Rimbey drugstore owners are in shock over the government’s decision to slash the cost of generic drugs, and both businessmen are worried about how they will keep their stores viable when the new prices go into effect May 1.
The budgetary announcement that the cost of generic drugs will be reduced from 35 per cent of the cost of brand name drugs to 18 per cent as of May 1 is good news for the consumer, but it leaves owners of pharmacies with little or no wiggle room to survive, said Patrick Rurka, owner of Rimbey Value Drug Mart.
“It’s a really bleak picture,” said Rurka. “I’m trying to be optimistic, but I’m struggling right now.”
Rurka, who has owned Value Drug Mart for nine years, said pharmacy owners depended on the rebates received for the generic drugs to keep their profit margin healthy.
The cut means there will be no rebate and pharmaceutical owners will have to depend on a dispensing fee of $10.22 per prescription, which has not increased since the late 1990s as their only source of income.
Carl Ziegler from Pharmasave is also concerned about the government’s decision to slash generic drug costs.
“I have never been a fan the rebate model of payment,” he said, “but that’s the way it worked and now with the reduction to the pricing, I don’t know how we will recover.”
Ziegler said the $10.22 dispensing fee simply isn’t enough.
“The dead net cost of dispensing a prescription, paying the staff, paying the utilities, paying the rent — expenses — is well over $13 per prescription. That’s the bare bones cost to ensure that my patients are getting the adequate pharmacist team time to ensure that their medications are appropriate, used properly and effectively and answering any questions.”
Ziegler said on a perfect day that cost might drop to $11.50.
“But I can’t hope for perfect days as a front line health care professional.”
Rurka agreed the rebate system is ineffective.
“It doesn’t make sense we are being paid through a rebate system.”
He added the change in pricing means services such as faxing and phone calls to physicians or other drugstores can no longer be free and donations to sports groups and activities will have to be chopped.
“Somehow I have to cover my costs,” he said. “I will have to somehow tighten my belt and come up with more efficient ways of doing business.”
Rurka and Ziegler were among six pharmacists who took part in a conference call with Health Minister Fred Horne, March12.
They said the minister listened to their concerns but offered no solutions or changes to the model now in place.
“What I’d like to see going forward is a revised fee schedule,” Ziegler told the minister. “A fee schedule tiered to the cost of drugs. If not a tiered fee schedule, then a flat dispensing fee of $10.22 plus a percentage charge to cover the cost of distribution.”
“Can the minister remove the handcuffs that disallow pharmacies to bill a higher dispensing fee that what is set forth by government?” he asked.
Both Ziegler and Rurka are angry pharmacy owners such as themselves were not consulted before the change was announced.
“It has been a horrible surprise,” said Rurka.
“They did not meet with the Alberta Pharmacists Association once,” said Ziegler. “There was no negotiation. It is unbelievable.”
In a special edition of The Capsule, a newsletter from the Alberta Pharmacists Association, RxA Byron Bergh said pharmacists need to lobby the government about the impact the changes in pricing will have to their businesses.
He said the government and private drug programs have benefited the most through generic drug revenue as it has allowed them to keep pharmacy fees largely unchanged for the last 22 years.
Now that government is reducing generic revenues, they must correct two decades of neglect by reinvesting in pharmacy, he said.
The change will result in a serious hit to pharmacies’ bottom lines, Rimbey-Rocky Mountain House-Sundre MLA Joe Anglin said in a press release.
“The new funding model put in place by this government is backfiring,” he said. “They are destroying a rural pharmacies’ ability to recover costs which ultimately will result in several thousand Albertans losing access to what is for many a critical health care service.”
