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Ministry Status: Activation Status

Ensuring Better Value for Money

Changing Pharmacy Reimbursement Structure Progress

The pharmacy reimbursement structure has been changed to better reflect the true cost of dispensing drugs.

Dispensing Fees

Effective October 1, 2006, the dispensing fee paid for Ontario Drug Benefit prescriptions was increased to $7.00 (or a seven per cent increase) for all pharmacies. The co-payment was not affected by this change. The previous increase (a one-per cent increase) was in April 2003. The dispensing fee is intended to cover the direct costs (rent and labour) associated with dispensing prescriptions.

Mark-up

As of April 1, 2007, the mark-up on the drug benefit price was reduced from 10 per cent to 8 per cent. As has always been the ministry's policy, the mark-up is paid on the drug benefit price, not on the wholesaler price. The mark-up is intended to cover distribution and inventory costs paid by pharmacists and is not paid on cost-to-operator claims.

Rebates

The Transparent Drug System for Patients Act, 2006 makes several changes to remove "rebates" (payments from generic manufacturers to pharmacies) and to tie any benefits paid to pharmacists to increased patient care programs, now called "professional allowances," through a transparent system.

  • The legislation defines a rebate as "currency, a discount, refund, trip, free goods or any other prescribed benefit." Rebates of any kind are not allowed under the legislation.
  • The legislation allows pharmacists to accept professional allowances from drug companies. Professional allowances are to be used exclusively to fund patient care initiatives. The legislation contains regulations relating to the Ontario Drug Benefit Act Code of Conduct and the Drug Interchangeability and Dispensing Fee Act Code of Conduct
  • These allowances are capped at 20 per cent of public system generic sales and will be governed by a code of conduct. This limit does not apply to private sector sales.
  • Effective October 1, 2006, the Code of Conduct is in force, setting out the fundamental principles of the Code; outlining what professional allowances may not be used for; outlining the criteria for calculating professional allowances; and establishing reporting requirements.

Professional Allowances

"Professional allowance" in the definition of "rebate" in the ODBA means a benefit in the form of currency, services or educational materials provided by a manufacturer to operators of pharmacies or companies that own, operate or franchise pharmacies for purposes of direct patient care that are continuing education programs, clinic days, compliance packaging for patients and certain equipment and educational materials for chronic disease management initiatives. See s 2(1) of the DIDFA regulations and 1(1) or the ODBA regulations.

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