London Chamber Responds to Reforms to Ontario's Drug System

15 Apr 2010

London ON

The Ontario Government plans to further reform the prescription drug system to provide better access to lower-cost generic drugs for patients, while continuing to increase annual funding to the drug system as a whole. Announced changes to the system will include:

* Lowering the cost of generic drugs by at least 50%, to 25% of the cost of the original brand name drug for Ontario's public drug system, private employer drug plans, and people who pay for drugs out-of-pocket, saving taxpayers millions of dollars.

* Ending so-called 'professional allowances' - payments generic drug companies make to pharmacy owners intended to fund patient services.

* Ensuring pharmacists are fairly compensated for helping patients by increasing dispensing fees and paying for additional services provided to patients

* Supporting access to pharmacy services in rural communities and under-serviced areas with new dedicated funding

Background:

These new reforms build on steps taken in 2006 when the government introduced changes that lowered generic drug prices to 50% of the price of the original brand name drug, and helped fund access to 150 new prescription drug products. Ontario's support for pharmacies has increased by $318 million, or nearly 50 per cent, since 2003. Ontario also pays approximately 25% - 75% more for generic drugs than many other countries, such as the United States and the United Kingdom. As of February 2010, there are 3,306 pharmacies in Ontario. 2.8 million people receive coverage from Ontario's publicly funded drug system and these new reforms include plans to phase in similar generic drug price restrictions for private sector plans.

London Chamber of Commerce Position

The Chamber will reserve judgment on the final outcome of these reforms until all of the new regulations have been finalized and articulated. Much uncertainty still remains regarding the scope of the reforms. The Chamber's position as set out below is based on information that the Chamber has been able to obtain to date on the proposed reforms.

1. With Ontario's worsening deficit/debt position and with an annual Health Care budget spiraling beyond $40 billion a year as a backdrop, any reforms that would better our fiscal position while at the same time benefitting the majority of Ontarians would seem in order.

2. As the great majority of private employer drug plans require the prescribing of lower-cost generic drugs, this could dramatically reduce the cost of benefits for our members, freeing up much needed cash for job creation, research and training.

3. Many Ontarians simply cannot afford to pay for the increased costs of drugs and are often forced to purchase prescription drugs across the border where prices can regularly be 25% to 75% cheaper. These reforms have the potential to not only lighten their burden they could as well make Ontario a more competitive jurisdiction and a more attractive place to invest.

4. The Chamber values the work and the contributions of Ontario's pharmacists and these reforms attempt to provide for fair compensation for their services.

5. We strongly urge the Government of Ontario to allow reasonable and sufficient timelines for implementation so pharmacies will not incur dramatic losses all at once and will have the opportunity to reconfigure their business models.

6. Since it is likely that the large chain pharmacies will be in a better position to weather these changes we encourage the government to find ways in the new regulations to assist the smaller independent pharmacies (small businesses) to continue to operate profitably under new business models.

7. As these reforms touch upon established agreements negotiated between private parties, the Chamber urges the provincial government to move judiciously where such agreements are concerned.

8. The Chamber also holds the view that should pharmacies wish to enter into the drug manufacturing business, they ought not to be prohibited from doing so, provided that such activity complies with applicable law. Any outright prohibition of the sort would run contrary to the entrepreneurial spirit that this Province's economic future depends upon.

9. The London Chamber supports reforms that make our health care system and indeed every government program and service more responsive to Ontario's economic reality, our members' ability to pay.

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