Usually price cuts to consumers are a good news story but when the provincial government unilaterally reduced the price of generic drugs to provincial pharmacists, it created serious problems for many of the drug purveyors in rural Alberta. Small town pharmacists, in particular, were hit hard financially by the news that all the generic pharmaceuticals they had on hand would be priced higher than the amount they could charge for them. Buy high, sell low is a recipe for financial ruin especially when you don’t have the diverse merchandising model of a Wal-Mart or Costco to soften the blow.
The news has seriously affected operations at Family Pharmacy in Wetaskiwin. Michelle Reid, who along with her husband, John, who have been in business for seven years, is extremely concerned by the Health Department announcement.
“I am certainly discouraged and shocked by the government's decision because there was no consultation with pharmacy, industry, or Albertans,” claimed Reid in an exclusive interview. “It's not supportive of democratic free-enterprise, and not supportive of my patient's healthcare needs. In my opinion, the government and, to some extent, the average Albertan, doesn't quite fully understand the issues that arise because of the announcement.”
Fellow pharmacist, Donna Oselies of Apple Drugs in the town of Millet, agrees with Reid wholeheartedly.
“There isn’t a pharmacist in Alberta that agrees with what the province has done,” Oselies informed the Flyer. “I feel, for patients’ lives at this point. There have been drug shortages the last two years and it will only worsen. Why would generic companies sell for 18% when they can get 35% from other provinces? We already have a drug shortage that is affecting patient care. Some generics aren’t even worth producing for 18% so they will not be there. Brand names will not be able to keep up with production and be more expensive. We’ve already seen this happening.”
Oselies was also mindful of the larger picture for smaller centers who rely on their local druggists as being part of their health and wellness team.
“All of the graduating pharmacists have been told there are no jobs in Alberta,” Oselies stated. “The United States are buying up our students. We will not be seeing a lot of pharmacist graduates entering the Alberta market where there are already shortages. Even the box stores won’t be able to keep up. With all the baby-boomers entering their senior years, it will only get worse.”
Oselies also made the point that pharmacy students often rack up huge student loans, in the $100,000.00 neighborhood, and that, once they leave the country, those loans are much more difficult to collect. The province must have already realized their error as Health Minister, Fred Horne, has already given the industry an extra 30 days to reduce their inventory of the higher priced products. Just that move alone could save a small retailer $50,000.00 to $100,000.00, a figure that could cripple and possibly sink a struggling pharmacy serving a limited rural market, according to a number of media reports. The minister also alluded to other initiatives to transition the industry into the lower margins the province is proscribing. Still, Michelle Reid is convinced it was too much, too fast.
“The one month washout period is not enough,” asserted Reid. “Many of our medications don't turnover in that time-frame because most pharmacies generally have a three month supply on hand for the convenience and safety of their patients. As a result, we will take on a very large loss in inventory June 1st when the washout period is over. The losses, even in small pharmacies, will be upwards of $60,000. It's impossible & completely unreasonable for the government to think we can empty our shelves within a month.”
Given the rapid response by Horne to the situation, with the 30 day extension and promises of other tweaks, it appears the move by the province was implemented before it had been carefully considered. For Reid, Oselies and many other Alberta pharmacists, many of whom held a protest over the matter at the legislature a month ago, it is a case of the government failing to consult with affected stakeholders when changing legislation.
According to Reid, “On April 1st there were six specific medications (a few strengths of each), that were already reduced to 18% of brand. We haven't had time to adjust to that yet, and another enormous reduction is taking place 30 days later. If the government actively discussed these changes beforehand with pharmacists, industry and Albertans, perhaps a better, more reasonable, more viable solution ..could have been determined. I'm hopeful that the government will acknowledge our distress & be willing to discuss the situation now that they see how pharmacies and patient care will be affected, and offer some compromise so we can find an appropriate resolution.”
Reid estimated generic products accounted for between 60% and 80% of the total sales in her shop.
Rather than the health minister’s accelerated implementation period, compared to most other provinces, Reid had some suggestions for Health Minister Horne, “A smaller reduction, for instance 30% of brand, to occur sometime later in 2013 or in 2014 would have been much more reasonable, and held a smaller impact on patient healthcare. Generic companies have professed that they cannot make many of their medications for 18% and we could potentially see medication shortages as a result. The generic companies also may not be able or willing to provide medications to Alberta, and our patient's health will be compromised. Why would they sell to Alberta at lower prices if they can sell to other provinces at a higher prices? We will likely be forced to go back to using brand name medications, at higher prices, that are in short supply in the market, and we will see healthcare costs rise, and patient health suffer.”
“Dispensing fees will need to increase to keep pharmacies viable,” Reid continued. “These are dictated by government, as well, and have not changed in years, so it's imperative that discussions ensue to allow for a reasonable fee, so pharmacies can remain an important part of our healthcare system, and our communities.”
Reid and Osleies are not alone in their opinions. In a response to the government’s slashing of generic drug pricing, Director of Communications for the Alberta Pharmacists Association, Cynthia Rousseau, issued a statement available on the Association’s website (www.rxa.ca).
In the response to the legislation, she writes,
“Representatives from the Alberta Pharmacists’ Association (RxA) and community pharmacists were shocked when such a dramatic decrease was announced without consultation of the profession. RxA is deeply concerned for pharmacy as a profession, as this change will affect the ability of pharmacists to continue to provide high quality care to Albertans. The Association has heard from many pharmacists that they are very concerned for their patients and for the profession.”
So much for the good news story.