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Executive Officer Communiqués

Notice from the Executive Officer : Reporting Framework for Professional Allowances

September 14, 2007

I am writing to provide you with information on the format for the reporting of professional allowances. Over the past several weeks, we have had numerous meetings with the Ontario Pharmacists' Association (OPA) and Canadian Association of Chain Drug Stores (CACDS), to carefully listen to the concerns of pharmacy. In response to these concerns, we are now moving forward with a two-step reporting process – both the process and actual requirements have been reviewed by OPA and CACDS.

Over the coming weeks, we will continue to provide updates on the reporting framework.

Interim Reporting Requirement for Pharmacies

The interim reporting requirement covers the period of July 1, 2007 to December 31, 2007.

What pharmacies are required to report

Pharmacies will be required to provide the following information to the Executive Officer :

  • amount of all professional allowances received by the pharmacy/pharmacist from manufacturers. This includes allowances paid for drugs purchased for public and private prescriptions; and
  • total amount of all professional allowance monies expended by pharmacy. This includes monies expended for private and public services. This amount must be reported at the individual store level e.g., independent pharmacies, or at the head office/chain level; and
  • certification by two senior officers of the company or the manufacturer's auditors that :
    1. the professional allowance monies were not expended on any of the prohibited uses as described in the Code of Conduct under the heading 'Use of Professional Allowances'; and
    2. the professional allowance monies were expended for the purposes of direct patient care.

Notwithstanding the February 21, 2007 Notice from the Executive Officer, the Ministry will further clarify eligible patient counselling activities and define these activities as part of the final reporting requirement.

If allowances are received at the head office or chain level, those monies must be included in the report. If a head office or chain is reporting on behalf of a number of stores, the report must include a list of all pharmacies that are included in that report.

Format of report

A template letter will be prepared and posted on the Ministry's website, as a sample letter that pharmacies may use to report the above information to the Executive Officer.

When to report

The first report must be submitted no later than November 20, 2007 and will cover the period of July 1 to September 30, 2007. The second report must be submitted no later than February 29, 2008 and will cover the period of October 1 to December 31, 2007. Thereafter, the reporting requirements to be followed are noted below.

The Ministry retains the right to audit and examine records to determine compliance with the Ontario Drug Benefit Act and its regulations. In addition, the Executive Officer retains the discretion to further clarify current prohibited uses.

Final Reporting Requirement for Pharmacies

The final reporting requirement applies for all reporting periods after December 31, 2007 and onwards (until further notice by the Executive Officer).

What pharmacies are required to report

Pharmacies will be required to provide to the Executive Officer the same information as per the Interim Reporting Requirement, as well as report on the use of professional allowance monies for Ontario Drug Benefit (ODB) recipients. The Ministry does not intend to require pharmacies to report the use of professional allowances for the private market.

For the purposes of reporting, I intend to further clarify the permitted use of professional allowances, and have committed to continued discussions with OPA and CACDS to seek their input. These discussions will take place shortly; I intend to finalize and publish details by the end of December 2007 concerning the permitted use of professional allowances.

Format of report

A detailed guidebook and template will be developed and distributed to pharmacies to support the submission of this information. We will not require detailed supporting documentation to be submitted to the ministry, however, the information must be kept on file for a period of at least two years in case of audit.

When to report

Reports must be submitted within two months after the last day of the reporting period. For example, for the period January 1, 2008 until June 30, 2008, the report must be submitted by August 31, 2008; for the period July 1, 2008 until December 31, 2008, the report must be submitted by February 28, 2009; and so on.

Final Reporting Framework for Manufacturers

Pharmaceutical manufacturers will be required to submit information detailing the amount of professional allowances that are provided to each pharmacy or head office. As noted previously, the ministry will provide each manufacturer with the total dollar amount of a manufacturer's drug products reimbursed by the ministry on an individual pharmacy basis to help support the calculation of the professional allowance paid.

Manufacturers are requested to retain any related financial and accounting documentation that may be needed as part of the ministry's audit process for a period of two years. The cost for any service that is paid for on behalf of a pharmacy e.g., material to support a patient education program, will need to be calculated and reported to the pharmacy so that the same information is submitted by the pharmacy and the manufacturer. These costs must be reasonable and will be verified as part of the audit process.

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