Microsoft word - focus_232 sa.doc

FOCUS update
Ontario is moving ahead with changes to the drug system -
lowering generic drug prices for all Ontario residents
On Monday June 7, 2010, the Ministry of Health (MoH) and Long Term Care (LTC) announced that the regulations proposed April 7th will begin to take effect on July 1, 2010 with only a few changes. Originally, the regulations were expected to go into effect on May 15, but were delayed to allow the Minister time to review submissions from pharmacists and other stakeholders. With the delay, it was uncertain whether the government would make significant changes to the proposed regulations, particularly in how the regulations would apply to the private sector. The government has now confirmed that the lower generic prices, as well as the elimination of the professional allowances, will apply to both the public and the private sector. Overall Impact and next steps
It is expected that the reduced generic prices and the elimination of the professional allowance will have a significant impact for the pharmacy community. Pharmacies may look at alternate ways to offset some of their loss in revenue, such as through increasing dispensing fees and applying mark-up on drugs for private payors (i.e., those with benefit plans, as well as cash paying customers). For our Pay-Direct Drug plans (PDD), we have some protection from these potential increases because of price controls in place. • The dispensing fee paid is limited to a reasonable and customary amount of $11.99. Pharmacies can balance bill Sun Life plan members if their fee is higher than $11.99. If pharmacies start increasing their dispensing fees, then plan members can expect to see an increase in their out-of-pocket expenses. • The allowable markup on ingredient costs is limited to that agreed upon between Telus (our Pharmacy Benefit Manager,) and the participating pharmacies. As part of this agreement, the pharmacy agrees to not balance bill the member additional amounts over the allowable ingredient cost. The type of price controls on PDD plans are generally not applied to paper reimbursement (non drug card) plans. If your plan is a non PDD plan, you may want to contact your advisor to discuss options to manage the potential increase in costs to your drug plan. The reduced generic pricing will apply to private plans. To determine the potential overall savings, we will continue to monitor the pharmacy reaction to these changes, as well as any exemptions allowed by the Ministry of Health. Group Benefits are provided by Sun Life Assurance Company of Canada, a member of the Sun Life Financial group of companies. 06/10 - SS FOCUS update
Proposed Regulations
Final Regulations
Generic Price
Public Plan (ODB):
Public Plan (ODB)
Reduction
• Same as proposed, but effective July 1, Private Sector:
Private Sector:
• Same as proposed, but to take effect as • Reduced pricing applies to only generics on • Reduced pricing for generics of Lipitor will be implemented immediately (June 7th) for both public plan and private payors. Lipitor, a highly utilized cholesterol lowering drug, recently went off patent. We expect the generics will soon be on the ODB formulary • Some generics will be exempt from the reduced prices (e.g., products older than 10 yrs, & non-solid drug products) Phasing out of
Public Plan (ODB)
Public Plan:
Professional
Allowances
Same as proposed, but effective July 1, Private Sector:
Private Sector:
• Same as proposed, but effective as follows Group Benefits are provided by Sun Life Assurance Company of Canada, a member of the Sun Life Financial group of companies. 06/10 - SS FOCUS update
Increase dispensing
Public Plan (ODB):
Public Plan (ODB):
fee, for ODB/Public
plan only
For rural Pharmacies, increase up to $5 (up location and distance between pharmacies Cap on Markup for
Public Plan (ODB)
Public Plan (ODB):
ODB/Public Plan only
• No change to current mark-up - mark-up Extra funding for
Public Plan
Public Plan
Professional Services
provided by
150 million investment stays the same, but: pharmacies
$75M will be used to pay a Transitional
Fee to pharmacies until professional
additional fee will gradually decrease as follows: • $0.35 effective April 1, 2012 • Eliminated effective April 1, 2013 Note: This additional fee is intended to be paid
for ODB recipients only; it is not intended that
private plans also pay this fee
Here is the previous Focus Update announcing the proposed Ontario Drug plan details. For additional information on the Ontario drug reforms, please visit the Ontario government Web site at
www.ontario.ca/drugreforms.
Questions?
Please contact your Client Service Administrator at 1-877-786-7227. Group Benefits are provided by Sun Life Assurance Company of Canada, a member of the Sun Life Financial group of companies. 06/10 - SS

Source: http://bennettinsurance.ca/wp-content/uploads/2010/06/Sunlife-Ontario-Drug-System-Changes-Focus-232-GenericDrugs-Ontario1.pdf