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Ontario's fight with pharmacies may turn into a cross-country battle Add to ...

For pharmacies, the prospects in other provinces are not quite as grim as they are in Ontario.

But they're not real hot, either.

Other health ministers probably won't envy Deb Matthews the long and bruising public-relations battle she launched this week with pharmacists as she aims to take away their "professional allowances" - the rebates paid by generic pharmaceutical manufacturers in return for selling their products, which account for most of drugstores' profits. But they will look jealously upon the much lower prices that Ontarians will consequently pay for their prescriptions, which are projected to provide both public and private drug plans with hundreds of millions of dollars in annual savings.

There's no way that provinces paying about 50 per cent of the equivalent brand price for generic drugs will stand idly by as Ontario winds up paying only 25 per cent. And what's especially alarming for pharmacies is that it's the two next biggest provinces that are best positioned to lower their prices.

In Quebec, drug manufacturers' listing agreements with the government require them to match whatever the lowest price is elsewhere in Canada. So it will only be a matter of months after the prices are cut in half in Ontario before the same thing happens in its neighbouring province.

In British Columbia, the government is in negotiations with industry representatives to replace an interim agreement that will expire this summer. In response to a request for an update, its Ministry of Health Services issued a statement asserting that "we aim to achieve significant savings through these negotiations and are determined to limit the ever-growing cost of generic prescription drugs." It also stated, somewhat ominously, that it will take "unilateral action" if there is no "satisfactory agreement by the end of June."

Drugstores can at least take solace in the unlikelihood that their fourth-largest market will act very aggressively. Still in the midst of implementing much milder pharmacy reforms of its own, which will put generic prices only slightly below 50 per cent of the brand, Alberta is not generally expected to break course in the foreseeable future.

But even if only Quebec and B.C. join Ontario in aggressively lowering prices - and in reality, several smaller provinces will likely do so as well - pharmacies are going to take more than just the $1.1-billion annual hit they're predicting in Ontario alone.

The pain might not be as bad elsewhere, because as of now there are no indications that anyone else plans to formally do away with the professional allowances. Quebec might well just maintain its current cap, which limits the allowances to 20 per cent of generic drugs' sale price. And B.C. has previously indicated little interest in tightly controlling the commercial relationship between manufacturers and retailers, so it doesn't have a cap at all.

But if drug prices go down, it naturally follows that rebates on them will as well.

Of course, generic drug manufacturers could be even bigger losers. In Ontario, at least, the cut in their prices should be counterbalanced by no longer having to pay large sums to drugstores. In other provinces, they could win up with the worst of both worlds.

But the people who dispense drugs tend to make more sympathetic victims than the people who manufacture them, so it's pharmacists who are already being heard in Ontario. The prospect that their battle could become a national one promises to make their voices even louder.



 

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