Government shortcuts spell disaster for health program beneficiaries
WHAT IT MEANS AND WHY IT’S IMPORTANT Once again, government seems to be mangling the delicate balance among pharmacies, generic drug suppliers and consumers. Ontario lawmakers and health “reformers” are doing it the old-fashioned way: by seeking short-term cost cuts at the expense of long-term savings.
(THE NEWS: Shoppers Drug Mart responds to Ontario’s revised generic pricing rules. For the full story, click here)
In the United States, pharmacy retailers and generic drug makers have pleaded with Congress and federal regulators, at least since the passage of the Deficit Reduction Act of 2006, not to cut generic drug reimbursements in such federal programs as Medicaid and Medicare. They assert — quite rightly — that cutting the payment rate for generic drug dispensing to lower healthcare spending for those programs actually raises prescription drug costs.
How? By killing a critical incentive for pharmacists to dispense the lower-cost generic, rather than the higher-cost branded drug. Given the draconian cuts to Medicaid generic prescription reimbursements advanced by the DRA, why should a pharmacy lose money filling a Medicaid script with a generic when it could fill with the brand at a more favorable reimbursement that preserves profit margins? It means shifting the burden onto taxpayers, rather than the pharmacy, but who can blame retail pharmacies for not wanting to dispense medicines at a loss?
Passage of the health-reform act last month has done much to prevent those cuts in the United States, by establishing a more equitable generic payment system for Medicaid. Not so for pharmacy providers north of the border.
This time, it’s a Canadian provincial government shooting itself in the foot. The Ontario Liberal Government plans to cut generic prescription drug prices for patients covered by the Ontario Drug Benefit Program in half — from 50% of the equivalent brand name price for multisource generic drugs to 25% of the brand price. The cuts follow more than nine months of apparently fruitless discussions between pharmacy groups and Ontario’s Ministry of Health & Long-Term Care on alternate ways the government could save healthcare dollars.
Toronto-based drug store giant Shoppers Drug Mart is helping lead opposition to the plan. The company said it is “strongly opposed to the changes … and believes that they will have a direct negative impact on pharmacy services and patient care in the Province of Ontario. “The plan indicates an unreasonably low rate of reimbursement compared to what was proposed by community pharmacy,” said the company. It also “suggests that the Ontario Liberal Government will further interfere in the commercial relationships between generic manufacturers and pharmacies, and that this government will play an increased role in the regulation of private sector drug benefit programs — programs which it does not fund or pay for,” noted the 1,220-store drug chain.
Compounding the problem for pharmacies, according to Shoppers, is that “the Ontario Drug Benefit Program already benefits from some of the lowest generic drug pricing in the country, and the province pays the lowest dispensing fee in Canada.”
Pharmacy leaders in the province spent long hours proposing alternatives that they said would have saved the program billions over the next few years. If adopted, they asserted, those proposals “would save the government money, enhance pharmacy services and improve efficiencies, provide greater patient access and at the same time, ensure the long-term economic viability of community pharmacy and the Ontario Drug Benefit Program.”
The proposals were relatively modest: a less severe cut in generic dispensing rates; a small increase in the tight-fisted $7 dispensing fee to pharmacies. They also included giving generic drug makers and pharmacy retailers a freer hand to negotiate supply agreements “in accordance with ordinary commercial terms,” and “enhancing drug utilization management programs by implementing such measures as therapeutic substitution and increased generic prescription utilization initiatives.”
It isn’t rocket science.
PBGH reports cost-effective diabetes management in Pittsburgh
PITTSBURGH Patients diagnosed with Type 2 diabetes in Pittsburgh were more likely than similar patients nationwide to receive A1c, blood glucose, serum cholesterol, ophthalmologic or urine glucose tests than those in other areas, but best-performing regions use the same management services at a higher rate, according to a report released Wednesday by the Pittsburgh Business Group on Health.
The report, based on data from 2007 and 2009, also found that the disease was managed in a more cost-effective manner in the Pittsburgh region, compared with other regions around the country. The report is meant to help employers assess whether their diabetes management strategies are working to change employees’ behavior, improve health and contain their healthcare costs.
“In only our second year of analyzing and comparing this data, we’re already seeing a positive trend in the management of diabetes in the Pittsburgh region,” PBGH executive director M. Christine Whipple said in a statement. “We’re looking forward to analyzing the 2009 data, which will give us three consecutive years of trends and enable us to say definitively what direction diabetes management is taking in the Pittsburgh region.”
Shoppers Drug Mart responds to Ontario’s revised generic pricing rules
ONTARIO Canadian retail pharmacy chain Shoppers Drug Mart has responded to the Ontario government’s decision to further drug reform measures in the province by reducing generic drug reimbursements for Ontario Drug Benefit Program beneficiaries.
The Ontario Liberal Government announced Wednesday that generic prescription drug prices for patients that benefit from the province’s drug benefit program will be reduced from the current level of 50% of the equivalent brand name price to 25% of the equivalent brand name price. The announcement also indicated that planned reductions in generic prescription drug pricing would also be extended to the private sector over a multi-year period. Shoppers Drug Mart said that such changes will impact its sales and profitability and the government “will further interfere in the commercial relationships between generic manufacturers and pharmacies” and that the government will play an increased role in the regulation of private sector drug benefit programs –– programs, Shoppers said, the government does not fund or pay for.
“These announced reductions in drug pricing and pharmacy reimbursement, on the heels of significant cuts just four years ago, will only serve to further commoditize healthcare and the practice of community pharmacy at a time when Ontarians need it most,” said Jurgen Schreiber, Shoppers Drug Mart president and CEO. “These announced changes reinforce our view that in the long-term, the successful players in retail pharmacy will be those with size, scale and an ability to leverage operating efficiencies. Shoppers Drug Mart, with the largest integrated pharmacy network in the country and the leading market share, will be challenged in the short-term to adjust to the changes announced [Wednesday], but remains well-positioned for the long-term.”
Discussions regarding changes to the Ontario Drug Benefit Program have been underway for more than nine months, Shoppers said.