Peggy Revell
When the Transparent Drug System for Patients Act went into effect in March, 2007, the provincial government hoped it would bring reform to the Ontario Drug Benefit program and deliver savings to taxpayers across the province.
But in the almost two years the legislation has been in place, it’s been the independent and small pharmacies across the district that are feeling the financial squeeze.
“It’s been a major financial decrease for us,” Pharmasave owner Kim Metke said about the legislation that saw such changes as the mark-up prices of generic drugs and reimbursement costs further capped.
The biggest issue, explained Atikokan Pharmacy owner Earle Arnold, is the inadequate dispensing fee paid to the pharmacists by the government.
For each prescription filled under the Ontario Drug Plan, the province pays a fee of $7 to the pharmacist. But this $7 actually is almost half of how much it costs for the pharmacist to really fill the prescription, Arnold explained.
“When you take all the things into account, the staffing, if there’s time taken up to check a prescription with a doctor to confirm a drug interaction is okay, or to get a dose change because the prescription was written incorrectly, or any of those number of things, what they’ve come up with is the dollar number of $13.70,” Arnold said of the actual cost for an independent pharmacy to fill a prescription, citing the most recently-released study on the issue.
“So there’s a big gap between what the government pays and what it actually costs me to fill the average prescription.”
Before the new legislation came in, this gap in payment would be made up through the rebates that generic drug companies gave to pharmacists.
“Generic manufacturers have given rebates to a pharmacy depending on how much they spend,” Arnold explained, likening it to how other businesses buy in bulk.
“If [a pharmacy] spends $100,000, they might get ‘X’ percent, and if they spend $10 million, they might get ‘X’ percent, and if you’re Wal-Mart and you’re buying for all your stores across Canada, I would assume they get a lot better deal than Atikokan Pharmacy does when I’m buying my small amount.”
This type of subsidy has been occurring for decades, noted Arnold, and money from the rebates went towards things like paying for staff and free prescription delivery.
“Now they’ve taken away the rebate, and they’ve restricted where I’m allowed to use the money that I do get,” he explained. “Like I’m not allowed to use it for certain aspects of running the store, such as prescription deliveries. I’m not allowed to use it for all the staffing that I might have used it for before.”
“For me, it adversely affects my ability to offer extra services to people, like free delivery for seniors, and that kind of thing because all of a sudden I don’t have any way to absorb those costs anymore,” echoed Metke.
Customer services hasn’t changed with the new law, said Arnold, but it has cost his pharmacy more money to maintain the same level of service as it offered before.
If the provincial government wants a portion of the rebate, all of the rebate, or to get rid of the rebate altogether, Arnold said he would be fine so long as they also paid a fair dispensing fee for prescriptions.
“If they paid us a fair fee for our prescriptions, then it would be no decision,” he stressed. “That would be fair, and it would work out.
“But because they don’t pay a fair fee for filling a prescription, then it ends up that we rely on the rebate from the generic manufacturers and if they take that away, it will starve out independent pharmacies,” Arnold warned.
One way which the government was going to offset the losses from pharmacies was through the “MedCheck” program, where pharmacists are paid a “modest” amount to spend 15-20 minutes with a patient to review their medications, said Arnold.
“It’s a fantastic program,” he said, “but it’s totally unrealistic for, say, me here.”
As the only pharmacist in the geographical area between Fort Frances, Dryden, and Thunder Bay, Arnold works all hours at the pharmacy to run his store, working 40-50 hours a week.
“I would love to have more time to sit down and spend 15, 20 minutes teaching my patients . . . but I don’t know when I’m supposed to do that,” he remarked. “I’ve done a number of MedChecks, but I’ve had to do them at my lunchtime, or on my way home from work, or outside of the pharmacy hours, because I can’t leave the pharmacy for half-an-hour in the middle of the day to go do this.”
It works for pharmacies in bigger cities because co-workers can overlap their time to do these MedChecks, Arnold said. But for himself and other friends who run independent pharmacies, the constraints do nothing to offset the losses.
Another one of the big changes includes an increase in bureaucracy and paperwork pharmacies must fill out.
“We have to give quarterly reports of where our profits are going to, to the government,” noted Sarah Berg, owner of Rainy River Pharmacy, adding it’s a process that is very time-consuming.
“They want to know where we are spending our money that we make on our prescriptions,” she explained.
“For one thing . . . it really isn’t any of their business where everything is allotted to,” noted Berg, saying it should be enough that the pharmacies are kept up to code.
“It’s mind-boggling,” agreed Arnold of the bureaucracy and paperwork, noting the rules for pharmacies have changed multiple times over the past couple of years.
“I can hardly keep up with how many times they’ve changed the rules since this bill was first introduced,” he lamented.
“It’s a lot of red tape that I don’t feel is improving service to my patients, and that’s what my goal is,” said Metke. “It just makes an added expense for me, and an added expense for my staff.
“It’s quite time-consuming, and it does nothing to increase patient service in the province.
“In fact, it’s a detriment to it,” Metke charged, saying he would rather spend his time helping his patients than filling out reports on how he has helped his patients.
For Berg, the changes in legislation mean having to carry an increased inventory, having a lesser mark-up on drugs that are billed to Ontario Drug Benefits, and it comes out of her bottom line.
The legislation also brought in a two-tiered pricing system for generic drugs. For example, a bottle of 100 capsules of Smivastatin (80 mg) at regular cost would be $138.60, but the inventory that Berg uses for OHIP patients is $110.
“It’s the exact same pill, it’s made from the same company, it’s labelled the same,” she remarked. “You can’t tell the difference between the two bottles on the shelf, other than the fact that they cost different.
“And now what has happened is that some of the other third-party payers are saying that they will only pay the lesser amount and we have to, by law, give them the more expensive drug,” noted Berg. So the pharmacy ends up covering the difference themselves, she said.
“I don’t see how it’s fair how [Ontario] can have a two-tier drug pricing. It should all be at one-tier,” Berg stressed. “I don’t think Ontario Drugs should get the same medication cheaper than other patients should.”
Berg noted the higher the number of clients who are Ontario Drug patients a pharmacy has, the more these changes will affect a pharmacy.
“We’re a retirement town, so we have a high percentage of our prescriptions going to senior citizens who would be included in that program,” she explained. “So the more people you have in this grouping, the more it’s going to affect you.”
Just the other day, Berg learned pharmacists also will have to start paying for the required certifications and upgrading throughout the year. Previously, this had been supplied by the drug companies, but now Ontario will be the first province in Canada to require pharmacists to pay for these mandatory lessons.
The Atikokan Pharmacy is only a clinic dispensary in the basement of a doctor’s office, noted Arnold.
“The only thing that makes any money in the store is the pharmacy,” he noted. “If they take away the profitability of the pharmacy, then we’re going to close and then there’s no pharmacy services for the people here.”
While the changes have hurt business, Arnold said it hasn’t made a giant difference because of one thing Atikokan has going for it: a full complement of doctors.
“So because of that we’re still able to keep it going,” he explained. “If we lost one or two or more doctors, then it would be a different story . . . there would be a point where we wouldn’t be able to keep it going.
“Then there would be quite a big geographical area that people would have to travel to get prescriptions filled.”
“I hate to say it, but it just seems to smack of the old ‘Well, it doesn’t affect us in Toronto,’” said Metke. “Well, yeah, because there’s a drugstore on every corner!”
Even if it does affect larger chain stores, it’s not likely to make them go under, noted Metke, since they’re able to absorb the costs or find a way around it. The big impact is on the smaller pharmacies in smaller communities, he warned.
“So for places like Rainy River, Emo, and Atikokan, it’s very, very serious,” Metke stressed.
“Looking at situations when, say, what’s currently going on with Emo, the owner’s passed away, the business is probably going to be sold, it becomes: ‘How economically viable is that business for somebody to buy?’
“At that point, they may not be able to sell it, and then you’re talking about the business closing,” said Metke. “And that’s just a loss for the service of that community.”
Metke’s sentiments are echoed by Michael MacKinnon, a pharmacist at Emo Drugs. Following the passing of Greg Asplund, MacKinnon is planning to buy Emo Drugs from Asplund’s son. Yet these new regulations make it a “whole new ball game,” he admitted.
With all the new costs associated with the new provincial regulations, it’s hard to estimate the cost of the only pharmacy in Emo.
“It’s a very frustrating situation because it was done without consultation,” said Metke.
The added the government also continued with these plans despite warnings from pharmacists that many of the legislation’s aims wouldn’t be met and it would be the smaller, independent pharmacists who would be negatively affected.
For example, one intent of the legislation was to lower the amount of money the Ontario government was paying to generic drug companies for generic medication, Metke noted. Roughly half of the prescriptions filled under the Ontario Drug Benefit plan are filled by generic drugs, he said, yet they amount to only 20 percent of the cost.
“So the government’s already getting a pretty good deal on that,” he said.
The other 80 percent of costs come from big brand name drug companies, Metke explained
And despite claims the plan would reduce payments to the generic companies, it hasn’t, added Metke. For generics, it’s “business as usual, he said.
“In fact, the amount that the generics are making we figure has gone up by 10 percent.”
