On July 10, 2009, David Caplan, the Minister of Health and Long Term Care of the Government of Ontario announced plans for a substantial review of the drug system in Ontario. This review comes approximately 3 years after the completion of the reform process that lead to the Transparent Drug System for Patients Act (Bill 102).

The Government believes that it has made progress under Bill 102, including better management of the public drug program, savings of over $600 million that have been reinvested into Ontario’s drug system, improved access: faster drug funding decisions and innovative agreements, enhanced pharmaceutical reimbursement and greater patient and public participation. At the same time, the Government has indicated that it believes that further improvements are needed before Ontario can be said to achieving world-class value for money.

The Government has identified a number of major issues that remain to be addressed including: the need to fund the increasing demand for drugs and make new investments in drugs, increasing spending for generic drugs, supporting a higher number of pharmacies per capita than elsewhere, unacceptable practices occurring within the existing system (i.e., abuse of the rules with respect to professional allowances), and the fact that other jurisdictions have taken substantial steps across the value chain to reduce prices not yet undertaken in Ontario.

In preparing to launch a broad consultation process with stakeholders, the Government has already consulted a wide range of sources of expert advice and has identified a range of options. These options include changes to the (i) rules regarding professional allowances, (ii) services of pharmacies that are compensated, (iii) rules with respect to distribution channels, and (iv) the pricing of generics and brand name drugs.

Next Steps

The Government is in the process of establishing multiple discussion tables to solicit feedback from various stakeholder communities. Some of the tables will focus on sector –focused themes (e.g., issues that impact pharmacies) and others on "crosscutting issues (e.g., sustainability of public and private plans). The participants in the discussions will be largely the industry associations. The consultations are to be concluded in September.

The Government has indicated that once the consultation process was concluded it would proceed with changes, starting with those that did not require legislative or regulatory changes. It was suggested by Minister Caplan that an legislative changes would likely find their way to the Provincial Legislature in the first half of 2010.

While the Government has been careful to outline issues that affect all of the participants in the drug distribution system in Ontario, it seems clear that the primary focus is with the respect to the compensation of pharmacies and the pricing of generic drugs. Each of these issues was addressed substantively in the Bill 102 reforms. The reforms that were implemented as part of the Bill 102 process have not yielded the results that were expected.

In addition, the scope of this reform process is broader that in the case of Bill 102. In the latter case the focus was on the public market. The current review is said to include both the public and private markets.