New drug regulation may bring down the cost of employer benefit plans

New drug regulation may bring down the cost of employer benefit plans


TORONTO – Much attention has been focused on the war of words between Shoppers Drug Mart and the Ontario government over a new regulation that would amend the Transparent Drug System for Patients Act (DIDFA) and the Ontario Drug Benefit Act (ODBA). However, little attention has been paid to the impact on employer benefit plans.

The amendment would reduce the cost of generic drugs to 25 per cent of brand names. The regulation would also eliminate professional allowances given by the generic drug companies to the pharmacies, something the health minister has compared to a kickback.

These professional allowances would be accounted for in the price of these drugs, many much higher in cost in Ontario than in the United States.

When the Transparent Drug System for Patients Act (2006) was passed, it created substantial differences between the public Ontario Drug Plan (ODP) and the employer-based private sector plans.

With this amendment, regulated prices of generics will also be passed on to the private sector.

Aon consulting, in their newsletter “Ready,” says with patents of major brand name drugs like Lipitor expiring soon, “the cumulative savings for employers may be significant and employers have an opportunity to explore how best to capitalize on these savings within a broader approach to cost management through the adoption of strategic and fully integrated employee wellness management.”

Implementation of the regulation will be swift – many of the terms come into force beginning May 15 of this year, including elimination of professional allowances for ODP.

Dispensing fees would rise by about 20 cents per year over the next four years, depending on the class of pharmacy. By 2014 dispensing fees will range from $8.83 to $12.14.

The government is also sweetening the deal by providing an additional $100 million for the MedsCheck program, a program that pays for an annual 30 minute consultation between the pharmacist and any patient taking more than three prescription medications.

OPSEU has publicly supported the plans, alongside most other trade unions and the Ontario Federation of Labour.

The OFL is also calling upon Shoppers Drug Mart not to hold their patients to ransom amid the chain’s moves to shorten pharmacy hours in the Minister’s home riding of London North.

“If the attack by Shoppers Drug Mart continues we urge the government to follow Ireland’s example when it was embroiled in the same fight last year and contemplate establishing publicly run pharmacies,” says OFL President Sid Ryan.

The battle between big pharmacy and the Ontario government has pitted Health Minister Deb Matthews against her brother-in-law, former Premier David Peterson, who sits on the board of Shoppers Drug Mart.

Stakeholders have until 5 pm on May 8 to respond to the new regulation.