How different configurations of pharmacare could affect pharmacy bottom lines

Pharmacare legislation became law earlier this month with a bill that included contraception, many diabetes medications and diabetes supplies. However, who exactly it will cover and how it will be covered is still largely unknown, and the details could have a profound effect on pharmacy workloads and revenues. The first step is for Health Minister Mark Holland to name a committee that will make recommendations on how pharmacare is implemented. Both the Neighbourhood Pharmacies Association of Canada and the Canadian Pharmacists Association (CPhA) are advocating for pharmacy representatives to be part of that committee. “Pharmacists will hopefully be at the table throughout the whole process,” says Joelle Walker, vice president of public and professional affairs for the CPhA. “They are the ones who are implementing the program at the front lines.”One of the main things that’s up in the air is how the system will work. Will it cover all Canadians or just uninsured ones? Will government insurance be used for these drugs, and private insurance not be involved? Or will it be some sort of a mixed-payer system, where Canadians could use their private coverage and the public system? “[That decision will be] driven by data, science and evidence," Holland told the Canadian Press.Holland previously said these drug categories would be “universal, single-payer, first-dollar coverage.” Before that, he had said that people would be able to choose whether to use their health coverage or the federal plan. “The government has said we’re going to go single payer on these medicines, but how this all gets done is still complex. Are they going to lose their private coverage? Will we have dual coverage? There are a lot of questions," says Shelita Dattani, senior vice-president of Pharmacy Affairs and Strategic Engagement at Neighbourhood Pharmacies.Pharmacies advocate for mixed-payer pharmacareThe CPhA and Neighbourhood Pharmacies are both advocating for a mixed-payer system. That system has multiple benefits, says Dattani, who presented to the Senate Committee on Social Affairs, Science and Technology about pharmacare. One is that it directly impacts pharmacies' bottom line, as a single-payer system would lower both dispensing fees and markups, which make up the majority of most pharmacies’ revenues. Dispensing fees are expected to have the biggest impact, though markups would also be affected. In Ontario, for example, the Ontario Drug Benefit Program pays pharmacies a dispensing fee of $8.83, while private plans pay an average of $11. The CPhA asked the Senate to consider how pharmacare would affect pharmacies’ bottom lines and to include dispensing fees as well as the costs of the drug. “We wanted to see was a formal recognition that pharmacare isn’t just about the hard cost of the drug but also about pharmacy services that go along with it,” says Walker. Neighbourhood Pharmacies created a submission to the Senate that included an analysis of these repercussions. It found that a national pharmacare program that covered contraceptives and diabetes medications to both people who are uninsured and those with existing coverage would lower pharmacies' revenues by $43 million a year. An impact on government costsIt’s also cheaper for the government: covering every uninsured Canadian for diabetes and contraception would cost $300 million a year while covering every Canadian for those medications would cost $900 million, according to Neighbourhood Pharmacies estimates. “If you think about how much money we have to spend on this, our view is it would be a lot better for more Canadians to target a broad range of disease groups but fund those who don’t have any coverage versus people who already have coverage and who aren’t [having trouble],” says Walker.Michael Law, Canada Research chair in Access to Medicines at the University of British Columbia, believes that it’s not that simple. The public cost would increase, he says, but for many people, it would be offset by not having to pay the “implicit payroll tax” of paying for their private coverage. Despite that, he says it's too soon, and there are too few details for him to know which model he feels is best. On the other hand, Dr. Fiona Clement, director of the Health Technology Assessment Unit at the University of Alberta, favours a single-payer system. “From the evidence that we have of other places, legislating or enshrining private insurance as part of the model to establish complete population coverage has resulted in complex models where each individual has different levels of coverage. If the end goal is that every Canadian has the same coverage, private insurance will not achieve that,” she says. She adds that having a single-payer system would allow the government a stronger position to negotiate drug prices. Implementation and disruptionsAnother reason the CPhA and Neighbourhood Pharmacies favour a mixed plan is that implementation is simpler. Both Dattani and Walker cited OHIP+ as an example of possible disruptions from changing people to a government plan. “[During that] one of our member pharmacies had a cancer patient who was a child, and that child was getting chemo, which was covered by the parent's plan, but when the switch happened, their chemo wasn’t covered by the OHIP+ coverage,” says Dattani. The doctor had to fill out an application through the exceptional access program, and the child didn’t get their chemo for eight weeks. Neighbourhood Pharmacies is also concerned that a public formulary would be smaller than private ones, increasing the chances of shortages and limiting choice in medications. Canadians’ preferencesAnd both associations argue that Canadians don’t want to lose their private plans. “There’s a system that works quite well for a lot of Canadians right now. Public plans are generally less comprehensive, and we don’t want to bring everybody down to the basic level; we want to bring everybody up,” says Walker. Neighbourhood Pharmacies also conducted a 2020 poll that showed 80% of Canadians were satisfied with their drug coverage and 75% did not want their benefits replaced. “Most Canadians are happy with the drug coverage they currently have, and they don’t want to see it disrupted,” Dattani says. “We have to listen to those things.” What comes next? Many of the practicalities will be decided in deals the federal government will negotiate with the provinces, which they hope to do by the spring. B.C. is the furthest into this deal, as the province has already agreed to a memorandum of understanding with the federal government. Alberta, on the other hand, is reluctant, with its Health Minister Adriana LaGrange saying it would opt out of a federal plan and prefer to have the funding go to its Alberta Blue Cross program. Quebec, which has its own pharmacare program, has also expressed its desire not to participate but to be compensated. The federal government is racing against the threat that an early election could lead to Conservative Leader Pierre Poilievre scrapping the plan or minimizing its impacts. “A conservative government could feasibly march into office, add the pharmacare amounts into the health transfer, and just wipe their hands of it,” says Law. He’s worried that the timing puts the entire plan in jeopardy, but he’s hopeful it will get done in time. “We’ve taken so many kicks at the can on improved pharmaceutical coverage in Canada—this goes back to the 60s—and it would be pretty sad if we lost yet another window of political opportunity to improve access to medicines.”

How different configurations of pharmacare could affect pharmacy bottom lines

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