Publication
TITRE
A Short-Sighted Approach to Reducing Drug Costs in Ontario
DATE
19 avril 2006
EXPERTISE
A Short-Sighted Approach to Reducing Drug Costs in Ontario
On April 13, 2006, the Ontario Ministry of Health and Long-Term Care proposed sweeping amendments to the Drug Interchangeability and Dispensing Fee Act (DIDFA) and the Ontario Drug Benefit Act (ODBA). The Transparent Drug System for Patients Act, 2006 (http://www.ontla.on.ca/documents/Bills/38_Parliament/session2/b102_e.htm) will have significant and likely negative implications for pharmaceutical companies doing business in Ontario as well as for physicians, pharmacists and patients.
This Bill does not contemplate a change to the current coverage for Ontario Drug Benefit recipients, but rather proposes various legislative changes to the provincial drug system in both the ODB and private payer markets in five key areas, including: (1) pricing and reimbursement of drug products; (2) improved patient access to drug products; (3) need for more appropriate use of partnerships in health care; (4) innovation; and (5) strengthening the governance and operation of Ontario's drug system.
The reforms are aimed at increasing drug interchangeability and reducing the cost of employer and provincially funded drug plans. With little in the way of support for drug research and development in Ontario, this short-sighted approach may cause the public to question the government's stated goal of fostering an innovative drug economy in Ontario. The long term costs or consequences of the amendments - to the innovative industry, to the practice of medicine, and to patients - could be significant. Some of the more important aspects of the proposed legislation are summarized below.
a. Expanded interchangeability
A new formulary designating drugs as interchangeable will apply to both the ODB and private payer markets. This amendment will enable pharmacists to automatically substitute generic medications for patients covered by employer-funded private health plans or cash patients in the same manner as they are currently for recipients of Ontario drug benefits.
Products may not only be designated as interchangeable where they have the same active ingredients in the same dosage form, but also where they have similar active ingredients in a similar dosage form. This amendment will increase the number of generic drugs that are interchangeable with brand-name products. The "similarity" of drug products will be determined by a government official pursuant to clinical criteria that have yet to be defined. The expanded interchangeability rules raises issues of safety and efficacy that the government will undoubtedly have to address in the coming months before the proposed law is in force.
Even more alarming, pharmacists may substitute a drug with the same or similar active ingredients in the same or similar dosage form as the drug prescribed even if the substituted drug has not been designated as interchangeable in the formulary. This substitution may be done by the pharmacist without consultation with or even notification to the prescribing physician. The challenge in developing such interchangeability and automatic substitution rules will be to ensure that the prescribing decision and patient context is respected. What may be "similar" for regulatory purposes may be a dangerous substitution to make in the absence of patient assessment.
b. New central governance
Formulary listings and drug benefit prices will be determined by the Executive Officer of the Ontario public drug programs. This official, dubbed "the Drug Czar" by the opposition health critic, will have sweeping authority to: maintain and publish the formulary; designate products for listing; designate products as interchangeable; impose financial and formulary penalties against manufacturers engaging in illegal rebate practices; negotiate price agreements with manufacturers; make payments under public drug programs; establish clinical criteria that must be met as a condition for payment; and pay pharmacists for professional services.
c. Lower drug prices
The government will rely on its buying power to negotiate more competitive prices for brand name drugs. The price of generic drugs will also be reduced to fifty percent of the brand name price. Manufacturers will be prohibited from selling a listed drug product at a price higher than the drug benefit price listed on the formulary.
d. Abolition of generic rebates to pharmacies
Generic manufacturers will be prohibited from providing rebates directly to pharmacies "in exchange for shelf space" for their drugs. The Bill will also prohibit any person from accepting a rebate from a manufacturer. The Executive Officer will be empowered to impose financial penalties and even deny manufacturers interchangeability status for violations of the new rebate prohibition laws.
e. Improved patient access and transparency
The government suggests that access to drugs will be enhanced by replacing the current Limited Use and Individual Clinical Review system with conditional listings, provisions for exceptional access and more rapid review of breakthrough drugs. A web-based "Share Care Network" has also been proposed to help doctors prescribe the most appropriate drugs and promote patient compliance with drug therapies. In an effort to improve transparency and accountability, two patient representatives will be named to the Committee to Evaluate Drugs (formerly the Drug Quality and Therapeutics Committee) to assist in making drug listing decisions.
f. Enhanced role for pharmacists
Pharmacists' dispensing fees will be increased. The government will remunerate pharmacists for providing enhanced professional services to better assist in the management of medication.
g. Investment in innovation
A five-million-dollar Innovative Research Fund will be established to investigate the benefits of pharmaceutical innovation on overall savings to the cost of health care. Government and pharmaceutical companies would contribute jointly to the Fund. In addition, the government proposes to develop chronic disease partnerships with the innovative industry.
Conclusion
In sum, the proposed amendments to the Drug Interchangeability and Dispensing Fee Act and the Ontario Drug Benefit Act represent a dramatic and disconcerting change in the public and private drug system in the province of Ontario. Whether this new legislation has achieved a "fair and equitable balance" amongst the various stakeholders in Ontario's health care system is far from clear. In addition, whether the amendments adequately protect public safety while ensuring patients have access to the medicines most appropriate for their condition will undoubtedly be the subject of much debate in the provincial legislature in the coming months. This Bill raises very troubling issues relating to the patient/physician relationship, the practice of medicine, polypharmacy and pharmacist liability among others. If this Bill is implemented, the validity of the adverse drug reporting system is further compromised because of the expanded interchangeability criteria and discretion granted to pharmacists to substitute.
Ontario's proposed reforms arrive at a time of speculation that some provinces may delegate their authority to regulate the prices of non-patented medicines to the federal Patented Medicine Prices Review Board.
For further information about this proposed legislation, please contact one of the following members of the Life Sciences Team at Ogilvy Renault LLP:
Patrick E. Kierans (416) 216-3904
pkierans@ogilvyrenault.com
Penny S. Bonner (416) 216-6629
pbonner@ogilvyrenault.com
Martha A. Healey (613) 780-8638
mhealey@ogilvyrenault.com
Jason Markwell (416) 216-2977
jmarkwell@ogilvyrenault.com
© Ogilvy Renault LLP 2006 - All Rights Reserved
Personnes-ressources
Patrick E. Kierans
Toronto
416.216.3904
pkierans@ogilvyrenault.com
Profil
Penny Bonner
Toronto
416.216.6629
pbonner@ogilvyrenault.com
Profil
Martha A. Healey
Ottawa
613.780.8638
mhealey@ogilvyrenault.com
Profil
Jason Markwell
Toronto
416.216.2977
jmarkwell@ogilvyrenault.com
Profil
