Changes to drug pricing in Atlantic Canada

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What we know…

Drug pricing plays a critical role in the cost of providing your group benefit plan. For this reason, one of our key ongoing objectives is to secure the most competitive pricing possible for our clients to help their drug benefits remain sustainable.

We do this in partnership with our Pharmacy Benefit Manager, TELUS Health Solutions (TELUS). TELUS establishes contracts with pharmacies that set specific limits on how much the pharmacy will be reimbursed for drug ingredient costs and dispensing fees.

If a pharmacy submits a drug claim where the ingredient cost of the prescription is higher than the set limit, the payment from TELUS to the pharmacy will be cut back to the set limit. Under the terms of their agreement with TELUS, the pharmacy is not allowed to pass on those extra costs for the drug ingredient to plan members.

In addition, if a pharmacy’s dispensing fee is higher than the set limit, the pharmacy is also prohibited from passing on those extra costs to plan members (In the Atlantic Canada region only).

Why the changes in Atlantic Canada?

All of the contracts that TELUS has with pharmacies contain a “competitive pricing clause” that’s designed to ensure a level playing field for all providers and ensure consistency in pricing for group benefit plan members, no matter which insurance carrier or drug benefit manager is used.

In 2010, another Pharmacy Benefit Manager in the Atlantic Canada region negotiated discounted pricing with some Atlantic Canada pharmacies, which broke the spirit of the competitive pricing clause. Through recent discussions with several leading pharmacy chains in the region, TELUS has negotiated a solution that is fair and equitable.As such. TELUS is lowering its drug pricing in this region to ensure ongoing pricing competitiveness.

What are the changes?

Across Atlantic Canada, Telus is changing their price file source from Atlantic Canada Pharmaceuticals Inc (APSI) to Manufacturer List Price (MLP) for Branded Products and Provincial Formulary Price for generic products. This is a system change that affects the benchmark used for pricing, but not the pricing itself. Telus will also introduce new lower generic drug mark-ups across the region.

For Nova Scotia only, new lower generic drug pricing has been in effect since August following Nova Scotia Pharmacare, and a modest increase in the maximum dispensing fee will be allowed for to partially compensate pharmacies for the drug cost reimbursement reduction, consistent with Nova Scotia Pharmacare, as well.

Next steps

The new pricing schedules were distributed by fax to individual pharmacies on October 31st, for implementation on December 1st, 2011.

Questions?

Please contact your Client Service Administrator at 1-877-786-7227.