Ontario considers rule to limit exclusivity deals between insurers and pharmacies

Globe and Mail

2 days ago

The Ontario government is considering a new regulatory rule that would allow patients to access any pharmacy of their choice through a mandatory exemption – even if their private insurer has signed an exclusive agreement with a preferred pharmacy.
The proposed rule is one of two options the Ontario government is seeking feedback on as part of its second public consultation looking at whether new regulations are needed to limit exclusivity deals between insurers and pharmacies, called preferred pharmacy (or provider) networks (PPNs).
Insurers and some pharmacies argue the deals can lessen costs and guarantee certain service standards, while other pharmacies and patient advocates argue the agreements inappropriately constrain patient choice and could lead to poorer health outcomes.
A second option the government is considering more closely is what it calls an 'any-able-and-willing-provider' (AAWP) model, which would require insurers to allow a wide range of health care providers into their networks.
An 'any-willing-provider' measure would essentially end what are called 'closed' PPNs, in which patients can only get medication reimbursed if it comes from specific pharmacies that have deals with their insurance company. An 'open' PPN allows more pharmacies to join these networks if they can show they can meet certain quality and pricing standards.
Ontario to launch new consultation on restricting exclusive deals between pharmacies and insurers
During last year's initial consultation, the Ministry of Finance conducted 11 stakeholder roundtables and received 178 independent submissions. After reviewing the information, the government said it found that pharmacy PPNs 'may increase access' to specialty medications by 'enabling affordable coverage,' as well as 'significantly reduce' pharmacy mark-ups, from 15 per cent to 10 per cent, for example.
The government also heard that, if employers and insurers are not able to utilize pharmacy PPNs to keep costs 'at bay,' employers may choose to reduce coverage or cut benefits altogether.
When reviewing whether PPNs have any effects on competition, the ministry said it heard that they are 'not the only such arrangement' that may affect competition. Patient Support Programs, known as PSPs, are also arrangements where drug price and access are negotiated.
The government also heard that vertical integration between insurers, pharmacy benefit managers and pharmacy operators may pose a risk to competition.
The alternative option of introducing a standardized and mandatory exemption rule could also promote consumer choice, the government said, by limiting the circumstances in which a PPN may require or incentivize a patient to use a preferred pharmacy.
Currently, PPNs may include a process for patients to request an exemption so they can access prescriptions at pharmacies outside of the network. However, these processes are not standardized across the industry and are at the insurer's discretion.
Access to medication is increasingly being dictated by preferred pharmacy networks
If introduced, an exemption rule would be standardized and mandated by statute, regulations and rules. Examples of a qualifying exemption would be medical, geographical or accessibility reasons.
Karen Leiva, spokesperson for the Canadian Life and Health Insurance Association, said the association has long held the view that PPNs are an important tool for the industry. 'PPNs help to ensure that Canadians who need life-saving medication and other supports can receive them,' she said in an e-mail.
Justin Bates, chief executive officer of the Ontario Pharmacists Association, said he is encouraged to see a form of 'any-willing-provider' legislation being explored as part of the second consultation.
However, Mr. Bates also said that because this type of legislation would not be a blanket ban on PPNs, it could leave open the possibility that insurers create PPNs that are open in name only – because the terms of joining are so restrictive they exclude some pharmacies that find the requirements too onerous or expensive.
The government's addition of the word 'able' to make the phrase 'any-able-and-willing-provider' has raised some eyebrows.
Quinn Grundy, a professor at the University of Toronto who researches the pharmaceutical industry, said the use of the word 'able,' along with a mention of smaller pharmacies not necessarily having the right equipment to handle specialty drugs, was a red herring.
'I actually don't think that is the issue at all,' Prof. Grundy said. 'Everyone can get a fridge. These drugs are within any pharmacist's scope of practice to dispense. I think the question around able is whether they can afford to provide those services at the price that the insurer is willing to reimburse.'
Mike Nashat, a pharmacist and director of OnPharm-United, a network of more than 600 independent pharmacies, said that competency standards should be set by regulators, not by parties to an agreement.
'We're increasingly concerned that the word 'able' will be used as a loophole to justify excluding qualified pharmacies from networks for commercial, not clinical or competency, reasons,' he said.
PPNs do allow insurers to contain costs and ensure standards, said Chris Bonnett, a consultant on drug policy and private health insurance – but to work long-term, all parties must benefit.
'That means the terms have to ensure a viable market, be clear and transparent, and be monitored so that overall, everyone is better off,' he said.
The Finance Minister's office declined to respond to questions about the consultation, which runs until July 28.