When the province’s Health Minister, Deb Matthews announced she was tying a $750 million loophole used by pharmacy owners to cash in on generic drugs, it set off a spin-crazy firestorm – largely from chains like Shoppers Drug Mart, who stood to see money simply evaporate from their purses.
The change cuts the payments generic manufacturers make to drug stores to win a place on their shelves – part of the province’s strategy to make generic drugs more affordable.
Shopper’s immediate response was to cut hours of service in the health minister’s home riding. Rexall, meanwhile began imposing delivery fees. And last week, the pharmacy industry made like grass-roots protesters and flooded the public galleries at Queens Park to get their point across.
Meanwhile groups like Ontario Community Pharmacies insist the change “will mean reduced hours of operation, less patient services, like one-on-one consultations and in some cases, store closures.”
To get a better grip on what all this means, here’s the take of MD Joel Lexchin, a prof at York U’s School of Health Policy and Management and author of Drug Therapy for Emergency Physicians.
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Generic drugs are said to be the second most expensive part of the province’s health care system. How did this end up happening?
That’s pretty simple. It’s the part of the system that government has the least amount of control over. Three parts of the system cost lots of money: hospitals, doctors and drugs.
About 99 per cent of money that goes to doctors comes from government so they can control spending. Nearly all the money to acute care and rehab hospitals comes from government – they have control over that. But they don’t have significant control over drug prices.
The companies have a lot of ways of influencing doctors to prescribe the most expensive products.
How do those payments to pharmacies from generic makers (called professional allowances) work?
The generic drug companies make their money because pharmacists dispense their particular version of a drug. The pharmacy owners – because Shoppers and the other big chains are not really owned by pharmacists – say to the generic companies, “you want us to stock your drug? You’d better give us a kickback or a discount – or we won’t do it.”
What does this mean for the small, independent pharmacists?
The independent pharmacists are the ones who are, at this point, going to suffer the most. That’s because for a long time, the government was attempting to control two aspects of drug prices. One, the dispensing fee, and the other, the ingredient cost.
The dispensing fee is the amount of money that is supposed to pay for the intellectual activity of the pharmacist – talking to people about how to use the drugs, side effects, that kind of stuff. The province wouldn’t let that amount increase, so in the process what they created a situation where pharmacies became more dependant on the generic discounts [professional allowances.] That’s what’s left the independents in the lurch.
The government needs to make concessions for the independents. I’m not sure how those would look. The larger chains are more diversified. The one up the street from me rents space for a post office, has space for groceries, and sells cameras and telephones.
The government is now proposing to increase dispensing fees (by $3 for rural pharmacies and $1, urban). Will this alleviate the situation?
A little bit. For the chains, that may be enough, since they don’t rely on prescription sales nearly as much as the smaller independents.
The government is currently saying they’re going to save $750 million in drug prices and they’re going to turn back $100 million in higher dispensing fees. I think that the owners and the pharmacists are looking for that to go higher.
But raising the dispensing fee takes its toll on the people who pay out of pocket. The people who are the most vulnerable are those in minimum wage jobs, non-union jobs with no benefits.
What alternatives do you see?
My idea – which is not really mine, a lot of people are talking about this – is that you need to stop paying pharmacists for running a store. [The generic drug prices issue] is all about a shopkeeper function – discussions over what you’re going to pay for an item when you put it in your store.
Instead, pay pharmacists for their intellectual activities. We don’t pay doctors for running an office, we pay them for seeing patients. Similarly, pay pharmacists for their intellectual activities: monitoring how patients are using medications, asking people about side-effects, reporting adverse reactions to drugs, going over medication confusion.
One of the ways of doing that is moving pharmacists out of stores and putting them into offices with doctors. These people would not be dispensing drugs in these offices, but they would be providing information to the patients. You could see a doctor then walk down the hall to the pharmacist.[rssbreak]
