Government has used the word to directly vilify Ontario pharmacies, and even further pharmacists.

    But has anyone cared to ask what these kickbacks really are and how they are obtained? The kickbacks pharmacies receive are rebates from the drug companies. They are similar to mail-in rebates offered at many retail stores. You buy the products first, mail in the receipt and UPC code and you get the rebate sent to you. This is what essentially the pharmacy kickbacks are. The pharmacy purchases the drugs from the drug manufacturing company first and they offer a rebate back. As you know, there are many drug manufacturing companies. In order for them to get your business, some offer better rebates than others. For example, if someone was looking to purchase a laptop computer, one would typically cross shop a number of retail stores to find the store that offers the best rebate or deal before purchasing the product. The same is for pharmacies, everyone wants to save money. They cross shop between various drug manufacturing companies to get the best price or deal for the drug they are buying. Now, let’s go back to the example of buying a laptop computer. If someone was buying it as a gift for their friend, what do they do with the rebate? Does the person giving the gift give the rebate to the friend as well? Or would they simply pocket the savings? Hey, whatever you do with the savings is none of my business.

    But do you know what happens to the rebates the pharmacies receive? The rebates are put back towards programs such as educational clinics, medication delivery, patient consultation, dialogue with doctors, blood pressure reading machines, and the list goes on. These services are free to the public but NOT cost free to the pharmacy that provides them. As you may not be aware, pharmacies are required to document the rebate amounts they receive from drug manufacturing companies and log what services they are put towards. Bill 102, introduced by the Ontario Government in 2006 requires that these rebates be documented and reported by both drug companies and pharmacies. The Bill also caps rebates at 20% of the price of generic drugs. Under the new Drug Plan Reform, the rebates of 20% of the price of generic drugs will be removed. Since these rebates are put towards free public services, these services will suffer or be lost if the money directly put towards funding them is removed. Remember, these rebates are documented and reported to the Ontario Government so they know what the rebates are going towards. However, the Government still claims that these services will not be affected.
    Now that there’s no secret that drug manufacturing companies give out kickbacks, did you know that these kickbacks aren’t limited to just pharmacies? Under the Ontario Drug Benefits plan (ODB) the Ontario government has provided a list of drugs that its plan is willing to cover. The list is called the Ontario Drug Benefits Formulary. You can find this extensive list and categories at the following link:
    Just by randomly searching the formulary database you will find, amongst other information, the name of the drug; whether there is a generic form of the drug; and the price the government negotiated with the drug companies. Since the Ontario Government is paying to cover medications for those who qualify under the ODB plan, the government has a say in which drugs it wants to cover. This seems fair. The Government cross shops the numerous drug manufacturing companies and negotiates the best deal. Guess what? The Government is offered kickbacks too, from the drug manufacturing companies for choosing to put their drugs on the list. Under the new Drug Plan Reform, the kickbacks are removed for all pharmacies, but it doesn’t prevent the government to continue to receive them. Furthermore, the reform will put the government as the sole negotiator of drug prices, not just for the drugs on the ODB Formulary, but of ALL drugs. Essentially, the new Drug Plan Reform will divert all potential kickbacks offered in the drug manufacturing industry to the Ontario Government. And only one can speculate that these kickbacks won’t be subject to the 20% cap it does now for pharmacies. We Ontarians pay high taxes to all levels of Governments so as any taxpayer, I welcome the Government looking into other methods of generating revenues and growing the budget in hopes we the taxpayers can keep a little more money in our pocket. But if the Government is doing it in a manner which directly cuts funding for public services from pharmacies, steals the kickbacks for themselves and calls the pharmacy victims the villains, then that’s a step too far.

    So for the ones who think the new Drug Plan Reform was all about the kickbacks, you’re right. But the direction of abuse should not be towards the pharmacies or pharmacists. The real villain here is the Ontario Government. But I have to hand it to them, the Government did a good job convincing us that accepting kickbacks and diverting responsibility has no place in politics…so it must be the pharmacists.

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