Cuts Coming: Ontario’s Stronger, Healthier Ontario Act 2017 Formalizes Challenges for Pharmacy

Dear Members:

On May 17, 2017, the Ontario government passed the Stronger, Healthier Ontario Act (Budget Measures), 2017 (formerly Bill 127).

While not part of the Act, the budget announcement confirmed the government’s investment in health care including free prescription medications for Ontario residents aged 24 and under through OHIP+: Children and Youth Pharmacare, starting in January 2018. As we reported to members in the April 28, 2017 eblast (please log in and search for April 28, 2017), the Ontario Pharmacists Association (OPA) believes that income should not be a barrier to patients’ ability to access medication therapy; however, we are disappointed that pharmacy services have not been spelled out in the OHIP+ package, and we continue to have concerns about the economic impact that this program will have on pharmacies. We have expressed these concerns, and our need to be an active participant in discussions around how this program is eventually implemented, to the Ministry of Health and Long-Term Care (MOHLTC), the Ministry of Finance and the Office of the Premier of Ontario. Please see the OPA Bulletin of April 28, 2017 for more information (you will need to log in and search for April 28, 2017).

Second, and of particular importance to the profession at this time, the Act contains a provision (Schedule 24) giving the government greater flexibility to adjust pharmacy payments under the Ontario Drug Benefit Act to obtain greater value for money for the Ontario Public Drug Programs (OPDP). Specifically, this provision allows the executive officer to, for a defined period of time, subtract an amount from payments made to pharmacies for supplying a drug benefit.  The purpose of the payment adjustment is to ensure that pharmacy savings previously committed to are achieved.  For more information on the OPDP savings initiatives, please refer to the OPA Bulletin of August 25, 2015 (you will need to log in and search for August 25, 2015).

Members will recall that in October 2015, the Ontario government passed amendments to the Ontario Drug Benefit Act aimed at helping reduce the provincial deficit in part through operational and regulatory reductions in expenditures and enforcement within pharmacy. These changes included:
  • reducing the mark-up percentage for high-cost drugs;
  • reducing the dispensing fee for long-term care (LTC) claims and enhancing medication management in the LTC sector;
  • limiting the number of billable dispensing fees to a maximum of five per 365-day period per patient per chronic therapy drug; and
  • requiring patients to try more than one generic before the brand product is reimbursed by the Ministry as a “No Substitution” claim.
The Ontario Pharmacists Association, Neighbourhood Pharmacy Association of Canada and the MOHLTC agreed on these initiatives through discussions in an effort to avert a more impactful, broad-based dispensing fee reduction. These discussions were and continue to be subject to a non-disclosure agreement. To date, however, there remains a shortfall in the required savings for fiscal year 2016-17. The subtraction from pharmacy payments specified in the Stronger, Healthier Ontario Act (Budget Measures), 2017 is designed solely to close this gap.

On May 15, 2017, Allan Malek, senior vice president of professional affairs, and I appeared before the Standing Committee on Finance and Economic Affairs as part of the public consultations on Bill 127. The Association’s presentation focused on the broad, unrestricted language used in the original version of Schedule 24 of the bill.  In its presentation, OPA argued that the original language offered neither time nor total dollar limits, guidelines or parameters to restrict the implementation of the subtraction, and the executive officer could ultimately be able to turn to this legislation to unilaterally impose additional funding cuts on pharmacy at a future date. The Association’s position: use the existing regulatory framework to recover any remaining budget shortfall over a clearly defined timeline (24 months) in order to greatly mitigate the size of the monthly impact on pharmacies, pharmacists and, ultimately, the patients they serve.

While the subtraction from pharmacies’ remittance advice notices will be unfortunate, the Ontario Pharmacists Association was encouraged to see that its recommendation to restrict and time-limit the bill’s broad language have been adopted by the government in the final wording of the budget bill. A 24-month time period, as suggested by OPA, has been put in place, with savings to be recouped beginning September 1, 2017 and ending September 1, 2019 – ultimately this will help keep the percentage reduction from the pharmacy remittance advice to a manageable low level.

In the coming weeks, regulations will be drafted to outline the specific parameters of the subtraction process – specifically, to articulate the percentage reduction that needs to be applied to close the fiscal savings gap.  The proposed regulatory amendments will be posted on Ontario’s Regulatory Registry for public consultation.   The Ontario Pharmacists Association will be at the table for those discussions and will ensure the interests of pharmacy professionals are front and centre. We made progress with the introduction of a 24-month time limit; we now need to work with the government to clearly define the total savings gap and to set the reconciliation percentage.

The Ontario Pharmacists Association acknowledges that community pharmacies and pharmacists have borne more than their fair share of expenditure control measures over many years. The initiatives announced in the spring budget – both OHIP+ and the subtraction from pharmacy remittance payments – will lead to significant financial challenges for pharmacies across the province. We have shared these concerns with the Ministers of Health and Long-Term Care and Finance, as well as the Premier’s office, and we will continue to advocate on your behalf to help minimize the impact of these changes on pharmacists and patients alike while simultaneously working to stop future targeting of the profession.

We will provide members with updates on this issue as they become available. In the meantime, your questions and feedback are welcome via email.


Andrew D. Gall, FCPA, FCMA, C.Dir., EMBA
Chief Executive Officer

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