McGuinty Government Reforming Ontario’s Drug System

Ontario plans to further reform the prescription drug system to provide better access to lower-cost generic drugs for patients, while continuing to increase annual funding to the drug system as a whole.  These proposed changes include:

•  Lowering the cost of generic drugs by at least 50%, to 25% of the cost of the original brand name drug for Ontario’s public drug system, private employer drug plans, and people who pay for drugs out-of-pocket, saving taxpayers millions
• Eliminating abuse of the system by ending so-called ‘professional allowances’ – payments generic drug companies make to pharmacy owners intended to fund patient services, but are instead being used by many pharmacies as rebates to fund fringe benefits, bonuses, overhead costs and boost profits
• Ensuring pharmacists are fairly compensated for helping patients by increasing dispensing fees and paying for additional services provided to patients
• Supporting access to pharmacy services in rural communities and under-serviced areas with new dedicated funding

In 2009, generic drug manufacturers reported paying pharmacy owners more than $750 million in professional allowances, with pharmacy owners themselves revealing that 70% were used for rebates instead of patient care.

In addition, during the past year, at least 100 pharmacy owners failed to provide any documentation related to the payments they’ve collected and 650 pharmacy owners provided incomplete reports. Some pharmacies have also been involved in a re-sale scheme in order to receive professional allowances multiple times for the same product – a practice that has resulted in the government taking legal action against them.  Today’s announcement builds on steps taken in 2006 when the government introduced changes that lowered generic drug prices to 50% of the price of the original brand name drug, and helped fund access to 150 new prescription drug products.

QUICK FACTS

• Ontario’s support for pharmacies has increased by $318 million, or nearly 50 per cent, since 2003.
• Ontario pays approximately 25% – 75% more for generic drugs than many other countries, such as the United States and the United Kingdom.
• There are more than 140 new pharmacies in Ontario since reforms to the province’s drug system began in 2006. As of February 2010, there are 3,306 pharmacies in Ontario.
• Approximately half of generic drug companies are located in Ontario.
• 2.8 million people receive coverage from Ontario’s publicly funded drug system.

LEARN MORE

• Reforming Ontario’s Drug System
• Read more about how Ontarians will benefit from the proposed plans.