The Year in Review

By Heather Middleton

It has been a year of tribulation and negotiation with a hint of optimism for community pharmacists. Provincial pharmacy associations hammer out new fee schedules, reclaim cutbacks and drum up new ideas for getting reimbursed for cognitive services. Others go back to the drawing board. Again. Across Canada, the reform of Health Canada’s non-insured health benefits program points to a harsh new reality for pharmacists.

And a national plan for Pharmacare inches closer to reality.

Competition in retail pharmacy has never been so intense, with the big getting bigger, and independents carving their own niche to survive. While the threat of MediTrust mail order pharmacy appears to be diminished, legal skirmishes keep things interesting.


Invited delegates at a federally sponsored Conference on National Approaches to Pharmacare champion the need for a universal, publicly funded and administered prescription drug plan for all Canadians. Issues addressed are those identified by the National Forum on Health, including its recommendation that medically necessary prescription drugs be made available to all Canadians without any co-payments. The federal government announces it has no plans to impose Pharmacare on the provinces and promises to provide new funding, if necessary–though details are vague.

Meanwhile, the federal government earmarks $50 million over the next three years to finance pilot projects for the national plan and an additional $50 million over the same period to develop a national health information system.


B.C., Saskatchewan, Manitoba and Nova Scotia are the first provinces to adopt a harmonized drug schedule, based on the model put forward by the National Association of Pharmacy Regulatory Authorities (NAPRA). Alberta, Ontario, Newfoundland and P.E.I. expect to pass the required legislation early this year. While New Brunswick has also indicated its support of schedule harmonization, Quebec chooses to develop its own model (it is also the only pharmacy regulatory body to opt out of membership in NAPRA). For more on Quebec’s schedules, see New rules confuse pharmacists and patients below.

“If we sit back and wait for government, wait for insurance companies, wait for employers, [alternative reimbursements] aren’t going to happen. We have to take a leadership role as pharmacists, even in this tough business environment. People aren’t going to believe us credible unless we can prove that we can deliver this and that cognitive service.”
[Speaking at Pharmacy Post’s Roundtable]

John Makepeace
director of pharmacy, Wal-Mart Canada Inc.

Meanwhile, Health Canada extends the deadline to revoke the GP (general public) designation that allows certain OTC products and commodities to be sold in non-pharmacy retail outlets until the fall of 1999. The harmonized drug schedule will clarify where those products can be sold when the GP designation is phased out.

The new drug schedule will quicken prescription to OTC switches, facilitate national product launches and put new drugs on provincial plans sooner.


Pharmacists and their customers are caught off guard by Quebec’s new drug scheduling rules and practice regulations that classify drugs according to consumer risk.

Under the province’s new rules, medications are divided into three schedules: one, prescription drugs; two, drugs available without a prescription, but only under the supervision of a pharmacist; and three, drugs that are sold only in pharmacies. Other OTCs are unassigned and available in general retail outlets.

The new regulations confuse consumers and create more work for pharmacists, say critics. New practice standards also require pharmacists to set up a computer file for each patient who obtains a schedule two drug.


Five years of negotiations lead the Pharmacy Association of Nova Scotia (PANS) and the provincial government to a three-year agreement that includes annual increases and a two-tier fee system.

By the time the contract is up on March 31, 2001, Nova Scotia’s 246 pharmacies will receive additional revenues of about $4.7 million, an average of $19,000 per store, including almost $500,000 in retroactive fee increases. The professional fee for Pharmacare prescriptions increases to $8.65 from $8.39 for scripts with ingredient costs of up to $110; for prescription costs greater than $110, the new fee is $12.98. In April 1999, the fee will rise to $8.82 for ingredient costs up to $115 and $13.23 for higher-cost prescriptions. In the year 2000, fees increase again to $8.99 and $13.48, respectively.


In April, the provincial government raises the dispensing fee on prescriptions for welfare recipients to $4.42 from $3.92. But the meagre financial gain could be lost if Newfoundland’s health department accepts a recommendation to limit the markup on drugs in its interchangeable formulary to 9%. The policy would not only affect drugs dispensed through the province’s prescription drug program, but also those dispensed through private third-party plans. It would also cost community pharmacy an estimated $600,000 a year, eliminating the $500,000 gain from the increased dispensing fee. A decision has yet to be reached.


After a 16-month battle, the Shoppers Drug Mart and Wal-Mart outlets in Gander reinstate dispensing fees, although they’re still discounted. Shoppers was first to go to a zero fee and the first to eliminate it by charging $3.99 for all prescriptions. Gander’s Wal-Mart pharmacy now charges $3.88 for its scripts. The zero fee came after the provincial government slashed the dispensing fee for welfare recipients to $3.50 from $6.50.

Meanwhile, the town’s two independent pharmacies continue to charge a usual and customary fee of $7.90 (as well as the $3.50 for welfare beneficiaries). Despite losing customers since the fee war began, both pharmacies say they are on the road to recovery.


B.C. pharmacists complain the province’s government-funded trial prescription program involves too much time and paperwork, resulting in low participation. The program pays pharmacists a second dispensing fee under certain provincial health care plans for 49 listed drugs. Although all B.C. pharmacies are connected to the government’s computer system for Pharmacare, it does not process trials or accept on-line reports, making the documentation process cumbersome for pharmacists. B.C.’s ministry of health says it plans to adopt version IV of the Canadian Pharmacists Association’s standard for electronic claims submission within two to three years to help speed up documentation.


The Alberta Pharmaceutical Association (APhA) extends its contract with province for a sixth year while it tries to hammer out a plan for practice changes. Alternative reimbursement, provider audits and compounding are all up for discussion. The province also finances an “innovation fund” to support three pilot projects involving trial prescriptions, drug utilization review and academic detailing. The APhA will create guidelines and manage the projects.


A trial prescription program launched by the Saskatchewan Pharmaceutical Association (SPhA) and the province’s government delivers cost-savings to the drug plan. After one year, 2,619 trial prescriptions are dispensed, of which 44% (1,140) are not refilled due to side effects, lack of efficacy, etc., amounting to more than $38,000 in savings. For their efforts, pharmacists receive a cognitive fee of up to $7.50 (on top of the standard fee of $6.93 for the initial trial supply). Pharmacists in the province are paid for trial prescriptions through a self-funded alternative reimbursement fund, established in 1994. The fund now contains more than $600,000.

Meanwhile, lengthy contract talks between the government and the SPhA include two new programs for alternative reimbursement. The SPhA hopes a decision will be reached by the end of the year.


The Ontario Pharmacists’ Association (OPA) develops a fee guide to help pharmacists bill patients and payers for cognitive services. Since competition regulations prohibit the establishment of a uniform fee structure, adoption is voluntary. The suggested fees are based on a formula that takes time and the relative value of a service into consideration. The base rate of $90 per hour factors in business costs such as pharmacist salaries, administrative expenses and current professional fees. The fee guide covers seven service categories, including dispensing services, additional dispensing-related services, pharmaceutical care services, specialized pharmacy services, pharmacist consulting services, preparation of customized pharmaceuticals and long-term and institutional care services.


In an amended statement of claim alleging conspiracy against Shoppers Drug Mart and other key pharmacy organizations and individuals, MediTrust Healthcare raises its request for damages to $775 million.

In its original claim, filed in April 1997, MediTrust asks for $120 million in damages. After hearing motions from the defendants, the original claim is struck out, but, the mail order pharmacy is granted permission to file an amended claim to cover more detail.

I believe people lose against the big boys because they try to run with them and don’t capitalize on their own professionalism. You’ve got to remain professional and convince your customer you’re worth it.
[An independent pharmacist competing
against the zero fee in Gander, Newfoundland]

Kevin O’Brien, pharmacist-owner
O’Brien Pharmacy

The amended statement of claim gives more details relating to MediTrust’s allegations that the 15 defendants campaigned, individually or as part of a global conspiracy, “to destroy MediTrust and thereby unduly restrain or injure competition in the Canadian pharmacy industry.”

The judge states that some areas of the claim are still too vague and a second amended claim is filed November 13.

A decision as to whether the court case can proceed has not yet been reached.

Pharmacists and payers continue to disagree about the pharmacists’ role in helping to manage drug plan costs.

  • Payers expect pharmacists to help them manage and better understand their drug plans; and see improved communication between themselves, pharmacists, patients and physicians, according to the AltiMed CFP Report on Pharmacy Services 1998.
  • However, the Canadian Pharmacists Association (CPhA) reports that pharmacists are already providing those services at a cost of about $28,000 a year per pharmacy.
  • In future, payers think pharmacists should focus on patient education/information, consistent level of service, communication between the pharmacist and physician, documentation of health outcomes, patient monitoring and specialization by disease, according to the AltiMed survey.


Relations between Health Canada’s medical services branch and pharmacists sour because of unilateral cost cutting and allegations of fraud. Abuse of the non-insured health benefits program (NIHB), which pays out about $180 million annually in prescription and OTC drugs for the more than 650,000 aboriginal Canadians, was detailed in a 1997 report from in the Auditor General. Investigators found that over a three-year period, 15,000 people had prescriptions filled at three or more pharmacies; another 1,600 obtained more than 15 drugs and more than 700 people had about 50 prescriptions filled. Reports of the abuse in daily newspapers and on radio stations draw attention to the issue.

Meanwhile, province-by-province ‘negotiations’ result in fee cuts and co-pays.

  • In B.C., the fee for NIHB prescription drugs is capped and the fee for OTC prescriptions is dropped. The B.C. Pharmacy Association pressures the Medical Services Branch to reopen talks and work with the association; the Branch agrees pushing for a guarantee that cost containments be met.
  • Alberta pharmacists manage to negotiate a better fee schedule. As part of the new deal reached in June, the government continues to pay the full dispensing fee of $8.50 for behind-the-counter products, retroactive to April 1. The APhA also works out a deal to replace the 50% markup for other OTCs with a $5 processing allowance. The APhA and the representatives of the NIHB program agree to spend two years working together on a drug utilization review program.
  • Native Canadians in New Brunswick boycott some pharmacies after pharmacists begin charging the 15% markup that the government won’t pay.
We’re making less money from the dispensary than we were 10 years ago. I believe the day has come where the big outfits are the way of the future and the days of the independent pharmacists are over.

[Speaking about the challenges of surviving as an independent]
Dianne Kehoe, pharmacist-owner
Kehoes Pharmacy
Perth, Ontario

In December, the First Canadian Health Management Corporation takes over the processing of NIHB claims, as part of a commitment by the federal government to give First Nations and Innuit people control of their health programs. The new contract for pharmacy, fiercely opposed by pharmacy associations, and now under review, includes a clause for termination of services without cause. And, to top it off, Health Canada admits it’s reviewing a proposal to put NIHB prescriptions in the Winnipeg area up for tender, thereby creating a restricted network of pharmacy providers.


ESI Canada establishes a network of capped-fee providers as an option for insurers. Pharmacists who join the “select network” agree to a professional fee of $8 in exchange for a boost in business from participating insurers and their plan members. However, employers have yet to sign up. Remaining pharmacists belong to an “open network,” allowing pharmacists to charge their usual and customary fee, without the guarantee of additional business. So far about 700 pharmacies in Ontario have signed on to the “select network” and ESI plans to expand the network nationally next year. The pharmacy benefits manager will also launch its first cognitive fee program in early ’99.


Maritime Medical Care (MMC), Nova Scotia’s largest third-party health insurer, overturns cutbacks for some of its clients’ drug benefit plans after pharmacies began billing patients for the difference. In February, MMC had cut its reimbursements to pharmacies to cost plus 2 % with a fee of $8.36, from cost plus 2 % with a fee of $8.50. Patients complained to their employers about having to pay the difference, and the MMC brought back the old reimbursement rates. However, the new rates remain in effect for employers who do not fund their own programs.

Also in Nova Scotia, three pharmacies file lawsuits against two major third-party health insurers–Assure Health and Blue Cross of Atlantic Canada–for allegedly interfering with competition by prohibiting parity billing (i.e., the opportunity for pharmacists to charge patients the difference between a third-party fee cap and their usual and customary fee). The Pharmacy Association of Nova Scotia is funding the lawsuits.


Canada’s largest pharmacy banner becomes Canada’s largest home health care retailer. Shoppers Drug Mart Ltd. buys up 16 Doncaster Home Health Care locations bringing its total to 31 stores carrying the new banner Shoppers Home Health Care Doncaster. Shoppers plans to expand the division to 100 outlets across Canada in the next five to six years.


The first Health Smart pharmacy opens in Windsor, Ontario. Three local pharmacists own the new chain that plans to build on the business strategies of the former Big V chain. Members of the “customer council” make recommendations on what they would like to see in the store, while the store itself boasts low shelves, wide aisles and soft colours. Hardwood floors and plants decorate the in-store Wellness Shop. Health Smart also intends to put a doctor’s office in each store. Plans are in the works for five more stores in southwestern Ontario by the end of 1999.

We’re pharmacists, and if we don’t put people before economics, we’re not meeting our professional obligation.
[Speaking against tobacco sales in pharmacies]

Bev Harris, pharmacist
Shoppers Drug Mart
Coquitlam, B.C.


A Calgary-based cooperative enters Ontario to sign independents on to its Medi Plus and Medipharm banners. There are 44 Medi Plus stores in Canada, primarily in Alberta and Newfoundland, while Medipharm was created for dispensary-oriented operations. The co-op is expected to grow nationwide to 140 Medi Plus and 135 Medipharm stores next year and the goal for 2000 is 220 and 255 stores, respectively.


Drug Trading Co. Ltd. launches a retailing program that will see its four banners (Guardian, I.D.A., Rx Central and Community Drug Mart) converted into one. Retail 2000 is an opportunity for members to get more buying and marketing clout, say company executives. Drug Trading currently has about 900 banner-store members and 300 non-banner members. Store renovations, technology upgrades and patient care programs are also part of Retail 2000, to be phased in over the next two years.


It’s year two for Quebec’s universal drug plan and pharmacists, physicians, consumers and employers are still complaining.

Consumer groups and health care providers praise the plan for bringing universal coverage to the 1.3 million Quebecers who previously had no insurance. Others say the cost of coverage may be too high for the province’s lowest-income earners. Under the universal plan, adults must have drug insurance, either through their employer or the province. Welfare recipients and seniors must now pay co-pays and premiums for prescription drugs. Those fees force some people to forfeit their medications, causing more than 4,000 hospitalizations, institutionalizations and deaths due to non-compliance and drug problems in the first 10 months, reports a government study.


After three years of lengthy debate, the Saskatchewan Pharmaceutical Association (SPhA) votes to establish the Representative Board of Saskatchewan Pharmacists, hopefully putting concerns over conflict of interest to rest.

The new board will advocate on behalf of pharmacists, leaving the SPhA to concentrate on regulatory matters and its primary mandate to protect the public. The board will have its own staff, elected board members and committees, and its budget of $322,000 will be administered separately from the regulatory budget of $692,000.


Pharmacists in Manitoba vote to establish a “patient care fund” that will reimburse pharmacists participating in pharmaceutical care projects. Pharmacists agree to pay a $15 surcharge on practice licenses for two years to help fund the program, and pharmacy owners also promise to contribute one cent from every prescription filled, to a maximum of $25,000 in the fund. Apotex Canada Inc. will match funds, up to $40,000.

The project follows up on a pilot program in which six pharmacists worked with the elderly to help manage their drug therapies.


The U.S. launch of Viagra (sildenafil) in April sends droves of Canadian men south of the border–with or without prescriptions–while others buy it over the Internet. Manufactured by Pfizer to treat impotence, Viagra is touted as the fasted selling drug in history. Health Canada is expected to give Viagra the green light anytime.

Competition from the large stores has actually been a positive factor. It’s given us a kick in the ass and made us ask ourselves what we are doing. That’s the nature of being an entrepreneur–you fall on your face and get up and keep going.

[An independent pharmacist speaking about competition in Ontario]
Ron Cosgrove, pharmacist-owner
Peninsula Pharmacy
Lions Head, Ontario


Pharmacists in Quebec and eastern Ontario use small generators to power computers, telephone lines and light bulbs during January’s fierce ice storm that caused blackouts for weeks.


Quebec becomes Canada’s third province to rid pharmacies of tobacco. A four-year battle pitched the Ordre des pharmaciens du Quebec against the Jean Coutu Group (PJC) Inc. The log jam is broken in June, when the province’s Professions Tribunal sides with the Ordre and states that tobacco should be pulled immediately from frontshop shelves. The Jean Coutu Group appeals the ruling, arguing that Quebec’s new tobacco legislation gives pharmacists until Oct. 1, 2000 to remove tobacco. A Supreme Court ruling in September upholds the ban, effective immediately, after stating that the sale of tobacco products conflicts with pharmacy’s code of ethics.

After two-thirds of pharmacists in B.C. vote in support of a tobacco ban, the College of Pharmacists of B.C and the B.C. Pharmacy Association jointly present its report recommending steps the provincial government take before legislating a tobacco ban. A five-year phase in period is requested to give the province’s pharmacies time to drum up new revenue.

Pharmacists in Newfoundland vote 96-1 to start the process of voluntarily eliminating tobacco sales in pharmacy, instead of waiting for the government to act. The Newfoundland Pharmaceutical Association will examine the economic impact of removing tobacco and establish a committee to look at other products and services to make up for lost tobacco revenue.


Toronto pharmacists save the former municipality of Metropolitan Toronto a bundle in drug plan costs–but still end up paying $40,000 as part of a unique contract arrangement.

The contract between the Metro Toronto Pharmacists’ Association (MTPA) and the city, guaranteed that a one year managed medication use program (MMUP) would save at least $200,000 by mid-January 1998. The MTPA says it met the target, but the city contends there is a $40,000 balance owing. In the interests of keeping up the good relations, the MTPA decides to swallow the balance and pays it from funds set up at the beginning of the program. It is now pitching the MMUP to the new megacity of Toronto, hoping to serve its 35,000 employees and their dependents.


Pharmasave Canada is poised to become a major competitor in Ontario, challenging such pharmacy heavyweights as Shoppers Drug Mart and Drug Trading’s Guardian, I.D.A. and Rx Central banners. The 16-year-old franchise pharmacy signs on 28 pharmacy owners, boasting it will have 200 Pharmasave stores in the province by the end of 1999. Pharmasave is the largest banner in B.C (with 94 stores) and holds the number-two spot in Nova Scotia (46 stores).


  • Baby boomers help bring alternative remedies into the mainstream and ring in $70 million for drugstores (for herbal remedies), but their lack of legislation invokes controversy among health care professionals, retailers, manufacturers and the government. While a new regulatory framework for natural health products charts its way towards government approval, the industry is doing its part to educate those on the front lines.
  • Wampole Canada Inc. sponsors the Canadian College of Naturopathic Medicine’s (CCNM) correspondence course on botanical medicine for pharmacists. The course, taught by pharmacist and graduate of the CCNM, Michael Smith gets much criticism from naturopathic doctors who fear that pharmacists are infringing on their territory.
  • The B.C. Medical Association approves a motion calling on the B.C. College of Pharmacists to allow members to recommend only those complementary medicines proven to be effective in scientific trials.