Pharmacists across Alberta are voicing concern over an announcement in the provincial budget for the government to reduce generic drug prices from 35 per cent to 18 per cent.
In a Budget 2013 press release from the Government of Alberta titled Building Alberta: Health a Priority in Budget 2013, the reduction of generic prices is stated as a highlight that will benefit all Albertans because of the lower generic drug prices, but many in the industry disagree.
Nigel Lafrance is the owner at Elk Point Apple Drugs, and although he is not a pharmacist himself, he sees the impact that the changes will have.
“It’s basically taking the majority of our revenue stream away from us,” says Lafrance. He explains that in the last three years, the price of generic drugs has been reduced from 75 per cent of Brand Name Equivalent to the current rate of 35 per cent.
“Alberta pharmacies have supported past reductions, and were promised that the money saved would be reinvested into community pharmacy. Only a very small portion of the savings was actually re-invested in community pharmacy,” says Lafrance, in an email to the Journal. He further says the money that was reinvested came with increased administrative burdens that reduced the amount of time pharmacists spend with patients providing care.
Lafrance says the government “blindsided” industry stakeholders with the recent decision to reduce the price of generics to 18 per cent. The impact of the change will be felt by rural pharmacies more than pharmacies in urban settings.
“Rural pharmacies simply do not have the population base to push through the large number of scripts that will be needed in order to remain viable,” says Lafrance. He explains that because the government controls the amount pharmacies pay for drugs and can sell drugs at, and there’s no markup allowed, pharmacies rely on income from the dispensing fee, which is also capped by the government.
The dispensing fee, is currently capped at $10.22 for all bottom tier drugs, the majority of business at Apple Drugs, and has only seen an increase of $0.51 in the last 22 years, says Lafrance.
Another revenue stream for pharmacies was the rebate they would negotiate with Generic Manufacturers, but with the reduction of the generic prices to 18 per cent, it reduces the rebates and completely eliminates that portion of a pharmacy’s revenue stream, he explains.
All these changes could result in reduced pharmacy hours, reduced staff, reduced pharmacy staff wages, and reduced pharmacy services. It may also lead to the elimination of free services like dead drug disposal, sharps disposal, deliveries, blister packing, phone consultations, consultation for over-the-counter medications, medication reviews for patients that don’t qualify under government guidelines, and tax receipts, says Lafrance.
“There’s a lot of things that (pharmacists) don’t get paid for,” he adds.
He further says that reducing the price of generics could push the generic manufacturers away from Alberta, and force pharmacists to fill prescriptions with brand name drugs that may not be covered by benefit plans, “Which means the patient will be the one that will need to pick up the cost.”
Lafrance says that pharmacies are asking the government to “reinvest in pharmacy by adequately reimbursing pharmacists for clinical services.” He adds that although reducing the price of generic drugs may look good on paper, it could one day mean rural Albertans have to travel to larger centers to get their prescriptions filled.
“When you factor in your time and your fuel, are you really paying less for your medication?” asks Lafrance.
The reduction in generic drug prices from 35 per cent to 18 per cent is set to take effect on May 1. Elk Point Apple Drugs is one of long list of Alberta pharmacies that has signed a letter to Minister of Health and Wellness Fred Horne, voicing concern for the change.
The letter, signed by Alan L. Hodgins, the CEO of Value Drug Mart Associates, states that “the cuts you have imposed are more than we can sustain, they will devastate our group of pharmacies and in the long run will not drive the savings that your government is looking for.”
The Wildrose has also voiced concern for the changes announced in the budget.
“If a pharmacy cannot survive financially, there is a very real danger that rural Albertans will lose their pharmacy services if this government doesn’t change course,” says Lac La Biche-St. Paul-Two Hills MLA Shayne Saskiw, adding, “We need to figure out a way to keep rural pharmacies thriving in Alberta.”
On March 21, a large group of pharmacists marched to the legislature building to protest the upcoming change.
