August 16, 2005

Pharmacare Cuts and Pharmacy Fees

The Ministry of Health recently released its report on Pharmacare, "Pharmacare Trends 2003". In addition to showing how many people were cut off benefits as a result of the introduction of "Fair Pharmacare", it may explain why the BC Pharmacy Association was such an enthusiastic supporter of changes to the Pharmacare program. According to the Pharmacare report: "Prior to 2002, the seniors' deductible only covered ingredient costs, with the patient responsible for covering the dispensing fee up to a maximum. The changes in 2002 brought the dispensing fee into the deductible. PharmaCare now spends double the amount it did in 1999 on dispensing fees." Following those changes, income based user fees were introduced as part of "Fair Pharmacare" in May 2003.

Notice that the name of the professional association is "Pharmacy Association", not "Pharmacists' Association". Many, probably most, pharmacists are employees of large stores or chains. Their fee is determined by the owner of the store, not by the pharmacists. There is an interesting history behind that name, but that story is for another day.

Dispensing fees, sometimes called professional fees, paid by Pharmacare increased from an average of $2.69 per prescription in 1999 to $6.42 in 2003 (139%). Those figures are misleading because prior to 2002 seniors paid the dispensing fee. That made the overall average dispensing fee paid by Pharmacare differ substantially from average fee charged to individuals. The report shows the average fee paid for Plan C (welfare); for that plan the average fee declined from $5.98 in 1997 to $5.73 in 2000 and then increased to $6.58 in 2001, $7.42 in 2002 and $7.98 in 2003. Since Pharmacare pays the full dispensing fee for Plan C, the average fee paid by Pharmacare for that plan should be the same as the average paid regardless of which plan any person is on. (Some pharmacies cheat and base the fee on the drug, ingredient, cost.) The fee increased by 21.3% between 2001 and 2003. That jump in fees was made easier by the removal of the competitive pressure that resulted from having the dispensing fee be the user fee for the plan for seniors. The pharmacies did very well for themselves at a time when cutbacks, restraint and "core reviews" were the theme of the Campbell government.

On October 24, 2001, an article was published on StrategicThoughts.com which said:

Until 2002 the program played a significant role in controlling dispensing fees through a combination of encouraging competition and negotiation. When the policy change was made to increase the user fee for seniors and to count dispensing fees the same as drug costs, the major control on dispensing fees was lost. Pharmacare still applies a maximum dispensing fee that will be paid by the program, but even that has increased by 12% from $7.55 in 1999 to $8.45 in 2003. In 1999 that maximum was $1.77 higher (30.6%) than the average fee paid by Pharmacare; in 2003 the maximum was only $0.47 higher (5.9%). It is much easier for pharmacies to charge above the maximum that Pharmacare will reimburse when the extra fee is part of a substantial user fee for the drug portion of the prescription. The gap between average fees and the maximum allowed for reimbursement was closed and fees were increased as a direct result of the government giving the Pharmacy Association what it lobbied for, higher user fees that helped to hide rising dispensing fees. The Association returned the favour by singing the praises of the government's changes to Pharmacare, including the publication of a position statement saying that "an ability-to-pay model would help control the escalating costs of Pharmacare."

Experience in Quebec showed that switching to income based user fees resulted in a one time drop in government spending on its drug program which was immediately followed by the resumption of rising costs. The service plan for the BC Ministry of Health forecasts that Pharmacare costs will rise 7.1% this year, 10.4% next year, and 10.4% the following year (ending March 31, 2008). Those forecasts are probably optimistic and are likely to be achieved only through further cost shifting onto sick seniors. Cost control calls for an understanding of the problems, not caving in to lobbyists. Many internists and health economists point to unnecessary and inappropriate prescriptions as a reason why costs rise in drug programs and why some people are made sicker. Dealing with that problem means taking on big Pharma which spends thousands on almost every doctor in order to influence their prescribing patterns. Pharmacists should be working with the government to eliminate inappropriate prescribing rather than cooperating with the government in shifting costs to sick seniors.

An evaluation of the impact of the policy changes to the Pharmacare program was supposed to be released before the election. It may not become available until after the next election, but Pharmacare Trends 2003 reported that:

It is an enormous understatement to say that the trend was briefly reversed in 2002 when the graph that accompanies the text shows 100,345 fewer people received Pharmacare benefits in 2002 than in 2001. In 2003 the number had still not reached the 2001 pre-"Fair Pharmacare" level, remaining 15,070 lower. Perhaps that is why the government didn't publish the report until after the election.