You could be paying much less for generic drugs if the provincial governments are successful in getting rid of the rebates the drug companies pay drug stores to stock their products. However, the drug store chains are putting up a fight and there’s no telling where this will end but you should be alert to pressure tactics at the drug counter.
So here’s the scoop:
Provincial governments spend billions annually on their drug plans providing free or subsidized prescription drugs for seniors, residents of long-term care and special care homes and people on social assistance. The plans vary across the provinces.
The province decides what drugs it will cover – the list is called the formulary – and negotiates and sets the price that it will pay for the drugs. In the case of generic drugs, the price is often set as a percentage of the original brand name drug price – at the moment around 50% or more of the brand name price.
At the same time, the drug companies pay rebates to drug stores estimated in a report by the Competition Bureau of about 40% of the drug price. These rebates keep the generic drug prices high –as a result, Canadians pay 50% to 75% more for generics than our counterparts in the US or UK.
Ontario and Quebec banned the rebates but Ontario permitted “professional allowances” of 20% which were intended to allow the drug stores to provide patient counselling. But after auditing the changes for a couple of years, Ontario found that the allowances were not in fact used for patient counselling services so now they will be eliminated,
Eliminating these allowances will allow Ontario to reduce the maximum price it will pay for generic drugs from 50% to 25% of the original brand name price.
This will take place immediately for generic drugs covered by the Ontario public drug plan and phased in over 3 years for those purchased directly by patients or reimbursed by private drug plans.
So called “professional allowances” which generic drug companies pay to pharmacies and then factor into the drug price will be eliminated, immediately for those covered by the Ontario Drug Benefit Plan and phased out for all other purchases.
The savings from these measures will be used to increase dispensing fees and payments for professional services actually provided by pharmacists.
These professional services can include monitoring or reviewing all your medication, some help with managing chronic conditions like diabetes, asthma and chronic pain and especially management of narcotic drugs. The list is not determined yet but these are the kinds of professional services for which pharmacists were trained.
All this means lower drug costs -for the tax funded public drug plan, the private health plans and your own budget. There will be more access to professional advice from your pharmacists knowing that they will be compensated by the province and the potential for more drugs being listed in the formulary.
Ontario is taking the lead on this. Quebec’s “best available price” rules mean that it will likely follow suit. And the pressure will build for the other provinces to show their taxpayers how they will ensure value for money in public spending for drugs if they do not adopt similar rules.