EMO—Mike McKinnon is stressed. And it’s because of Bill 102.
The Emo pharmacist has been making plans to buy the pharmacy portion of Emo Drugs, but now he’s starting to think twice.
“I’m just stressed out about it, basically,” he remarked Friday morning. “I have no idea what’s going to happen. . . .
“Now I want to see how this Bill 102 pans out—to wait and see what happens after the smoke clears.”
Bill 102, The Transparent Drug System for Patients Act, passed third reading and received Royal Assent on June 20, 2006.
The bill amends the Ontario Drug Benefit Act (ODB), the province’s publicly-funded drug benefit program, and the Drug Inter-changeability and Dispensing Fee Act (DIDFA), which regulates the designation of generic drug products as interchangeable with brand name drugs.
But not all regulations surrounding the bill came into force last year—some are set to take effect March 1 or April 1 this year.
And although the bill sounds good for patients, promising better value for their money and improving access to drugs, it could be damaging for the smaller, one-pharmacy towns.
“I think it will definitely affect us here,” McKinnon warned. “It’s just hard to know to what extent. I’ll probably have a better idea in six months.”
For instance, as of tomorrow (March 1), the Ontario government is set to prohibit “cost-to-operator” claims for interchangeable listed drug products, with manufacturers unable to sell a listed drug product at a price higher than the drug benefit price.
This 50 percent generic pricing rule also will be reflected—meaning pharmacies must sell generic drugs at a cost of no more than 50 percent the equivalent name brand.
“Generic companies compete, so every now and then sometimes you get some for free and the government said if you’re getting deals, we want that deal passed on to us,” McKinnon explained.
“But that’s where we make our money,” he stressed.
Ronald Sapsford wrote in a December report he recognizes pharmacists have lost revenue from the mark-up on ODB prescriptions and is reviewing the problem.
He noted they intend to provide more details on how to address the situation in the future.
But to make up for this, explained McKinnon, pharmacists have been allowed to increase their dispensing fee from just $6.57 to $7.
“It’s absurdly low,” he remarked. “The dispensing fees should be around $10-$12.”
And although the cost of drugs has gone up by 150 percent for the province’s ODB plan in the past 10 years, McKinnon noted it’s been nearly 20 years since dispensing fees have increased.
In addition, the regulation change will allow pharmacy mark-up on drugs dispensed through the ODB plan to decrease from 10 percent to eight percent, and a two-tiered pricing system on generic drugs is proposed.
“It will be a nightmare to keep track of inventory,” McKinnon said, adding he’d have to have two inventories with the new system—one priced at one level and the other at the higher amount.
“It’s pretty complicated. . . . And no one has a clue what’s going to happen,” he stressed.
Rainy River Drugs pharmacist Sarah Berg told the Rainy River Record earlier this month that she projects she’ll lose between $10,000-$15,000 on her inventory alone.
“I will have to sell drugs at a lower price than I did before that date, and had to buy them at a higher price before that date,” she noted. “I hope I don’t have to close, but I can’t stay open losing money.”
But McKinnon isn’t feeling defeated yet.
“Worst-case scenario, this place might not be sustainable, but I don’t think it’s going to be that bad,” he remarked. “But you never know.”
He noted he’d really like to take over business, but is going to play it by ear before any further decisions are made.
“Hopefully it won’t be so bad that there will just be the big chain pharmacies left. That would be kind of scary,” he warned.