ON Government seems to have "won" pharmacy war

Author: Alexander Stack Professional Corporation |

This Globe and Mail article has a pretty good summary of where things have ended up in the generic drug/pharmacy conflict with the ON government.

"Ontario outplayed the pharmacies in game of hardball."

The Adam Radwanski lead:

They spent millions upon millions of dollars mailing flyers, commissioning polls, buying up ad space and busing protesters around the province.

For their trouble, Ontario’s pharmacies might have emerged in even worse shape than they appeared to be in two months ago.

Few insiders seriously expected that the provincial Liberals would back down on the basics of their plan to cut generic drug prices in half by eliminating the “professional allowances” – the large sums paid by manufacturers to retailers in return for selling their products, which is where pharmacies have until now made much of their money. But there was speculation that the government would offer concessions aimed at increasing other forms of revenues.

Instead, with the revised reforms announced Monday, Health Minister Deb Matthews barely conceded anything at all.

A quick review of the legislation (which will go into effect July 1) suggests the columnist is right. In particular, there is a section clarifying that the ban on rebates does not include benefits provided with ordinary commercial terms (such as a discount for promptly paying your bill or a discount for large orders). This is potentially a huge loophole for pharmacies to re-institute huge rebates, but the OBDA regulations will now cap this at 10% of the of the value of the produces based on the drug benefit price in the formulary.

Regulations on prices reducing the price of generics to 25% on the public side (i.e. paid by the ON government through various programs) take effect on July 1; the private prices (paid by the public, often the public's insurers) are to be introduced in phases culminating in 2013.

There has been some increase in the dispensing reimbursement aimed at assisting pharmacies in rural/under-serviced areas.

An interesting question is how much other provincial governments react to this. Ontario and Quebec have put in very aggressive regimes - and there is some concern that national-chain pharmacies may try to recoup losses in Ontario by increasing their reimbursement elsewhere. And of course, why would provincial government X want to pay twice as much for generic drugs than the Ontario and Quebec governments? I would imagine health ministries in other provinces have already considered their positions and are busy implementing their reaction.

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