Ontario’s law curbing the cost of generic drugs sparks changes

From CMAJ:
Ontario shook up the world of generic drug pricing across the country 3 years ago when it passed Bill 102, the Transparent Drug System for Patients Act.

In turn, the executive officer of Ontario’s $4-billion-a-year drug benefit plan saw her own life disrupted.

In late April, Helen Stevenson was flanked by plainclothes Ontario Provincial Police bodyguards when she delivered a speech to IMS Health Canada. It was the day after the province announced a series of legal actions and imposed penalties totaling $33.8 million in a crackdown on violations of the Act.

Stevenson confirms that her need for security continues because of threats made in connection with her job.

For complicated reasons, Canadian prices for generic drugs — copies of brand-name drugs which have lost patent protection — are among the highest in the world (see Patented Medicine Prices Review Board, Non-Patented Prescription Drug Prices Reporting, 2006.) ...more

Pharmacists want remedy for problematic overhaul

From the Guelph (Ont.) Mercury:
These days, pharmacist Carla Bradshaw wonders why she's in her profession.

Since Queen's Park overhauled the Ontario Drug Benefit program in late 2006, independent pharmacists like Bradshaw have seen their earnings plunge to the point many are closing up shop or selling out.

Bradshaw, who operates Remedy's Rx in the medical complex on Guelph's Westmount Road, is tempted to follow suit.

"It's hit hard," said Bradshaw, who has owned the business for nine years. "It's barely worthwhile for me to stay open as an independent pharmacist."

The changes that came into effect in October 2006 under Bill 102 reduced the government's cost of providing drug coverage to 2.2 million Ontarians. Among those, the list included seniors and people on disability support or social assistance.

The estimated yearly savings to the government is $277 million on the $3.4 billion it spends on drugs.

The changes reduced the markup pharmacists get for selling the products of manufacturers of generic drugs, which are less expensive copies of brand-name medicines. That dropped to eight per cent from 10 per cent, the Independent Pharmacists Association of Ontario reported. ...more

Pricing pinches drugstores

From the Globe and Mail:
Uncertainty lingers about whether generic drug pricing changes in Ontario will hurt Shoppers Drug Mart Corp., but already some rivals are feeling the pain.

Loblaw Cos. Ltd., which has a wide network of pharmacies in its supermarkets, has reported a $10-million hit to its first-quarter operating profit because of the legislative reforms, which lower the price the province pays for generic drugs. Other pharmacies in Ontario are being pinched.

"It has hurt pharmacy tremendously," says Neil Bornstein, owner of a drugstore in Toronto that is part of Langley, B.C.-based Pharmasave Drugs (National) Ltd. "The waters are more muddied than ever ... I can't understand how Loblaw can identify it as a significant hurt and Shoppers not." ...more

Med money turnaround

From the Ottawa Sun:
For the first time in more than a decade, Ontario is the only province in the country expected to see a decline in prescription drug spending over the next few years.

That's the conclusion of a new report released by the Canadian Institute for Health Information (CIHI).

Ontario's situation is part of a greater trend: A projected slowdown in national drug spending. Last year, national spending was projected to rise 6.9%, down from an average increase of 11.2% between 1997 and 2004. ...more

At the drugstore, the nurse will see you now

While Bill 102 has typically been looked at with a mixture of concern and fear from the pharmacy community, there might be a bright side. There may be potential for new services and revenue streams as a result of the new cognitive services fees.

From the Globe and Mail:
The latest generation of the Rexall drugstore has a nurse on duty six days a week, podiatrists, chiropractors and other health professionals on hand regularly, and a four-seat classroom for health-related seminars.

Call it the new competitive front in drugstore retailing wars.

Pharmacies have been battling each other for years by flogging more shampoos, cosmetics, food and even electronic gadgets.

Now, with new drug legislation in Ontario that is expected to eventually spread across the country, the outlets are looking to transform themselves into patient counselling centres too. ...more

Will generic drug policy hit Shoppers?

Here's a timely article regarding the new generic rebate restrictions (Bill 102) in Ontario. I think these changes will hurt the bottom line in all types of pharacies in Ontario, from the small independent to the biggest chain. There is no doubt that it could affect Shoppers stock price. However, I'm pretty sure that they will ultimately land on their feet as a business since they have a lot of non-prescription items to profit from.

My biggest concern about Bill 102 is that it's going to devastate smaller, service-oriented, clinical pharmacies that heavily rely on prescription sales. They can't run the pharmacy department at a break-even or loss leader pass and reap their profits selling cosmetics or groceries. We've seen the independent pharmacy pretty much disappear in the United States. Bill 102 could make the Ontario pharmacy scene very American-looking: nothing but big chains and grocery stores with almost no independents. If these boutique pharmacies disappear, so will some of the unique professional services they offer. That lack of choice won't be good for either the average Ontarian or the pharmacists that serve them.

From the Globe and Mail:
There is mounting concern that Shoppers Drug Mart Corp. will be hurt by generic drug pricing changes in Ontario, home to more than half of the retailer's stores.

Analyst Keith Howlett at Desjardins Securities said Monday he can't see how the legislative reforms, which reduce the price the province will pay for generic drugs, “cannot have an impact on the largest retail pharmacy chain in the province.”

The drug policy could slice as much as $38.3-million a year off of Shoppers' profit in Ontario, or $75,000 a store, he estimated in a report. (That is earnings before interest, taxes, depreciation and amortization.) Shoppers has 511 pharmacies in Ontario and almost 1,000 across the country.

Mr. Howlett's concerns add to earlier ones raised by at least one other retail analyst, as well as pharmacists and other groups, about the impact of the new law. It came into force in October although parts of it have been phased in over the past few months — and some provisions took effect as recently as April 1. ...more