Consumers raise concerns over drug policy change
TORONTO - Diane Stretton Keane visits her downtown Toronto pharmacy about four times a week and says she doesn't want to be forced into trading in consultations and care for lower prices as the industry and Ontario government battle over soaring drug costs.
"When it comes to health, nothing should be a trade-off," she said in an interview Friday as generic drug makers and other industry players heaped more criticism at Ontario's moves to lower the costs at generic drugs.
After 18 years of meeting with her local pharmacists for consultations and advice, Stretton Keane said they have become her friends.
Pharmacists say that level of care and service is largely funded by allowances they receive from generic drug makers, which help to offset a gap in the dispensing price consumers pay and the actual cost to fill a prescription.
Pharmacies, including Shoppers Drug Mart, Rexall, Guardian and others have come out strongly against the provincial government cutting so-called funding allowances -- the money paid by generic drug makers to drug stores to get their medicines on the store shelf.
The government said the allowances inflate drug costs for consumers and the ban will reduce the price of generic drugs by half --to 25 per cent of the cost of a name brand drug.
Ontario's Health Minister Deb Matthews said she knew there would be strong opposition to the proposal, acknowledging pharmacists will have to change their business models because reforms will make the business of pharmacy "different."
Shoppers Drug Mart (TSX:SC), with 600 outlets in Ontario, said Thursday it is cutting jobs, store hours, extra services and new stores in the province in the wake of the government moves, which could cost the industry up to $1 billion in revenue next year.
Matthews said the industry reacted similarly when the government introduced the first stage of reforms in 2006.
"We heard the very same thing we heard that drug stores were going to close we heard that services would be cut," she said. " (but) they haven't closed. They've opened 140 more."
If the plan works, other provinces may opt for similar cuts as they also struggle to control the cost of public drug plans that eat up a growing share of health care spending.
Ontario's plan, partially a bid to reduce the costs of the publicly funded Ontario Drug Benefit Plan, could have an immediate influence on Quebec, where drug maker listing agreements require them to match the lowest price in Canada.
It could also factor in to negotiations between the B.C. government and the pharmacy industry to determine a new contract for generic drug pricing before an interim agreement expires this summer.
Stretton Keane said she's called her MP to voice her concerns. She said she is satisfied with drug prices now, and is more concerned that job and service cuts would be disastrous for patients used to a gold standard of service.
"(Politicians) don't have the experience to know what it's like to be the regular consumer having to worry about (drug stores) cutting staff or cutting hours."
Meanwhile, employers, unions, nurses, and retirees have applauded the cost-cutting measures.
Toronto student Naser Iqbal said he believes big drug companies and pharmacists like Shoppers can afford to cut prices.
"They're just cheaping out; they just want to make their money," he said. "So to keep their profits they say we're just going to cut services. . .I say that the government should really bust them."
The government intends to eliminate the cost to the public plan as soon as the bill is passed, but private employer benefit plans and out-of-pocket purchasers will have to wait until 2014 for the cuts to fully take effect.
Matthews said lowering drug prices will increase the number of drugs available for people.
But Jim Keon, president of the Canadian Generic Pharmaceutical Association, warns that slashing prices could mean fewer low-cost medications on store shelves, forcing consumers to pay name brand prices.
"If you drive the price down too low, what you're going to end up with is continuing to pay for the brand name product," he said.
He says price cuts will squeeze revenues and drug makers will have to evaluate whether they can continue to manufacture products with low profit margins.
"The government's alternative is to pay the dollar that the brand product costs," he said.
"If it's a new product and the generics don't develop it, the government and others will have to continue to pay (top) dollar for a much longer period of time because generics aren't available."
He said the cuts would hurt generic pharmaceutical companies in Ontario, where 80 per cent of Canada's industry is based and could result in some job cuts to its 9,000 person workforce.
Ontario's biggest generic drug makers include Teva Canada, Apotex, Ranbaxy Pharma, Sandoz Canada and others.
Matthews acknowledged the industry's importance and the thousands of jobs it creates in Ontario, adding she believes when the drugmakers look further into the reforms, they'll find benefits for the industry.