Drug System Reforms
Ministry of Health
Professional Allowances Announcement
April 8, 2010
Deb Matthews, Minister of Health and Long-Term Care: Good afternoon, everyone. As you can see I'm joined here as well by Sid Ryan, President of the Ontario Federation of Labour. Thanks very much for being here. I'm delighted you could be here today.
The day that I was appointed Minister of Health and Long-Term Care for the Province of Ontario, which was six months ago today, I pledged to do my best to ensure that Ontarians would get the very best value for every dollar we spend in healthcare, and that we would continue to improve both access to healthcare and the quality of our healthcare system. With that commitment in mind, I had a responsibility to take a good hard look at Ontario's prescription drug system.
As a government it's our responsibility to make sure that we are doing everything possible so that we can keep as many drugs as possible as affordable as possible for as many patients as possible. You heard mention of that in the Throne speech. You got more details in the budget. It's all part of our Open Ontario plan and I'm here today to give you the details.
In 2006, we took bold steps to rein in the cost of generic drugs and expand patient access to medicines. Since that time we have reinvested over $1 billion and added 150 new prescription drugs to the formulary, 38 of those are cancer drugs. Drugs like Nexavar, which is helping to treat Ontarians with kidney cancer, or drugs like Lantus, which helps diabetics across the province control their blood glucose levels. In short, the reforms made a difference. We made progress, but we need to do more. We can and we are determined to do better.
Today I'm here to let you know that our government intends to pursue changes that would enable further reforms to the Ontario drug system. Once implemented, these reforms would give patients access to more medicines at lower cost. We plan to make two changes that will be especially meaningful to Ontarians.
First, our government intends to propose regulations that would lower the cost of generic drugs by at least 50% across the board to 25% of the original brand name drug. That cuts in half the price for the generic drugs that we as a government buy and it's a more than 50% reduction on the price of generic drugs for Ontarians who pay for their drugs out of pocket or through insurance plans.
Secondly, we've introduced legislation that would, if passed, clean up a system of payments from generic manufacturers to pharmacy owners that inflates the cost of drugs and has been open to abuse. These are not the only changes we're making. The government would also propose regulations that would increase dispensing fees that government pays to pharmacies and boost financial supports for pharmacies in rural and underserviced communities.
We also plan to compensate pharmacy directly for specific services that pharmacists provide to patients, services such as those that are already provided by pharmacies to people in long-term care homes. We know that these reforms are in the patient's interest. It is Ontarians' interest. It is the right thing to do because these changes would ensure that we give Ontarians access to even more drugs, that we further empower pharmacists to use their skills and trainings to the fullest and ensure that they are fully compensated for helping Ontarians. These changes would also maintain the crucial access to pharmacy services in rural and underserved areas.
Before saying more, let me concentrate for a moment on the issue of professional allowances and why we have introduced legislation that would, if passed, allow us to eliminate them. As Helen Stevenson has explained, professional allowances were introduced as part of the 2006 reforms in large measure to help address the rampant abuses that had existed previously with generic rebates. These allowances, as I said, are paid to pharmacies not by the government but by generic drug companies in exchange for stocking their products. Let me be clear. This money is paid to pharmacy owners, that is the companies that own the drugstores, not directly to pharmacists.
I will not go so far as to call them kickbacks or rewards, but I can tell you there are people who would do that. Whatever you want to call them, one thing is for sure: they're very, very large payments. They're estimated to be $750 million in Ontario alone this past year.
This is the main reason that we pay so much more for our generic drugs than countries like the United States, the United Kingdom. So when you take a step back and you think that Ontario is one of the largest drug purchasers in the world, you quickly realize that something doesn't add up. It just doesn't make sense. We're not getting the deal we deserve. We need to get the best possible value for the money we spend on healthcare. That's my job.
But there's an even more urgent reason for acting, one that we as a government and I as a Minister cannot turn a blind eye to, and that is that the system currently is being abused, and tackling the abuse by some pharmacies and wholesalers that has been couched as professional allowances is fundamental to further reducing generic drug costs.
As part of the 2006 reforms, we put strict rules in place about the use of professional allowances. These included in legislation the following three requirements: that pharmacy owners report the amounts they receive in professional allowances and how those amounts are spent; the second requirement that professional allowances be used only for direct patient care; and thirdly that professional allowances be capped at 20% for drug programs paid for by the province.
To enforce those rules we put enhanced monitoring and inspections in place. The results are far from encouraging. Pharmacy reports -- these are the reports from pharmacies to government -- show that at least 70% of these payments have gone to salaries, bonuses, fringe benefits and not toward patient care as was legislated. We found that far too many individual pharmacies have provided no disclosure whatsoever in the latest reporting period and that some pharmacies and wholesalers were found to have entered into a resale scheme which triggered multiple professional allowances to be paid for the same product.
The bottom line: the system of payments is not working for the people of Ontario. It is being used by some pharmacy owners and wholesalers as a scheme to enrich pharmacies instead of a payment system to purchase better patient services. And the result is higher-priced generic drugs for Ontario's patients.
So today I have a simple message for Big Pharmacy. The days of artificially high drug prices paid on the backs of patients and taxpayers are gone. And they are gone for good. That's why we've introduced legislative changes that would, if passed, address this problem by eliminating professional allowances.
In closing, I want to return to first principles. We are a government that stands up for patients, and in this case we think we have a responsibility to act. We need to make sure that Ontarians have access to lower-cost drugs and we need to clean up a system that has been open to abuse. This is not about saving money. This is about getting better value for the money we spend on drugs. It's about shifting spending from expenditures that benefit the pharmacy business to expenditures that benefit the people of Ontario. It's about giving all Ontarians a fair price when it comes to drugs. Our government is prepared to act in defense of our objectives because we know they are the right ones for the people of Ontario.
We will add, as we have over the past four years, more drugs to the provincial formulary. We will boost the amounts we pay pharmacists for the valued services they provide. In fact, we'll do even more for pharmacists in rural communities and in underserviced areas because we need to ensure that people who live in these communities have access to pharmacists. These are needed reforms. They are necessary reforms. And I'm proud to stand here today and announce our intent to make these changes because I know we're making them for 13 million good reasons. That is for all Ontarians.
I'd now like to – I'll take your questions after, but first I'd like to invite Susan Eng, Vice President of Advocacy for the Canadian Association of Retired People, or CARP, up to the podium to say a few words. Thank you.
Susan Eng, Vice President of Advocacy, Canadian Association of Retired People (CARP): Thank you very much, Minister. We actually don't use our full name anymore as some of you have heard me say because so many of our people can't afford to retire, so we go by the name CARP. And that is actually why we are so supportive of the announcement here today.
The issue of drug costs has been a constant one for our members. The people who are not so well off have told us stories of people splitting their drugs, not taking them when necessary, not renewing their prescriptions because of the cost. And this despite the fact that for seniors here in Ontario it is covered by the Ontario Drug Benefits program; however, not everything is covered and some people who are under the age of 65 will not have that support. So the cost of drugs for older Canadians continues to be a major issue. If anybody is taking more than three drugs at once, chances are good that they will be an older Canadian given just the way life happens. And so in this case it becomes an extremely important change that is occurring here today.
Our people also are people who are focused not so much on saving money or cutting taxes, although they are for that as well, but they are looking at efficient use of their tax dollars. They want to get value for their money. So they would be appalled to know that $750 million was going out every year for non-services, for services that they will not access and going straight into profits. So it will be important to them that the reallocation of the monies that are saved through these measures will be targeted to providing services, consulting services, by pharmacists who after all are well-trained to provide such services and that will also redress the concerns that many of the smaller pharmacies might have that this will cut into their profitability and ability to stay in business.
And we are particularly concerned because many of our members are in rural communities, smaller towns where there might only be one or two pharmacies. So we are very supportive of the additional measures that will protect the smaller independent rural pharmacies in underserviced areas. That's an important aspect for us.
And of course the savings will also be targeted towards making more drugs available so that there will be more covered under the public system.
We're also impressed by the fact that these rules will apply to drugs that are purchased through private means, whether through drug plans or out of pocket. And that's an important impact for people who are not covered under the public system. Consequently, we are particularly supportive of this measure. We did in fact note that there was an alert to the initiative to deal with generic drugs in the recent budget, and we of course tested that measure with our membership.
As some of you might know we send out an e-newsletter to our members and ask for their input on various things, and after the recent Ontario budget asked them what they thought of the proposal to control generic drug costs and I can tell you that 50% of the people answering that poll from Ontario were fully in support of it. Of course they were all supportive of some of the other measures for Northern Ontario energy costs and contributions to the Pension Benefits Guarantee Fund. So they split some of their support, but the vast majority of the people very supportive of controlling generic costs and you can understand why.
So I'm here to indicate that we will be communicating all of these changes to our membership so that they will be well aware of the arguments, pro and con, and that the opportunity here is that they will be able to afford their drugs better and that this will help them as they manage their own health. Thank you very much.
And sorry, excuse me. It's my duty and my pleasant duty to introduce Rick Perciante, Acting CEO of the Canadian Cancer Society.
Rick Perciante, Acting CEO, Canadian Cancer Society: Thanks. The Canadian Cancer Society strongly believes that all Ontarians must have access to cancer drugs without financial hardship. We applaud the Ministry of Health and Long-Term Care for making changes to Ontario's drug system which will enable greater access to cancer drugs in Ontario.
Canadian Cancer Society volunteers and staff are proud to be leading the charge in the fight against cancer. Our fight is a big one. Cancer is a powerful enemy. The issue of access to cancer drugs is important not just to patients but to every Ontarian. Every three minutes another Canadian is faced with fighting cancer. That means nearly all of us in this room will be affected by cancer at some point in our lifetime, either directly or someone very close to us.
According to the 2009 Canadian cancer statistics, it's estimated that 27,900 Ontarians died from cancer and another 65,100 Ontarians were diagnosed with this disease. We are here today for those people here in Ontario who are diagnosed with cancer and dealing with financial hardship issues due to their diagnosis.
When someone is faced with cancer they should not have to worry about how they're going to pay for their cancer drugs. They need to focus on their health. The stress of learning that you have cancer is difficult for anyone to deal with. Having to decide between paying for your cancer drugs or providing for your family is devastating to anyone. Having inadequate coverage has enormous implications for patients and their families and we know that as drugs become more specialized, their costs continue to increase.
The changes made today will allow the government to provide greater access to cancer drugs and that is good news for cancer patients and their families. The Society will be monitoring the government to ensure that the money saved through these initiatives will help reduce the financial burden faced by cancer patients. The Society strongly believes that all Ontarians should have access to the cancer drug that they need without financial burden. Today's announcement brings us closer to achieving that goal.
I'd now like to introduce Sid Ryan, President of the Ontario Federation of Labour.
Sid Ryan, President, Ontario Federation of Labour: Thank you. And good afternoon. The Ontario Federation of Labour represents approximately a million workers in this province covering 53 trade unions. Each and every one of them have got a drug plan in place. Each and every one of them faces enormous difficulties at bargaining tables when it comes to the cost of drugs. Many of them find that it's either maintaining the drug plan that's in place or laying off front-line workers.
We know that drugs in terms of the cost drivers are one of the most fastest-growing components of the healthcare system and when we found out that this government and this Minister in particular was about to take on this issue, the response in Labour is very clear. We're saying, "Finally, a Minister that's willing to take on the interest and the drug companies and pharmaceuticals that's driving the cost of healthcare in this province."
So we know there's going to be a backlash and we know there's going to be a tremendous battle ahead. If anybody needs any proof of that, just take a look at the industry down in the United States and Barrack Obama attempted to restructure the healthcare system. The interests that were aligned against him are the interests that will be aligned against this government. And they need to know that the Ontario Federation of Labour with its million workers and just as many retirees in this province who are on fixed incomes welcome this change and we are prepared to stand with this government on this question. I believe it's a gutsy move and it's long overdue and kudos to this Minister for having the intestinal fortitude to take on this particular issue.
Moderator: That concludes our remarks for today's event.
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