There has been a lot of wailing, primarily by the enormously profitable Shoppers' Drug Mart chain, over the plan announced his week by Ontario Health and Long-term Care Minister, Deb Matthews to exercise some discipline over how generic pharmaceuticals are priced in the province. Shoppers', and other pharmacies, are proclaiming stores will be closed, hours will be reduced, patients will be unable to get counselling from pharmacists, etc., all because of the two-part plan the minister announced.
"Drug-store giants take on Ontario over move to cut prescription costs
Shoppers Drug Mart, Rexall and Pharma Plus threaten layoffs, store closings.
"The country’s largest drugstore chains are going to war with the Ontario government over the price of generic drugs, saying the province’s move to slash prescription costs in half will cut deep into profits, forcing layoffs and store closings."
link: Drug-store giants take on Ontario over move to cut prescription costs - The Globe and Mail
Part one of the plan is to reduce the price Ontario's Drug Benefit Plan (ODB) pays for generic drugs, i.e. those on which patents have expired. The ODB provides drugs at no cost to seniors and persons on social assistance and, because of the volume it "purchases" can more or less dictate the price. The commercial pharmacies currently charge 4 to 5 times are much for the same generic product sold in Ontario as they do in the USA. Economies of scale and the costs of doing business in Canada in no way account for the huge difference in price. The reality is that the pharmaceutical companies have been hauling in the profits because, in Canada, it's governments who are paying for most of the product. And governments, as we know, have access to unlimited sources of cash. Big pharmacy has taken this as licence to raid the treasury for the sake of its shareholders. The minister is absolutely right to take on big pharmacy and reduce the price that Ontario will pay. We can only hope that other provinces follow (by Québec law, that province can pay no more than the lowest price charged anywhere else in Canada).
The second part of the minister's plan is to block the "professional services fees" the manufacturers pay to pharmacies and this is what so upsets Shoppers' Drug Mart and the others. For years the business model followed by retail pharmacies has been built around these so-called professional fees which are, in fact, rebates to the retail store for carrying and selling product. In any other business, they would be called kick-backs, at best, or bribes, to use the uglier word. Hundreds of millions of dollars are handed over every year by the pharmaceutical manufacturers to get retail stores to carry their products and recommend them to patients.
While some may say this is similar to Kellogg paying Loblaws for premium shelf space to display its raisin bran (which is common practice in the grocery business), the same ethical issues do not apply in the sale of breakfast cereal as prevail in selling life sustaining drugs. Whatever, business strategy retail pharmacies follow, there is no ethical rationale for accepting supplier kick-backs that drive-up the cost of medications for patients, private insurers and taxpayers. Pharmacists with a modicum of professional self-respect would refuse such inducements without hesitation.
Medical/patient ethics must be based on trust and demand transparency. How can a patient trust the recommendations and advice of a pharmacist who is accepting payoffs from a manufacturer? If the dispensing fee pharmacists charge is insufficient to sustain a profitable business, fix that deficiency, but not by relying on under-the-table payola.
Of course Shoppers' Drug Mart and Rexall are no longer pharmacies; they are corporate conglomerates marketing a multitude of products other than drugs and professional ethics are of little or no concern. In their ethical system, supplier kick-backs are perfectly all-right if they contribute to a better bottom-line.
It comes as no surprise, therefore, that Shoppers' first response is to cut services to patients - the elderly and the ill - rather than fix a possible inherent flaw in its business strategy. Cry all the tears you want Shoppers'; taxpayers and consumers have will have little empathy for your fabricated distress.
