Tuesday, April 13, 2010

Pharmacy in Ontario

As many of you who read my blog know, I am a pharmacist. Recently the Ontario government announced sweeping changes in how pharmacy operates. First, a little background information.

All pharmacies in Ontario are PRIVATE retail businesses. The government does not own any of them. The government runs a drug plan called the Ontario Drug Benefit program. ODB for short. This plan is similar to Blue Cross, Green Shield etc. In fact, most drug plans base their model on the ODB medel. The way it works is thusly: A patient brings in their prescription. The pharmacist enters it into the computer along with the patient's drug plan number. This information is sent over the internet usually (sometimes by dial up modem etc) to a centralized computer, be it the Green Shield computer or the ODB computer. Said computer then spits back a response. This response is usually a 'paid' response. In this response is the patient's deductible (if any) and how much the plan deigns to pay the pharmacy. Yup, what we bill and what the drug costs is NOT necessarily, or even often, what we actually get paid.

Here is where it gets tricky. Basically, as the province's largest drug plan, ODB has negotiated a cut-rate fee. Similar to how , say, an interior decorator may get a discount on paint because she buys so much. However, ODB and many other drug plans, have started to cut back what they pay us. This happens in a variety of ways. One of the easiest things for the plans to do is...nothing. So when the manufacturer ups their price on the medication, the plans conitnue to pay the old price. So that eats into our proft margin as well.

The other way that the government eats into our profits is by not changing what they pay for the dispensing fee. Remember, the fee is basically where the profit would be. The government has increased the fee by a whopping $0.54 since 1989. That works out to around an 8% increase for a 21 year span. Clearly costs have increased more than 8% over 21 years! Do you know anything that has not increased more than 0.38% per year???? Basic inflationary costs are around 3%. Per year. So the govt has been getting a MASSIVE deal for their $7. Yet they claim to be paying too much.

Next installment. Where the money goes. Or what you get for your money