Ontario Fights back against High Cost of Generic Drugs – Ends Pharmacy Rebates from Drug Companies – Cornwall Ontario – April 8, 2010

Cornwall ON – Good news for Ontario residents as the Liberal Government is attacking the hidden cost of generic drugs in restricting the drug companies from giving rebates to pharmacies; a practice that inflated the cost of drugs in the Province.


When Ontario made an initial, tentative step to rein in rebates and cut generic prices in 2006, it sparked a firestorm of opposition from pharmacies, whose message of dire consequences dominated media coverage. As it turned out, the industry has thrived, with 140 more stores now than before the changes. The drugstore trade groups have this time hired high-profile lobby and public relations firms to help press their case.

We used bold type for the last sentence.   The drug lobby hired HIGH PROFILE LOBBY & PUBLIC RELATIONS FIRMS.

Hope most of you got that.    Do you the taxpayer get to have a lobby group fight for you to pay less taxes to support these types of practices?  Nope.

The problem with our medical system is that almost every group at the table seems to have a voice except those that pay the ticket price; you and I.

Partisan politics apart; good for the government for taking a step forward in the fight against spiraling medical costs.

What do you think Ontario?   You can post your comments below.

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  1. The high cost of medicines can be a burden for many who pay out of pocket, unlike doctor visits which are billed directly to the government and are paid for by taxes. Unfortunately, the provincial government cannot run the system any more efficiently as evidenced by the over $1 billion wasted on e-health and the $39 a call they pay for tele-health, all coming from taxpayer pockets. To ensure patient care and a sustainable system of pharmacy, the government should be working with pharmacists. The facebook groups Ontario Community Pharmacies, and Say No to drug vending machines and Yes to Pharmacists present another side of the issue.

  2. Ya, so you think this is a good thing, that once again the government has stepped in and messed with the system. My wife took a course threw the government to become a pharmacie tech, (on our tax dollar).just 3 years ago. Now she was told today that in 3 months she will not have a job. These kick backs that the drugstores were getting for putting medications on their shelves. Were paying to have home delivery, blisterpacks, breaks on dispensing fees, etc. Just remember people, nothing is free in life.
    And once again our tax dollar will pay for my wife to re-educate herself, for some what of another field. That our government thinks that is in need…

  3. Documents has been been presented to the Ontario government showing the cost of dipensing a prescription (not including any profits) is $13.74. The government presented their own figures and said “No, it costs only $12.49”.
    My question why is the governmentpaying $7.00 for the past 20 years & with their new Reform increasing it to $8.00 only. The government knows that the Professional Allowances are the main source for SMALL INDEPENDENT PHARMACIES to remain viable due to the Funding Gap created by the Ontario government over 20 years. Allowances filled that gap with a big portion going to patient care and the rest covers wages and rental to keep the pharmacy doors open.
    It is unfair to take it out without being able to fill that gap.Independent Hardworking Pharmacists are the ones who are going to be severely affected. Generic Manufactures are not Affected at all and obviously the Ontario Government Is getting a POLITICAL WIN. In brief only The Pharmacists and The Patients are going to pay the price for this POLITICAL DRUG REFORM.

  4. First, these rebates, called professional allowances, are not hidden. They are transparent and reported to the government. They are controlled by the government to ensure they are spent on direct patient care. Eliminate the allowances, you eliminate that level of care. Period. It is a health care spending cut. Patient’s will be impacted from these cuts, plain and simple. The government reported that 70% of allowances were spent on labour. Well, they should do the math – cut the allowances, you cut labour. Cut labour, you cut access to a pharmacist. Without that access, you impact care. This isn’t a case of pharmacies lining their pockets, these allowances allow pharmacies to operate without financial loss.

  5. Hi Mike,

    Can you please point out which services it is that these Pharmacies provide that are to be cut please?


  6. -Free Delivery (important to seniors)
    -Comliance packaging that makes managing medications easier, and delays admittance to long-term care facilities
    -Clinic days, where pharmacists evaluate patients disease states, medication profile and make suggestions to improve care
    -Over-the-counter medication recommendation
    -Prescription medication counselling
    -Numerous phone calls from patients that save government $$ by avoiding emergency room visits or telehealth calls (which average $39 a call by the way)
    -Advancing medications when patients have no repeats and can’t see their doctor – saves a trip to an after-hours clinic to get a new prescription
    -faxing the physician for patient repeats, which saves $$ by avoiding a simple check up with the MD for nothing more than repeats
    -Clinical interventions on prescriptions that result in tracking down physicians, making recommendations and altering prescriptions
    -dealing with private insurance plans when there are issues adjudicating online
    -assisting patients that are applying for the Trillium Drug Benefits program
    -Clinical talks to both patients and physicians, to help improve care (done a lot in my area)
    That’s ones I could come up with in 2 minutes. There are plenty more. All these result in cost savings for the government. The example I always like to give is the mother that calls a pharmacy at 3am because their child is vomiting. The pharmacists triages the patient, suggesting fluids, usually avoiding ER visits or telehealth calls. IMMEDIATE cost savings. And guess how much that pharmacist gets paid for that? zero.
    These changes are short-sighted, made by people looking to cut costs.

  7. Mike most of those services are normal services and have been for generations. Are you sure you aren’t a pharmacist or an lobbyist of some sort? Are you suggesting that some pharmacists won’t provide advice or cause discomfort and stress to patients because they won’t be able to get kick backs from drug companies anymore?

  8. I am a pharmacist. And I am saying pharmacies will not be able to provide these services because there will not be ample enough funding to afford these services.
    Quick pharmacy economics:
    Cost to prepare a prescription – $13.80
    Average reimbursement from Ontario Drug Benefits – $8.70
    What this means is, on average, everytime a prescription is filled for an Ontario Drug Benefit patient, the pharmacy loses $5. That, my friend, is not a good business model. The government has been so gracious to give us a $0.56 raise in dispensing fees in the last 20 years. But at the same time the cut prescription markup from 10% to 8%. That virtually negates the fee increase. We have had no increased funding in 20 years, despite the CPI growing at 50%. Costs go up, labour goes up, profitability stayed the same.
    Professional allowances filled that gap for years. Take them out, and the first thing pharmacies will have to do is cut costs to survive. First to go – extended services, such as delivery, compliance packaging or clinic days. i’m not saying we’ll get rid of them all together, but instead, we may require patients to pay… what that does is quickly reduce the number of people that will use those services.
    Next to go – labour. Walk into a pharmacy, count the staff. Now imagine that staff with one less pharmacist and one or two less technicians. Ever had to wait 20 minutes for a prescription? It will be worse… much worse. With less staff and more workload (since the government is asking us to do more with these changes) a pharmacists time to spend with patients will become limited.
    Pharmacists want to provide advice, we want to help patients, it’s what we are trained to do. I spend nearly an hour with a 95 year old man on Tuesday, post hospital admission for 2 heart attacks, arranging his meds in compliance packaging, explaining expectations and side-effects, so that he can start living with his daughter and son-in-law instead of him moving to a Long-Term Care Facility. That consult saved the government money. How much was I paid for it? Zero. However, it is funded indirectly by professional allowances.
    The key here is when you say “most of those services are normal services and have been for generations”. You are absolutely right. But without adequate funding, they will cease to exist. And that will only impact patients.

  9. Admin..How many times does the average senior have to visit the doctor to get repeat medications that they have been taking for years. That costs the system an extra $35 a visit. The abuse of health care is really wide spread. Pharmacist have had to rely on generic rebates in order to provide the services they do. You do the math the average prescription rate is approx. $10. Pharmacies are open 12 hours a day- approximately 75 hours a week . The average pharmacy may do 100-150 prescriptions. Rent in most places cost $5,000 per month – this is an understatement because most pharmacist pay way more than this. An average Pharmacy tech makes $15/hour.. So rent costs $60,000 , one tech costs $58,000 lets not include license fees ($800.00), hydro,gas,computer fees (close to $500.00 a month),texts, drug info mandatory subscriptions and so on. So lets just look at the tech and rent only …that’s $118,000. We will be making $10 times 150 prescriptions –that’s 150,000 dollars>>>so I guess the pharmacist in your world is worth $32,000. I can work for the government official ( read the newspaper) and they make over $100,000 and have a pension, which most pharmacists do not get. We do not even gets benefits because small pharmacies do not have funds to pay out for drug plans for their employees. I like to ask the minister…why do the politicians continue to get pay raises and have probably the best pensions plans and they can get all this for completing two 4 years terms.. The taxman pays for all this too. In fact the public should have the right to know how many politicians the public supports.. and how many government jobs that the public support that are utterly useless. Their jobs are far more important than treating patients…what a laugh…Look at the mess they have made….eHealth over 1 billions wasted paying high priced consultants…The funny thing is politicians are never accountable for their actions. Let the pharmacist stop answering questions for free and send all patients to doctors or hospitals…great solution…. Remember Pharmacies are businesses too…we take risks like every business man. All pharmacies do not succeed. Why do we pay a thousand folds for a pair of designer jeans, why can physical capable people on welfare, why does the government charge us so much for liquor when it is so cheap to produce,…business is business. Why do pharmacists have to justify our existence, why do we have to show our fee structure…..what did your doctor make on your last visit….in fact how patients visit multiple doctors and waste peoples money….I definitely feel that there is abuse in pharmacies, but those are few….the person who really is getting hurt is the pharmacists that only have one pharmacy and just want to practice pharmacy the way that they were taught..to take care of patients.. those who abused it should be charged. Believe me the government knows those who abused the system…..rebates should have been capped….but let the little guy who cares survive. But remember those who start businesses also should have the ability to make money as all business want to…….I will leave you with this….Why does the government get away with free lunches and have budgets when the common person does not….we all need to be accountable. Pharmacists are just a target to avoid attention to the government who has failed us time again with scandals.

  10. Hey admin, please don’t accuse others off the bat if you’re going to invite commentary. “Normal services” are dictated by the business environment. I’m surprised you’re arguing against that. Pharmacies are not mandated to provide compliance packages, free deliveries, etc. Shoppers’ share price plunged 10% today. Do you think they’re going to watch their profit disappear lying down as their investors panick? No, they’re going to have to compensate by either raising prices somewhere else via dispensing fees or mark-ups, and/or cut expenses by firing employees, cutting store hours, and cutting services. That includes “normal” services, and that also means that you’re going to be waiting quite a while longer for your medication and yes, you probably won’t get thorough counselling because suddenly one pharmacist is managing the entire pharmacy by himself instead of having 2 technicians to assist with the workload. You know who this will hurt the most? Consumers and especially seniors. What WILL this do? Balance the government’s balances after throwing money down the toilet in eHealth. Of course, the general public won’t understand this because they probably haven’t taken a business or economics course in their life.

    Throw accusations all you want, but at least address the very valid points being brought up here.

  11. Hi Chad, I didn’t accuse the poster. I asked a question and I did that because we have a policy of disclosure on this site. IE If someone simply is expressing an opinion they can stay anonymous; but if they are a black op for lobby group or for a party to a story, or member of the media they have to disclose. There already is enough manipulation of the media in this world.

    I’m sure there are issues for pharmacies. While this isn’t a perfect analogy I’m about to use I’m still going to suggest it. If you stopped a business from selling a certain product they’d lose money. It could even destroy their business, but if a product is dangerous you have to stop its sale.

    In this case the government is acting in what I personally think is a good measure to fight the growing impact of large scale lobby efforts in the drug industry.

    Here’s a question for you. Say you have generic company number one that makes good quality products, and generic company number two that isn’t as good, but gives pharmacies better kick backs. That’s a slippery slope to me. Generics are generics. They are not “exact” copies of the name brand drugs.

    But that’s a whole other issue. Thanks for posting btw and welcome to the Cornwall Free News

  12. Hi Mike,

    Thank you for clarifying that you are a Pharmacist. Your comments are most welcome. We have a disclosure policy here at The Cornwall Free News and we simply try to enforce that for the integrity of debate and conversation.

    email us at info@cornwallfreenews.com as we are looking at doing a radio segment on this issue. You bring up some very interesting points.

  13. I do not understand how this rebate thing works fully, because I am just joe taxpayer and a grad of the Ontario education system. If the rebate is not given from the drug company, will the drug not cost less?
    With the rebate taken out of the cost, the drug should cost less.

    Some drug plans seem to be going to fixed maximums, and the dispensing fee stated above is above mine, so my company does not want us to go where fees are higher. This is another issue.

  14. Just a note on the delivery service. Seems to me that you can get beer delivered for a fee, so this may be a service someone could start up. A Provincial make work programs Ministry will need to be started, licenses issued, Inspectors hired, training programs etc. LOL

  15. Do pharmacies make $ profit on the medications they sell (generic or brand name)? I was under the impression that Ontario provided for a 20% mark up on medications in addition to the dispensing fees (please correct me if I’m incorrect).

    Do brand name pharma’s provide this “professional allowance”? Would like more information about this issue.

  16. Hi James,

    I spoke with a few pharmacists today and they do in fact make a mark up on prescriptions, but the numbers bandied were nowhere near 20%. It all adds up, but then so do the labour costs as well.

    We’re going to be doing a segment on this topic on Seawayradio.com next week and I’m already working on lining up some guests so if anyone reads this that is in the industry or is a pharmacist feel free to email us via info@cornwallfreenews.com or at 613.361.1755

    Jamie Gilcig – The Cornwall Free News & Seawayradio.com

  17. Hi admin, thank you for clarifying that. I’m a pharmaceutical chemistry student by the way, so you can choose to take my opinion with a grain of salt or not, but you can also choose to research this issue more before cheering the government’s decision. It’s not black and white.

    “Here’s a question for you. Say you have generic company number one that makes good quality products, and generic company number two that isn’t as good, but gives pharmacies better kick backs. That’s a slippery slope to me. Generics are generics. They are not “exact” copies of the name brand drugs.”

    It’s a moot point because generics have and always will compete on price, not on quality. They are regulated to have the same bioequivalence as brand name drugs within a +/- 10% range. A pharmacy will never pick one generic over the other just because its bioequivalence is a little better because it’s a negligible difference, and even brand name companies don’t have much to say against generics these days because the effects are so similar, nevermind comparing generics to other generics!

    What this will affect are costs since ODB reimbursement will be cut to 25% of the brand name cost compared to 50% of the brand name cost. I can tell you right now that this will push manufacturers to cut costs by changing ingredients (i.e NOT improve quality) and/or closing up shop. The latter will only affect the smaller manufacturers, and I fear that less competition and slower development times will be the result as smaller generic manufacturers now have less incentive to compete against the big boys.

    As I mentioned in my first comment, this is only about cost, and the government will benefit for the most. Seniors and others covered by ODB will actually be hurt by this for the reasons I mentioned. Others will benefit from this, but they are not the ones that are taking the vast majority of medications in Ontario.

  18. Check you facts. The liberal government did hire a consulting firm. Not sure if you’ve ever hear of it. Called Mckinsey Consulting. It’s only the most famous consulting firm in the world.

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