Friday, March 26, 2010

Ontario budget targets pharmacists - the end of allowances?

The Ontario Government handed down its budget yesterday. The government is running a big deficit, and health care costs eat up an ever-larger portion of the budget (estimated at 45% of program spending this year). So, included in the budget are measures designed to slow the growth in spending on pharmaceuticals - specifically, slowing spending on generic drugs by forbidding professional allowances.

According to news reports, the government will ban the payment of allowances to pharmacists. Rebates - i.e. paying back to pharmacists X% of the purchase price of the nominal cost of the drugs - have been forbidden since 2006; however, the 2006 legislation left professional allowances on the table. Professional allowances are substantial: reportedly $750 million in 2008-09 - for comparison, the province spent about $800 million on generic drugs the same year (see National Post article). The 2010 budget re-enacts the legislative definition of "rebates" to catch professional allowances.

Obviously, on its face this loss of $750 million in income is a big issue for pharmacists. As this article in the Toronto Star reports:

"The finance minister said he's ready for flak from generic drug makers who fear losing competitive advantage and from pharmacies – which have already hired scores of lobbyists to plead their case – worried about lost income.

"I'm sure there will be some groups not happy," Duncan said."

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