Government Ignores Reality - will cost Seniors and Families

News Release

New Pricing Scheme Threatens Rural and Inner-city Services

For immediate release, St. John’s – 26/03/2012

Minister of Health Susan Sullivan is demonstrating a dangerous level of ignorance as she adopts a health policy that will irreparably harm front-line health care delivery in rural communities and inner-city neighbourhoods. 

The changes proposed to the generic pricing model to keep up with other provinces in Canada ignore the social demographics, geography and specific needs of Newfoundland and Labrador.

The Council’s spokesperson, Robert Doyle says, “Do we want Newfoundland and Labrador to spend more - per-capita - on generic drugs? No! But will the Dunderdale government achieve lowering the costs by simply copying the models of other provinces? No!” 

Here's why:

1. Our population is aging more quickly and therefore there is a greater requirement for chronic disease medications. 

2. The prevalence of conditions such as diabetes is higher in our province.

3. The lack of medication and disease management programs involving community pharmacy. 

Doyle adds, “The Government of Newfoundland and Labrador will not lower health care costs they will grow them. The Government of Newfoundland and Labrador will lose any ability to provide medication and disease management programs in rural areas and in the inner-city. The Government of Newfoundland and Labrador will lose informal collaborative medication and disease management currently taking place in independent pharmacies.” 

The Council believes this is not an issue of escalating drug prices – as the prices are going down every year as more generics enter the marketplace and through natural competition among generic manufacturers. This is an issue of poor policy review, research, and planning.

The government tried to buy the silence of pharmacies by signing a non-binding amending agreement with the Pharmacists’ Association of Newfoundland and Labrador. It does nothing for the viability of independent pharmacy and is an insult to local small business. 

“The Minister either does not understand or refuses to see the inherent problems in the government’s plan. The government does not have the information it needs to make this decision and it will result in unintended consequences”, Doyle says. 

Government says it will save tens of millions of dollars from a generic drug price reduction – that is not the case.  While generic drugs are being used in the majority of prescriptions filled they make up less than 40% of costs to the program. 

Doyle states, “If government wants to make a real difference in current costs and sustain costs in the future they must look at increasing generic utilization and developing – with pharmacy – a real medication and disease management program.” 

The Council is holding a meeting of its members within the next week and decisions regarding the next course of action will be discussed and ratified at that time.

The first decision has already been made – the Council will engage Dr. Wade Locke to do a thorough analysis of the situation and to develop a made in Newfoundland and Labrador solution.

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Additional Information

The CICPO represents the majority of independent pharmacies in Newfoundland and Labrador.

The CICPO members are located throughout Newfoundland and Labrador and are the only model of pharmacy available in dozens of regions.

Independent pharmacies average 10% front-store sales (other than prescription medications) and 90% back-store (prescription medications) in its sales mix.

Chain drugstores and mass retailers; Shopper’s Drug Mart, Lawton’s/Sobeys, Walmart, Zellers, Costco, and Loblaws range from a 50/50 sales mix with many averaging over 90% in front store sales.

The changes to the generic pricing policy will severely affect independent pharmacies while the chain drugstores and mass retailers gain opportunities to consolidate the marketplace.

Chain drugstores and mass retailers have buffers from revenue loss such as:

a)      In-house wholesale

b)      Front shop sales

c)       Private label generic drugs

d)      Mass purchasing power

This gives the chains and mass retailers a governmental regulated advantage over Newfoundland and Labrador pharmacies.

Government’s negotiation with PANL does not bind corporations and therefore may result in a rejection of the government drug card.

Private Insurance companies negotiate directly with business which is contrary to the position of the Government of Newfoundland and Labrador – which negotiates with a professional body that has no corporate authority to negotiate.

Generic drug prices have been reduced over the past five years from 70 per cent of brand to 50 per cent of brand through natural competition. Generic drug prices are going down every year. It is the only area of reduced costs in the Health system.

The Government of Newfoundland and Labrador has not completed a review on the potential unintended consequences of this policy and does not have any information that rural and inner-city independent pharmacies can survive this cut to revenues.

Economist Dr. Wade Locke believes that a complete study should be undertaken before this policy is adopted – including developing an optimum model for Newfoundland and Labrador considering – demographics, geography, services, and pricing.