“This is a shaking of the foundations of the profession, with rapid changes in revenue and expense models that have been formed over the last 30 years”
—Dawn Martin, Executive Director, Pharmacists’ Association of Saskatchewan
Provincial and territorial governments have agreed to jointly cap the prices of 6 widely used generic drugs at 18% of brand-name prices—a move that has generated considerable disappointment and concern among pharmacy stakeholders across the country.
The agreement—which involves the 3 territories and 9 provinces, excluding Quebec—covers drugs that account for approximately one-fifth of all public spending on generics in Canada. Included in the deal are atorvastatin, ramipril, venlafaxine, amlodipine, omeprazole and rabeprazole. The new prices were to take effect April 1, 2013.
Concern about the impact on pharmacists and their patients
A number of national associations, including the Canadian Pharmacists Association (CPhA), the Canadian Association of Chain Drug Stores (CACDS) and the Canadian Generic Pharmaceutical Association (CGPA), were quick to publicly express disappointment with the announcement of further cuts to prices for generic prescription drugs.
When governments announced the new pricing arrangement on January 18, they spoke of a desire to “ensure more dollars for provincial health care systems,” estimating that the lower prices would ultimately save $100 million a year. At the same time, however, most governments said little or nothing about how the anticipated savings would be used.
“We were disappointed that no government other than the government of Saskatchewan committed to reinvest any portion of the savings from the lower prices into expanded pharmacy services,” says Jeff Morrison, Director of Government Relations and Public Affairs for the CPhA. “Our position had always been that any system of reduced generic pricing should address enhancements to patient care.”
Several provincial pharmacist associations also expressed concerns about the effect of further revenue hits, when many of them were still attempting to adjust to across-the-board pricing reductions brought in by individual provinces.
In New Brunswick, for example, generic prices were lowered from 50% to 70% of the brand-name price to 40% on June 1, 2012, and then to 35% on December 1 of the same year.
“Now we’re facing another sizeable reduction for drugs worth 20% of the market and this is a matter of great concern for pharmacists in the province,” says Paul Blanchard, Executive Director of the New Brunswick Pharmacists’ Association. “We have had significant devaluation of pricing in a very short period of time and we’ve had little government support to help us modify our business model.”
Saskatchewan pharmacists welcome commitment to reinvestment
Saskatchewan’s premier Brad Wall is the only leader to have clearly committed to using some of its generic drug savings to fund pharmacy services.
This was welcome news to the Pharmacists’ Association of Saskatchewan (PAS), which was in the midst of contract negotiations with the provincial government.
“The Minister of Health actually wrote a letter to each individual pharmacy in the province, saying the government is very committed to pharmacist services in the health system and that they were looking to re-invest,” says Dawn Martin, PAS executive director. “But we too are concerned to see that many other provinces aren’t taking a similar approach. This is a shaking of the foundations of the profession, with rapid changes in revenue and expense models that have been formed over the last 30 years.
“Governments need to ensure that pharmacists are available in the system to provide important health services and if you shake the foundational revenue model, you are risking that,” she adds.
Governments reject competitive tendering
In July 2012, when the provinces and territories revealed plans to collaborate more closely on generic price reductions, they put forward the idea of a national competitive bidding process. Ultimately, they rejected that idea and opted for the pricing agreement instead.
That shift was welcomed by pharmacy representatives, including Jim Keon, president of the CGPA. “Tendering for generic drugs could result in drug shortages and delayed savings to Canada’s health care system,” Keon said in a January 18 news release.
Meanwhile, the provinces and territories say more generic price reductions are on the horizon, and pharmacy stakeholders are attempting to work more closely with government to manage the impact of future changes.
“In the short term, we’re going to continue to argue for re-investment in pharmacy services,” says Mr. Morrison of the CPhA. “And for the longer term, governments have agreed to look at more predictable policies on pricing and pharmacy-related services.
“What’s been happening over the past couple of years is we are getting these pricing changes with little notice,” he says. “It’s been very difficult for pharmacies to plan ahead when they don’t know a year out what sort of prices they are going to be facing.”