Canada

Winnipeg Free Press - PRINT EDITION

Expect provinces to follow Ontario

Generic-drug reforms could mean layoffs

By: Meagan Fitzpatrick

Posted: 04/10/2010 1:00 AM | Comments: 0 (including replies)

OTTAWA -- Ontario's plan to slash the cost of generic prescription drugs could have ripple effects across the country and set up other provincial health ministries for major battles with the pharmacy industry if they follow Ontario's lead.

In an effort to save more than $500 million a year, the province announced its proposal Wednesday to cut the price of generic prescriptions from 50 per cent of the equivalent brand-name drug to 25 per cent. The government also intends to eliminate professional allowances that are incentive rebates paid by generic drug manufacturers to pharmacies.

The Ontario government maintains that the professional allowances keep generic drug prices too high and that the reforms are necessary to combat the rising costs of drugs.

Pharmacies, big and small, are staunchly opposed to the changes and say they will do major damage to their profits, potentially forcing them to cut services for patients and lose staff. From stand-alone independent stores to Canada's largest drugstore chain, Shoppers Drug Mart, the consensus is that if the reforms are pushed through successfully, they will cut deep.

The impact could reach beyond Ontario's borders because the province tends to lead the pack and set the pace for drug-pricing policy for the rest of the country.

"The other provinces, I think you're going to see a move probably to adopt the same kind of prices that Ontario is aiming for generics," said Joel Lexchin, a professor at York University's school of health policy and management. "Ontario generally has tended, because of the size of the market, to set the mark for generic prices across the country."

Lexchin said all provinces are grappling with tight budgets and are looking for ways to shrink health-care bills.

How the other provinces will react to Ontario's shift in policy remains to be seen, but changes are expected.

Quebec, for example, has a pricing scheme where generic drugs listed on the provincial formulary must be sold by the manufacturer for the "best available price" that is offered elsewhere in the country. That means if a price drops for a certain drug in Ontario to be the lowest in the country, it will have to be matched in Quebec.

Manitoba has a similar kind of system where manufacturers must offer their products at a price that is no higher than what's paid in other provinces.

"Yes, Ontario's drop in drug prices could mean lower prices," Kelly Keith, a spokeswoman for Manitoba's health ministry, said.

Keith said the government is using its own strategies to manage drug costs but "will monitor the approaches taken in other provinces to bringing costs down to see if there are successes which could be applied here."

A spokesman for Saskatchewan's health branch said the government is in ongoing discussions with pharmacies on how to manage rising drug costs and in British Columbia, the government is trying to negotiate a new agreement with the British Columbia Pharmacy Association and the Canadian Association of Chain Drug Stores.

Rita Winn, who manages an independent chain of 10 pharmacies in eastern Ontario and said the proposed reforms will turn the system "upside down."

She's estimating the changes will mean at least $300,000 in lost revenue per pharmacy and that her company, Lovell Drugs, is almost certainly going to have to lay off some staff.

-- Canwest News Service

Republished from the Winnipeg Free Press print edition April 10, 2010 A14

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