CHANGES TO THE ALBERTA PHARMACY COMPENSATION MODEL: WHAT YOU NEED TO KNOW

Feb 27, 2012Posted By: igorUnder: General News, Pharmacy Profession

On February 13th, 2012 Honourable Fred Horne, Minister of Health and Wellness, announced large changes to how pharmacists will be remunerated as of July 1st this year. Pharmacists across the province have been anticipating a change in how they are compensated for the many health services they provide not directly attached to the dispensing of prescription medications, however the announcement last week was disappointing and again leaves pharmacies to grapple with yet another cut in revenues and waiting on a promise to fund professional services that are proven time and again, to be of huge value to patient health outcomes.

The following changes to the compensation framework were made (see AHS news release for full publication):

1)    The government will reduce the amount they pay for generic drugs by 85 million dollars. While this looks like it will be a blow to generic drug companies, the financial loss will be to pharmacies across the province.

2)    20 million dollars will be directed to pharmacists for prescription renewals. It was explained that when a patient has a prescription renewed by their pharmacist, the government will pay a fee of $20 to the pharmacy.

3)    5.3 million dollars will go to support rural pharmacies in 2012/2013 as part of a three-year 15.9 million dollar Remote Pharmacy Access Grant   This recognizes that this 85million dollar reduction in revenues to pharmacies will have a huge impact on the business of pharmacy.  Therefore to assist those pharmacies in rural centers, this $5.3 million will be paid to help reduce the negative impact of the reduction in revenues and help to keep these pharmacies in business.  This also recognizes that if these pharmacies were to close, the lack of pharmacy services would create a hardship for many rural residents.

You should know that this is NOT the first reduction in revenues to pharmacies.  Since 1994 the compensation model for pharmacies has seen a gradual decrease in revenues going to the pharmacies of Alberta, big and small.  Not only have the pharmacies been impacted but the wholesale sector that services the industry has seen continual reductions in their margins.  As a result, the economic model of this industry has been turned upside down, where pharmacies and wholesalers have had to go to drug manufacturers and contracted with these companies so that their products are inventoried by wholesaler and pharmacy.  Manufacturers have been paying a percentage of their earnings to the industry to keep the “pharmacy industry machinery” running.   It is those dollars that are no longer going towards keeping the industry subsidized.

Why are those dollars needed to keep such an essential profession and industry viable?

What most consumers do not understand, is that Canadians have some of the lowest prescription prices when compared to many other countries in the world.  To find out how true this is, talk to our neighbours to the south who for many years have made very attempt to purchase prescription medications from Canadian pharmacies.  You see, everything related to prescription medications is closely regulated by both federal and provincial governments.   Everything from the pricing of new drugs introduced to the Canadian marketplace to the pricing of generic drugs after those patents expire, are regulated.  So too are the prescription prices that you are paying.

If we dissect the prescription price you pay at your pharmacy, it is made up of two components.  The drug cost and the professional fee, which some incorrectly label as the dispensing fee.  The professional fee is fixed – not a percentage – that in Alberta is currently based somewhat on drug cost.   So, the professional fee is $10 for drug costs up to $74.99, $15 for drug costs of $75 to $149.99 and $20 for drug costs over of $150 and greater.   These fees are maximums, so pharmacies can charge less but they cannot charge more and whatever pricing scheme they use, must be used for all pharmacy consumers whether they have drug coverage or are paying cash.

The drug cost component is just that – the pharmacy’s actual, acquired cost of the drug which by the way is regulated by provincial and federal government.   To repeat this in just a slightly different way, the consumer is purchasing their prescription medication at the same cost as their pharmacy is purchasing from the wholesaler or direct from the manufacturer.   And this cost is regulated by government so there is no volume discounts available to the pharmacy or pharmacy chain; the drug cost is the drug cost no matter where it is purchased.

What does this mean to pharmacists across Alberta?

The pharmacy profession was hoping to have most or all of this money returned to them in the form of reimbursement for cognitive services.  That is, for services such as: medication reviews, prescription adaptations (renewals, altering dose or medication if necessary), immunizations, refusal to fill a prescription, chronic disease education etc. Instead, the government has announced that they are going to return less than half of the money that they have chosen to cut from the provision of pharmaceutical care.

The loss of these revenues in addition to previous cuts in revenues put in place as part of Alberta Health’s Pharmaceutical Strategy, originally introduced in 2010, will put increasing economic stresses on pharmacies to maintain current levels of service and access.  As a result, pharmacy hours may be reduced; staffing reductions may have to be considered to help pharmacies adjust to yet another drop in revenues.  Although pharmacies will certainly work hard to retain professional staffing – pharmacists and pharmacy technicians, some pharmacies may be forced to eventually cut staff.  For those pharmacies independently owned and operated by pharmacists, you can expect to see those pharmacist owners/managers working more hours in the pharmacy dispensary.

What does this mean for patients across Alberta?

The loss of funding to pharmacies can result in a reduction of services. Pharmacists are the most accessible and trusted health care professional. Study after study has shown that pharmacists can improve the health outcome of patients when they are able to work to their full capacity. The loss of funding to pharmacies will mean that pharmacists will not be able to provide the level of health care to their patients that they have in the past. Instead of using pharmacists to help care for patients during a time when there is a shortage of family physicians, the government appears to be making cuts to health care.

How does this reduction impact Alberta Health’s ability to manage the healthcare budget?

There is no doubt; Pharmacists are valuable members of the healthcare team, both in hospital and in the community.  Pharmacists are this province’s most valuable asset and drugs continue to be one of the most cost effective tools available to treat or manage disease.   In fact, drug therapy continues to represent one of the smallest costs described by government healthcare budgets.

However, the ability to manage this “tool” is dependent on Pharmacists – the drug experts – being available; having the time; the resources and the funds to manage drug therapy.   Drug therapy, to be effective; for patients to gain the benefits and the risks managed or reduced, all depends on Pharmacists receiving the funding to do what they have been educated to do.   By allowing Pharmacists to do just that, can have a huge impact on reducing healthcare costs by improving health outcomes and surprise, surprise – reducing drug use.

In fact, call your MLA and ask him/her about the government’s strategy for reducing prescription drug use and thereby reducing drug expenditures.   Ask them what is the dollar value of the 30, 40, 50 metric tonnes of “dead drugs” that are destroyed in Alberta every year.   We are fortunate to have a program called EnviRx that is managed by the Alberta Pharmacists Association with the help of hundreds of pharmacies who act as collection points for these dead drugs.  Although this program is very effective in collecting and destroying dead drugs, the cost of this tonnage is not understood nor being addressed

What can you do to change the future of pharmacy in Alberta?

If you are concerned about the financial cuts being made to pharmacies across Alberta, support your pharmacies and pharmacists by contacting the government. Call your MLA or the Health Minister to let them know that you are concerned about how the new remuneration model for pharmacies will affect patient care.  Ask them why the people of Alberta do not deserve to have the opportunity to benefit from a healthcare professional who could improve your health, improve the management of every chronic disease, reduce the consumption of drugs, reduce drug waste and help to manage limited healthcare dollars.

Lethbridge-East MLA Ms. Bridget A. Pastoor 403-320-1011 lethbridge.east@assembly.ab.ca

Lethbridge-West MLA Honourable Greg Weadick 403-329-4644 lethbridge.west@assembly.ab.ca

Minister of Health and Wellness Honourable Fred Horne 780-414-1311 edmonton.rutherford@assembly.ab.ca

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