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Posts Tagged ‘Prescription Drug Policy’

Canadian Healthcare: Resource Crunch

Tuesday, May 16, 2017 @ 11:05 PM

The resources crunch is coming in Canadian healthcare,
and tough choices must be made.

Click the play button to listen.



Ontario Alone Acts On Drug Costs.

Friday, April 8, 2011 @ 05:04 PM

Interesting article in Benefits and Pensions Monitor:

Ontario is the only Canadian province trying to protect the public from drug prices, says Marc Kealey, an expert on healthcare reform and governance. Speaking at the International Society of Certified Employee Benefits Specialists Toronto Chapter’s ‘Leveraging the Benefits of Rx Drug Reform,’ he said since Bill 102 in 2006, it has taken measures to ensure the drug costs are transparent and fair for public and private payers. In fact, he said the province plans to appeal a recent court decision by an “uninformed” judge which would allow one retail chain to sell private label prescriptions from a generic drug manufacturer it owns. Part of the problem is that most plan members really don’t understand or care about their drug benefit plan. As long as they can go to the drug store and get a prescription filled, they are content. However, they fail to understand that escalating drug costs are a demotivator for businesses which can lead to layoffs and even businesses closures. “We have to educate the public because this is going to really hurt and if it doesn’t stop, government will step in and try to control it through legislation.” And that, he said, is the last thing that major pharmacy chains want.

You can read it here:


- Marc Kealey

The Aftermath of Reform

Sunday, November 21, 2010 @ 05:11 PM

Recently articles have been written about the aftermath of the drug reform legislation in Ontario and on the eve of the Canadian Foundation for Pharmacy’s Annual Meeting, I wonder if  pharmacy officials attending  will address the issue of their behaviour during the legislation period.

In mid 2009, the government of Ontario made public overtures that it intended to review the Transparent Drug System for Patients Act ( legislation that was originally passed in 2006 to save costs to the public drug program in Ontario). Written in the Act in 2006 was a provision that government will review the Act every two years.  In the intervening years since the original Act was passed, Pharmacy was noticeably absent from any positive discussions with government on how it (pharmacy) could impact positively on patient care and save dollars to an ever-increasing cost for drug plans in both the public and the private sectors.

The review of 2009 was meant to assist private sector drug plans to manage cost increases on their formularies and match the savings realized in the public sector.  It should be noted that when the Transparent Drug System for Patients Act was originally passed in 2006, its jurisdiction extended to both the public and the private sectors.  However, the enforcement of the Act, at that time, never extended to the private sector.  This issue, in and of itself, created a two-tiered drug plan system where drug plan and actual drug costs in private sector plans were double digit higher than in the public system.  It was an untenable proposition from 2006 to 2009 and plan designers (among others) in the private sector appealed to government to right the legislation.

Pharmacy’s reaction to the proposed legislation in the months after 2009 was not only surprising, it was shockingly out of touch with the current economic thinking of Ontarians.  There were mass protests by pharmacy and intellectually dishonest comments made by pharmacy  officials(some suggested that stores would close, others suggested that service would be impacted and some even called the government reckless).  Pharmacists did not stand up for their profession during this time.  In fact, many protested in the face of government suggesting that the end was near.

I was a delegate at a public policy conference in the summer of 2010 in Collingwood where two bus loads of pharmacy students protested against those in attendance.  When pressed as to why they were protesting, there was a flurry of dramatic and factually incorrect comments from them. It was a shameful exercise – largely because none present had an open mind to the reasons why government needed to enact these changes –  it was, in the minds of these students apparently, only about them and their economic futures.

Pharmacy is a lucrative business.  In Canada it amounts to over $25 billion in annual sales.  Fees for pharmacy service in the public sector amount to about $700 million annually (it’s similar for private sector plans).  So what’s  the beef?

It has everything to do with how professions manage when public policy changes occur.  When I was CEO of the Ontario Pharmacists’ Association, I told pharmacists time and time again that the ONLY way to manage through the changes of the Transparent Drug System for Patients Act was to be actively and positively involved with government.  Pharmacy rebuked that exhortation and designed what they called “an opposition strategy”  (in short to use the opposition MPPs to attack the government).   Those who remember the election of 2007 know that pharmacy failed miserably in that fight.

Again, three years later, the sector is stymied as to why government distrusts pharmacy and why several stakeholder organizations, including CARP and CLIHA, have lined up against them.  And what is pharmacy’s response?  They punish their professional association (the Ontario Pharmacists’ Association- OPA).

It’s astonishing that Shopper’s Drug Mart, the apparent leader for the profession in Canada, would make public statements suggesting that it would no longer support its pharmacists who wish to belong to the OPA.  This kind of short sighted thinking fans the flames of mistrust between public policy framers and the professions with whom they aspire to collaborate on the future of the profession.

The outcomes of the drug reform measures introduced by Ontario have taken hold across Canada and helped this country come of age in world where drug costs are spiralling out of control and this has been a boon for patients.

Pharmacists need to embrace the notion that public policy is the purview of government and that people govern people!  When an entity pushes, the pushed either ignore the pusher or push back themselves.  Pharmacists as a profession need a lesson in how to manage through public policy debates in a positive manner.  Without the support of their member organizations –  like Shoppers –  they are destined for a rebuke from government!

- Marc Kealey

Leadership When We Need It Most

Monday, September 13, 2010 @ 04:09 PM

This week newly minted CEO Michael Cloutier, of the Canadian Diabetes Association, spoke at the Economic Club of Canada in Toronto.

It was a sell out crowd of over 300 people for a breakfast no less.

For the pedestrian observer Diabetes is a dreadful disease. It causes untold health disaster to those afflicted with it and there are any numbers of celebs schlocking for health related companies whose target audience is a person with Diabetes. Blah blah blah… so why the enormous media coverage?

Well, in my view, there are two reasons.

The first is the message and the second is who delivered it.

Let me start with the second. Michael Cloutier is a leader – point finale. He has presence, style and a network of politicos, health execs, patient advocates and opinion leaders across the country. He is a superb developer of human capital and motivates the hell out of those with whom he interacts.

The Canadian Diabetes Association made a brilliant choice making him its CEO. At a time prior to his appointment, the organization was floundering. Its leadership role had faded and it appeared to be concentrating only on its fund-raising rather than its historic and hallowed role as a champion for diabetes management and the key opinion leader for strategies to manage what it calls the tsunami of diabetes to plague the country. In short, the CDA had lost its way.

A one-time leader in the development of the Ontario Diabetes Strategy – an enormously aggressive plan by the government of Ontario to tackle the scourge of Diabetes – the CDA was virtually invisible from late 2007 to Cloutier’s appointment.

So, enter Cloutier. His mantra is always “show your brains off” – and he did so right away. Assessing his team, he reached out across the country to put them and all their target audiences on notice that Diabetes is an issue that requires the leadership of Canada’s most definitive voice on the topic.  He then moved quickly to deliver messages to information thirsty audiences.

This brings me to the first reason. The message.

Cloutier delivered a passionate speech rife with admonishment to government for not acting fast enough on the imminent increase in diagnoses of Diabetes across the country. In the case of the Economic Club speech, he directed his appeal to three areas; identifying the root causes of Diabetes, getting programs to patients and preventing Diabetes altogether.

He lamented the fact that heretofore lip service was basically the order of the day and he issued a challenge to the health community to dig in and work together to produce the kinds of outcomes that, if done properly and collaboratively, will produce better results.

He wasn’t using platitudes or rhetoric. He provided tangible evidence on the cost of Diabetes ($4.1 billion today with a forecast in years to come of $7 billion) and offered solutions for government, patients, providers and industry to consider.

In all it was a powerful message.

What was not surprising was the applause Cloutier received from the sell out crowd. They had been waiting for someone to take the dais – and that he did.

Cloutier IS a leader. Cloutier will lead a charge and motivate his team, industry, government and patients to work together for what will be an epidemic in future if left unchecked.

The work of the CDA will go on record in years to come as a catalyst for ridding Canada of the insidiousness of Diabetes and it will be due to his selfless leadership in bringing about that end.

- Marc Kealey

The media and drug reform.

Tuesday, August 24, 2010 @ 08:08 AM

I was a guest on the Roy Green Show on CKNW radio in Vancouver this past weekend.  I was invited as a follow up to  my speech in Whistler. The guest host was Mike Smythe –  well known provincial columnist and  talk radio celeb. Mr. Smythe  is well known  in BC media for doing his homework and outlining what his readers listeners need to know.

He introduced the show with a lengthy description of the state of drug reform in Canada and a pithy rationale for it – including the incidences of chronic diseases as a consequence of an aging population.

It was a lovely discussion.  In one segment Mr. Smythe pointed out that perhaps brand prescription drug prices were largely responsible for the high costs of plans in the country.  I’m savvy enough in media to know that the correct answer to that line of questioning was to stick to the message –  it’s  about the high cost of generic drugs that’s siphoning money to chain pharmacy and affording that sector huge profitability.

But it got me to thinking –  where is the brand industry on the cost of pricing?  Has anyone seen the information coming out of the association representing the brand industry?  If  you haven’t  –  there are the usual highlights about how Canada is ranked well below other countries on it’s approvals process for new mediations and how the brand industry employs thousands of highly paid people in positions that make a difference to prescribers and patients.

Well that’s simply not good enough and is the root cause of much of the ignorance o public about the value and, frankly, necessity of a strong brand drug sector.  The costs for new therapies –  many that patients demand and neeed – are borne by brand pharmaceutical companies.  In many cases the amounts are in the billions. These are not gambles –  they are well thought our and researched medicinal therapies to manage some of the more insidious diseases affecting people world wide  –  like diabetes, cancers, neurological disorders, mental health diseases, transmittable diseases like AIDS, TB and others.  Why are brand manufacturers, therefore, labelled as villains?  I submit it’s because they would put sales of their approved products above that what they do best – discover!

In an era of new options for the future and the genericization of chronic medications, the brand  name pharmaceutical companies need to be as innovative as humanly possible to describe the value of their industry.  I. for one, will continue to admonish the sector to do just that!  Mr.  Smythe, I reckon will be a little closer behind.

- Marc Kealey

Drug reform and what’s the buzz!

Monday, August 23, 2010 @ 06:08 PM

I was a key note speaker this past week at the International Foundation of Employee Benefit’(IBEF) Conference on Public Sector Pensions and Benefits.  It was a well attended conference  in picturesque Whistler BC, with delegates from across Canada and Chaired by Murray Gold – the most experienced legal expert, in my opinion,  in Canada on pensions and benefits.

My message was clear – the sustainability of drug benefit plans is in jeopardy IF plan sponsors, consultants, employers and employees don’t recognize that the status quo with respect to drug pricing, plan design, formulary management and prescription drug distribution is no longer an option.  There are other ways to look at predictable and sustainable savings for plans –  and they my include some tough medicine for traditional business approaches to the practice of pricing, dispensing, adjudicating and distributing generic prescription drugs.

The thesis I purport is that the current practice of two tiered drug pricing  (one for the public sector and one for the private sector) and one which I may have helped to initiate on the first place in my former role, is the rationale for the reform measures under consideration and adopted in several provinces.  The measures are not unique to Canada – several G20 nations have adopted drug reform to manage burgeoning costs of prescription medications.  In Canada, the increase of generic medications to replace branded medications whose patents have expired has created a profit boon for chain pharmacy.  What was widely unknown or ignored by plan sponsors or designers is that, in some cases, the massive rebates paid to chain pharmacy actually contributed to the higher costs Canadians paid for the generic medications that they believed  would help save money.  The head of the Competition Bureau of Canada reckoned that some $800 million (Cdn) is paid to pharmacy to dispense certain generic molecules over others.  The net result is that annualized increases in drug benefit plan premiums and drug prices have plagued the system across Canada for years.  Finally, governments are waking up to that reality and doing something about it.  The province f Ontario passed legislation in June to lower generic drug prices over tome to 25% of the brand. The province of BC has followed suit with an agreement to lower prices to 35% of brand in a similar timeframe.  Obviously these reforms have jurisdiction in the public sector plans and, in the case of Ontario, the private sector too. The truth is, the rebating game may never end.  What ever organization controls the means of  distribution and dispension controls the price(s) plans and organizations will pay.

The IBEF is on the right track rigorously educating its membership as to this reality and the options available to them.  For my part I will continue with advocating on behalf of private sector multi employee organizations –  it’s  the right thing to do.

- Marc Kealey

Canada contributes to the world significantly in terms of politics, comedians, natural resource management, innovation in health system design and, of course, the game of hockey. A G-20 nation, Canada often compares itself to and competes with its closest neighbor and trading partner, the United States.

However, when it comes to prescription drugs and their prices, Canada as a nation is compared to countries like Sweden — a bitter pill to swallow for Canadians, who represent 2% of the world’s population.

This article outlines the rationale behind and the reactions to prescription medication and drug plan reform currently underway in Canada. It also a provides a brief historical perspective on the reform environment and offers insights into opportunities for plan sponsors, designers and plan members to maximize reform outcomes.

A Perspective

Pricing for prescription medication in Canada is different from U.S. pricing.

The Canadian constitution gives provinces the power to create their own laws and regulations to manage and govern their health care systems, including prescription drug benefits. Each province has its own formulary and drug benefit plan and has regulatory colleges that govern the activities of health care providers like physicians, nurses and pharmacists.

The sum total of all provincial drug benefit programs is about $12 billion (Cdn) dollars per year.

In Canada, medications—both prescription and over the counter, and specifically those approved for human consumption—are granted approval through Health Canada.

Any pharmaceutical manufacturer wishing to “launch” a medication in Canada undergoes a rigorous approvals process. Patent laws govern the allowable time that a branded medication (like Lipitor™) can sell its product without competition—about 20 years. After the patent term expires, the law provides that generic manufacturers—those approved to manufacture a copy of the branded molecule—can produce and sell their version of the branded medication at a reduced price. Generic versions of any branded medication are sold and dispensed to patients through licensed pharmacies at a significantly lower price than that of the branded medication.

In the current environment of economic challenges, provincial drug benefit programs have little choice but to make changes to improve the financial position of their plans. The cost of drug programs is rising, and the public has little appreciation of those increases. Provincial drug benefit plans across Canada are making tough decisions. Generic drug prices, which seem unnecessarily high and are fueled by what are known as promotional allowances or rebates for retail pharmacies, are the targets of the reform. As frustrated private sector plan sponsors and designers experience similar rising costs, they also are undertaking this same assertive reform. Of course, this reform has created its own sense of frustration among pharmacy owners.

Canada spends about $25 billion (Cdn) dollars a year on prescription medicines. The split between public sector drug benefit plans (such as the Ontario Public Drug Program) and the private sector is about 45% public sector and 55% private sector.<1> It should be noted that rising costs in drug plans have largely accrued from increased drug utilization—for instance, more patients needing medications for chronic illnesses—and actual increases in the cost of medications. In the last ten years, provincial drug benefit programs have witnessed annual increases of anywhere from 8% to 15%.<2> Private sector drug plan sponsors have listed similar annual cost increases.

These issues are not endemic solely to the current economic climate; increases have been commonplace year over year for quite some time. While there appears to be no magic bullet for the future, with some innovative thinking, ingenuity and courage, they can be mitigated and managed.

An Historical Perspective

In the late 1960s, Canada’s federal government limited patent terms on brand medications and allowed for greater manufacture of generic medicines in Canada. Those broad-reaching legislative initiatives opened the door to realized savings for drug benefit plans as they allowed patented medicines to be copied by generic manufacturers when patents expired.

This legislation did not, by any stretch, threaten the existence of any brand manufacturer in Canada.  The brand pharmaceutical sector remains a vibrant part of Canada’s socioeconomic fabric, providing clinical research for new therapies, clinical programs and education opportunities for patient groups, hospitals and medical providers including physicians, nurses, pharmacists and others. In fact, the 1990s and the early 2000s were good years for brand manufacturers with blockbuster medications to manage high cholesterol, hypertension, diabetes, mental health, sexual health issues and cardiovascular disease. Brand-named drugs were listed on formularies across the country.

Clinical research among brand manufacturers continues today for the next disease management tool, such as biologics, to combat cancer, rare diseases and genetic disorders.

The patent legislation of the late ’60s spawned a robust and vibrant generic manufacturing sector that continues to grow in Canada. Generic manufactured medicines account for over 50% of all medicines dispensed in plans across Canada.<3 >

The legislation giving generic manufacturers the right to copy the active ingredient in a previously branded medicine and sell to patients through a pharmacy has meant savings in drug plans.  Generic medicines cost less because manufacturers do not incur the cost of drug discovery; that effort has already been done by brand manufacturers. Similarly, generic manufacturers do not have to incur the cost of what is commonly known in pharmaceutical industry parlance as safety and efficacy because brand manufacturers have already done these studies.

In the last five years, the patents on a number of blockbuster medicines—brand names sold at higher prices in pharmacies to patients—have expired. Generic versions of medicines such as Altace™, Biaxin™, Zyprexa™, Pantaloc™, Pariet™, Actos™, Pravachol ™and Vasotec™ are now for sale at a lower price. In the next three to five years it is expected that more branded medicines will hit the patent expiration cliff.

Prices for brand medicines, set in Canada by a panel known as the Patented Medicines Price Review Board (PMBRB), were about 30% to 40% higher than prices for their generic versions.

At the same time the movement from brand name to generic versions of drugs was taking place, community pharmacy, as a sector, began to consolidate. Throughout the 1970s and 1980s Canada witnessed the firm establishment of chains or banners or buying groups intended to ensure cost-effectiveness and profitability for the retail sector. As a consequence, there appear to be few real independent, community-based retail pharmacies in Canada. The retail community pharmacy universe, therefore, has become a significant force as a distribution channel.

This movement in pharmacy seems to have spawned a philosophical difference of opinion between pharmacy as retailer and pharmacist as health professional. The retail pharmacy, by virtue of its ubiquity and strength, appears to have emerged as the more powerful entity in this reform world.

Competition for shelf space in community retail pharmacy prescription medicine is fierce. Generic medicine manufacturers used to compete against each other for pharmacy’s business through programs aimed at pharmacists and small-ticket items like hand-held information technology devices. Now, they compete solely through cash rebates or free goods to the community pharmacy or chain head offices, which make the buying decisions and allow a manufacturer’s medicine to be dispensed at a local pharmacy or through a matrix established by the pharmacy chain.

This scheme produced the unintended consequence of making generic drug prices, although still cheaper than brand medicines, more expensive in Canada than in comparator countries. It’s widely noted that Canadians pay the highest drug prices for generic medications. Here’s why: Historically, as retail purchases of generic medications grew, so did the “allowances” to pharmacies from manufacturers to have pharmacies stock a particular manufacturer’s products. The prices that pharmacies charged to public and private plans did not take into account the rebates or allowances the retail pharmacy received from manufacturers. This practice inflated the price or the actual cost of the ingredient (not the fee) paid by the consumer and third parties.<4>

Public sector drug plans recognized that rebates or allowances to retail pharmacies ranged from 40% to 80% of the invoice price of medications. The provinces of Ontario and Quebec, convinced that this practice was having an impact on their plans, introduced legislation to curb the practice. In 2006, Quebec passed Bill 130, the Act Respecting Prescription Drug Insurance. The act introduced various cost-containment provisions, including establishing a set price for generic drugs (54% of the brand), and strived to limit allowances paid by manufacturers to retail pharmacy. The act did not affect private sector plans.<5>

In 2006, Ontario launched Bill 102, the Transparent Drug System for Patients Act, which introduced broad-ranging changes for manufacturers and pharmacy. The act went much further than Quebec’s Bill 130; it amended the Ontario Drug Benefit Act as well as the act that governed the private sector—the Drug Interchangeability and Dispensing Fee Act. It established a firm limit on “allowances” to be paid to retail pharmacies doing business with the Ontario Public Drug Program and set generic drug prices in the public sector at 50% of the brand. This 50% limit became the new price in Canada for generic drugs.

In other ways, the bill gave special recognition to the profession of pharmacist. It moved to increase the role of pharmacists as a part of the health team through commitments for increased scope of practice, the ability to advise the public drug program through the Pharmacy Council and a fee-for-service initiative known as Meds Check. <6>

Bill 102 was passed into law in late summer of 2006 amid a backlash from retail pharmacy, which was collectively upset over the impact of the act’s limit on allowances. One of the most significant and unintended consequences of the passage of Bill 102 was a shift in costs of prescription medications and fees for pharmacy service from the newly legislated public sector to the seemingly untouched private sector. Since the passage of Bill 102 in Ontario, drugs sold in pharmacies to consumers are sold under what is now referred to in Canada as a two-tiered drug-pricing system. Patients in the public program pay a lower price for drugs than patients in the private drug benefit sector.

Before the passage of Bill 102, there was little distinction between public sector drug plans and private sector drug plans regarding fees paid to pharmacy and ingredient costs. In fact, private sector plans often mimicked any changes that were realized by changes in public sector plans. Since the passage of Bill 102, however, private sector plans pay about 50% more for prescription and fees than plans in the Ontario Public Drug Program.<7>

Other provinces, watching closely what was transpiring in Ontario, soon followed suit with reform measures to protect their public drug plans. Most notable were the provinces of British Columbia and Alberta.

British Columbia (BC) established its Pharmaceutical Task Force and tried to address the issue of what it deemed “the hidden cost of generic medications” and what it viewed as a growing trend in “frequent prescribing.” After a protracted consultation period, the province reached an agreement with the BC Pharmacy Association with what it cited as “interim changes” to the province’s PharmaCare program.<8> It was interesting to note that the province gave appropriate recognition to the value of pharmacists and, in 2009, invested in patient care options.

In 2009, Alberta introduced its reform measures through its Pharmaceutical Strategy. This two-phased reform measure began in early 2009 with a legislated change to the price of any generic that would be newly introduced on the public drug plan from the previous 75% to 45% of the branded medicine’s price. The province committed to further lowering the cost of generics that were already on the plan. Early this year, the province announced a commitment to a price of 56% of the brand price for these medications.

The province also announced that it would invest in a fee mechanism for pharmacists to provide a cognitive service to patients similar to the program earlier described as Meds Check Ontario.<9> These announced reform measures in Alberta seemingly will not benefit private sector plans.

In the summer of 2009, the province of Ontario’s minister of health began consultations with pharmaceutical stakeholders to create longer term sustainability on its recently reformed public drug program. The minister recently announced that it would begin bilateral discussions with pharmacy on approaches to eliminating allowances or rebates altogether. The province will likely settle on a generic drug-pricing scheme similar to or perhaps lower than the province of Alberta’s scheme. At the same time, Ontario has further recognized the value of the pharmacist as a part of the integrated health team.  Ontario offered the profession scope of practice enhancements, through proscribing authority and other clinical enhancements, to ensure greater access for patients in the health care system.

The Road Ahead

Private sector plan sponsors, designers and consultants have been keenly interested in the outcomes of recent reform measures introduced by provinces. Private sector sponsors are unhappy with the two-tiered drug cost system and have expressed concern and frustration about the practice of generic allowances to pharmacy. Plan sponsors have tried to instill some discipline in plan design to combat increases in prescription drug costs and fees associated with traditional community pharmacy.

Provinces in Canada remain bullish on the need for reform. The Competition Bureau in 2008 suggested that the practice of allowances or rebates to pharmacy from generic manufacturers resulted in $800 million dollars that could be used to reduce the prices Canadians pay for prescription medications,  diverted into chronic disease management programs, or used to lower taxes or benefit plan costs.<10>

Pharmacy as a front has begun to agitate against these reform measures. In some provinces there are threats to withhold service to patients on public drug programs or there are threats to private plan sponsors where a pay-direct card, for example, would not be honoured by certain pharmacy chains.

Governments have moved to combat the animus through further recognition of the clinical value of the role of pharmacists and have amended scopes of professional practice to include them in their reforms.

No doubt pharmacy will try to resist these reform measures—the changes will impact their businesses directly. And they can play a tough game. It will take courage for private sector plans to fend against some of the tactics that pharmacy will employ. But leveraging the strength of the membership of any private sector plan will result in better pricing for those plans and, perhaps, bring to light a new pharmaceutical distribution model altogether.

Besides public efforts at reform, the private sector is seizing this opportunity to promote drug cost management. Many are looking closely at the prices of prescriptions and trying to find ways to direct plan members to opportunities for good outcomes at lower costs.  Some are capitalizing on public sector reforms and implementing those changes. Others are considering innovative and alternative distribution of prescription medicines. Some are encouraging cooperatives with other plans. Most are calling for better drug prices, exclusive listing agreements on their formularies and clinical programs for their plan members.

Private sector plans are encouraged to engage more in the public sector reform debate and become knowledgeable about public policy initiatives underway on the sustainability of public sector plans.

Plan sponsors and plan designers may embrace alternative delivery mechanisms, a simplified prescription process, better interaction with pharmacists, lower dispensing fees, lower prices for drugs and optimization of the dispensing practice (from monthly to every three months for chronic medication regimens) when they witness the actual savings they can realize.

This transparency will maximize drug benefit plan efficiency and promote better outcomes for private sector plan sponsors and holders. This, in turn, will create greater access, greater benefit and, most of all, sustainability going forward.


<1> CIHI research

<2>Ontario Ministry of Health research, 2009

<3>IMS Canada

<4>Mercer Canada Report, October 2008

<5>Bill 130, the National Assembly

<6>Ministry of Health, Province of Ontario

<7>IMS Canada research

<8>Province of British Columbia Health Ministry

<9 >Province of Alberta

<10>Sheridan Scott, commissioner of the Competition Bureau, 2008.

- Marc Kealey

Pharmacy and integrated Health

Sunday, June 20, 2010 @ 06:06 PM

The regulations reflecting the revisions to the Transparent Drug System for Patients Act in Ontario have been approved by the government of Ontario and are now posted.
The reaction by pharmacy organizations was predictable. They hate what the government has done and in so doing, they want to hold patients (especially seniors and the chronically ill – as they say) hostage in the process.

Not surprisingly the business sections of major daily newspapers have reacted by issuing a reduced strike price for publicly traded pharmacy organizations and in some cases have downgraded some organizations to a “hold” on their stocks.

In all, it’s a bad start for the retail pharmacy guys who could have come out of this exercise as the real champions in an integrated health care system, currently en vogue worldwide.

As a frequent speaker across Canada on drug reform, I’ve heard from large and small organizations seeking to wade through the confusion on drug benefit plans and formulary management issues with real answers. The Ontario government has stated that it wants transparency on all drug prices plain and simple. It has passed the legislation to do that and posted the regulations that reflect it. The fight is now over! Or at least it should be. What is pharmacy doing? It’s threatening to cut back on services that make patients better. Not good.

Concessions on the regulations governing the Drug Act in Ontario have been made by government and I like to think that some of us whose voice for the effective role of pharmacist in integrated health care was heard – the role of pharmacist has been made more effective. I only hope that pharmacy can see this and cut back on the vitriol.
We still have a lot of work to do to encourage government in Ontario to increase the cognitive service fee they offer to pharmacists and we can start today by encouraging other governments in Canada to realize the ROI on effective pharmacist services to patients.

- Marc Kealey

Major media outlets have covered the legislative process quite fairly over the past few months as the government of Ontario has moved to stabilize drug prices in Canada’s biggest province.  Nothing new here, the costs of public sector formularies have been increasing at anywhere between 5% to 15% annually.  When I was CEO of the Ontario Pharmacists’ Association, I implored the Board at the time to work with government and insisted that we play the Pharmacist as health care provider card when tackling the issues associated with the original reform brought in by the McGuinty Liberals in 2006.  The tack we took was to demonstrate the value of pharmacists and the work they do in community pharmacy, long term care pharmacy, specialty pharmacy and hospitals across the province.

The initial legislative framework (Bill 102) had taken draconian and, frankly, chaos inducing steps to transform the drug program in Ontario. The steps we took in 2006 to counter these moves proved fruitful and beneficial to pharmacy and pharmacists.  In fact, the initial financial impact of Bill 102 was some $680 million dollars out of pharmacy.  Our efforts at Ontario Pharmacists’ Association, at the time, was to appeal to the issue of fairness, integration in healthcare, a new reimbursement model and the use of collaborative efforts such as Information Technology to increase competition among pharmacies.  Our efforts paid off and instead of the initial $680 million dollar hit, we got back in programs and other concessions some $450 million dollars.  The unintended consequence of these efforts was the establishment of a two-tiered drug pricing regime that has taken hold across the country.   This means that private sector plans would pay more for the exact same drug and services as provided to public sector plan members (ODB for example).

In the ensuing years after Bill 102 was passed as the Transparent Drug System for Patients Act (TDSPA), the government has moved to integrate pharmacists into their health teams with minimal uptake from the pharmacy sector.   The Meds Check program which was announced coincidentally to the TDSPA was supposed to provide some $50 million dollars to pharmacists to provide extra service to patients on their drug regimens.  The program was initially a success, but pharmacy more or less blew it off in many parts of the province.  The Pharmacy Council, which was also announced in the TDSPA has now become a joke.

In the ensuing years since the TDSPA was made law, there have been charges laid against pharmacies, wholesalers and manufacturers for fudging required reporting to the Ontario Public Drug Program’s Executive Officer. The Canadian Association of Change Drug Stores (CACDS), which is the de-facto negotiating body for pharmacy, or the Ontario Pharmacists’ Association have barely attempted to licit potential models that could benefit patients and the customers they serve with ways to improve the  drug system. This  noted, quarter after quarter publicly traded pharmacy
organizations have seen average double digit profits  this in an era of economic austerity.

The trouble is that patients, plan members, formulary designers and public drug plan providers remained afflicted with cost increases. In the TDSPA there is a provision that the government will review the Act every 2 years.  Last summer (2009) the then Minister of Health in Ontario announced a review of the TDSPA.  Stakeholders were invited to provide their views on how to better the system.

Many stakeholders took the process seriously.  It was sad to see that pharmacy did not. When the government moved to enact legislation in 2010, it seemed to take pharmacy by surprise and they reacted with faux indignation. In fact, had they been more engaged , more attuned to the needs and wants of the patients and customers they purport to cherish, they world not have used them as pawns in this massive game of chess that they have lost so publicly.

The latest polls have suggested that Ontarians overwhelming (some 93%) support the government’s initiative. So enough bitching.  Here’s the deal  pharmacy should stop immediately their diatribes on how they will be forced to make very difficult choices “as they evaluate the level of care they provide to all patients, especially seniors and the chronically ill”.  It is sad to see that THIS rhetoric would be their response rather than engaging the public in a dialogue about an increase in cognitive services fees.

The government has announced some $100 million dollars in cognitive service fees with an additional amount for Meds Check and diabetes management.  In an era where medical models of treatment are becoming teams (like a Family Health Team) pharmacists can and should integrate themselves into these models.  This could prompt a call for an additional, say, $300 to $400 million in cognitive services fees.  Who’s leading these pharmacy organizations? They seem to have hit every stupid button and made asses of themselves throughout this whole process.  The sad reality here is that instead of looking to modernize an antiquated drug distribution process and embracing the trend of integrated healthcare, these pharmacy organization seem to think that the patients and consumers and shareholders they purport to care about are treated like lemmings and  will, unfortunately, continue to fight  to their own bitter end.

- Marc Kealey