CARP backs Ontario Drug System Reform

This week, CARP supported Ontario Health Minister Deb Matthew’s announcement of drug system reforms that will dramatically reduce the price of generic drugs and expand patient services provided by pharmacists. To view a video of the official press conference click here . To view our appearance on the Business News Network to discuss this matter click here The province asserts that the reforms will lower the price of all generic drugs purchased through the Ontario Drug Benefit plan by 50 per cent to 25 percent of the original brand name drug. Similarly, over the next three years the price of generic drugs paid for out-of-pocket or through private employer drug plans would be reduced by more than 50 per cent, to 25% of the cost of the original brand name drug. To read more about the reforms click here

The drug system reforms also eliminate so called “professional allowances” or rebates which generic drug companies pay to pharmacies ostensibly for patient services and then factor into the price charged for the drug. These allowances will be eliminated immediately for those covered by the Ontario Drug Benefit Plan and phased out for all other purchases. According to the province, professional allowances substantially inflate the price of generic drugs.

In reaction to the loss of this patient and taxpayer- funded revenue stream, pharmacies have issued bleak projections about their ability to continue operating under the new rules. In its news release, Shoppers Drug Mart Corporation forecasted reductions to pharmacy service offerings that will “negatively impact the health and well-being of patients.” To read Shoppers Drug Mart Corporation’s news release Click here

The broader pharmacy sector also warned of possible curtailment of pharmacy services such as withholding services from customers and patients. . To read more about these measures click here: Click here

The grievances expressed by pharmacies are at odds with the facts which clearly indicate that reforming the provincial drug system serves the interest of consumers, pharmacists and taxpayers alike. In the first place, while professional allowances were intended to be used for services that directly benefit patients, almost 70% was used for salaries, bonuses and fringe benefits. Second, due to professional allowances, Canadians pay 50% to 75% more for generics than our counterparts in the US or UK. To read the Competition Bureau’s study of generic drugs click here Also, according to the province, the anticipated half a billion dollars in savings from these reforms will be reinvested by the government to increase the number of drugs covered under the Ontario Drug Benefit plan, compensate pharmacists for new professional services and to sustain the broader health care system.

Keywords: drugs, pricing