“A large portion of the savings is coming right out of pharmacy”
—Byron Bergh, President, Alberta Pharmacists’ Association
Pharmacy stakeholders in Alberta used words such as “shocked” and “blindsided” in response to the province’s budget of March 7, 2013, which unexpectedly announced a reduction of all generic drug prices to 18% of brand-name rates, effective May 1.
It was a move that came without consultation and without advance warning. “We knew things were tight with the deficit in the province,” Byron Bergh, president of the Alberta Pharmacists’ Association (RxA), told CPJ. “But we weren’t prepared for anything like the announcement in the budget.”
At the time of the budget, pharmacists were still attempting to adjust to the changes of July 2012, when the Alberta government lowered generic prices to 35% of brand-name levels from an average of 50%. Additionally, in early 2013, Alberta joined most other provinces in announcing plans to impose an 18% cap on 6 widely used generics, beginning April 1.
“The cuts are so deep and so fast, it will be impossible for me to react quickly enough to ensure the sustainability of my pharmacy,” said Rimby pharmacist Patrick Rurka, in an RxA news release on March 8.
In its new release of March 13, the Canadian Association of Chain Drug Stores called the budget measure “another broken promise” and criticized Alberta for cutting prices in the absence of a properly funded program of pharmacy services. Both CACDS and RxA had been discussing service enhancements with the province in the months before the budget.
“We were working with them. That’s why we were shocked when the Alberta government blindsided broader pharmacy by unilaterally cutting generic prices by 50%,” Denise Carpenter, president of the CACDS, said in the release.
In a statement released to media, Jim Keon, president of the Canadian Generic Pharmaceutical Association (CGPA), called the cuts “a betrayal of our industry” and a threat to the drug supply: “The slashing of generic prices further jeopardizes the supply of cost-saving medicines for Albertans. In the face of these dramatic cuts to reimbursed prices, our industry plans to contact Health Canada to inform them of generic pharmaceutical products that may no longer be viable.”
Existing pharmacy services can’t replace lost revenue from price cuts
The Alberta government estimates the pricing changes will save $180 million a year in public drug-plan costs. As Mr. Bergh of RxA points out, the same amount will be saved by private drug payers, which adopt government pricing.
“A large portion of the savings is coming right out of pharmacy,” he says. “It doesn’t take too much to figure out that with hundreds of millions of dollars spread out over 1100 pharmacies, it is a huge hit.”
In July, government and pharmacy did put in place a new clinical services framework, but according to RxA, the revenue from those services can’t replace the hit from the price cuts—particularly at this stage. It takes time for pharmacies to train staff and get the processes in place to deliver services, notes Mr. Bergh. Meanwhile, he says, dispensing fees in the province have increased by only $0.52 since 1991.
“Ironically, the government wants pharmacists to help with access to health care with injections, refill authorizations and care plans but these price reductions are forcing a lot of pharmacy owners to re-examine staffing and wage levels, so that starts to defeat the purpose of the services framework, without proper planning.”
Pharmacists hold protest rally and province adds 30-day washout period
Around 300 pharmacists and pharmacy students communicated their displeasure with the government’s generic policies at a demonstration in front of the legislature on March 21. During that week, RxA held meetings with government in an effort to find ways to ease the transition.
On March 28, Health Minister Fred Horne announced that pharmacists would be given a 30-day “washout” period (until May 31), in which they would be reimbursed at the previous, higher levels for pharmaceuticals in their stockpiles. This reprieve is somewhat helpful, says Mr. Bergh, but the association doesn’t consider it a major concession.
“A washout period is standard practice and there’s no reason why it wasn’t put in place in the first place,” he says. “It’s really a stop-gap measure.”
Meanwhile, the tensions between the province and pharmacists rose further in early April, when the government launched a radio and newspaper advertising campaign that touted the fact that beginning May 1, “Albertans will pay the lowest price in Canada for generic drugs” and stated the province was “supporting pharmacists to provide you with many services to keep you healthy.”
Claiming the campaign told only one side of the story, the pharmacists’ association criticized the province for spending $400,000 on an ad campaign, while claiming it had to cut costs. A letter from Edmonton pharmacist Jasbir Singh Bhui, written to his MLA, was posted on the RxA website. “If the primary objective of the budget is to balance the books, why would the government take money from the backs of the pharmacists and waste it in advertisements to buy votes for your next election?” the letter asked.