Manulife backtracks plan to give Loblaws exclusive right to fill prescriptions for some drug plan members

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Canada’s largest insurer, Manulife Financial Corp. MFC-T, has reversed its decision to give Loblaw Cos. Ltd.’s L-T pharmacies the exclusive right to fill prescriptions on certain specialty medications for chronic illnesses.

The insurer announced on Monday that Manulife’s plan members who take specialty medications will now be able to fill their prescriptions at any pharmacy of their choice.

Manulife said last month that, as of Jan. 22, all specialty medications would “primarily” be fulfilled by Shoppers Drug Mart and other Loblaw-owned pharmacies. Also known as preferred pharmacy networks, or PPNs, these agreements are typically set up between insurance companies and one or several groups of pharmacies to help reduce claim costs for expensive specialty drugs.

Manulife set up an agreement for its specialty drug care program with Shoppers Drug Mart in October, 2022. The agreement was in addition to a similar PPN arrangement Manulife had created with independent health care provider Bayshore HealthCare in 2014. Both agreements allowed Manulife policy holders to pick up prescriptions in-store or through home delivery.

But on Jan. 17, Manulife announced it would be ending its arrangement with Bayshore as of Jan. 22. That deal included access through 300 affiliate pharmacies across Canada.

The exclusive agreement with Shoppers sparked competition concerns and negative feedback from some customers who were already accessing specialty drugs at other independent pharmacies set up through the Bayshore network.

Manulife Canada president and chief executive officer Naveed Irshad said in a statement that the company has listened to and is addressing the concerns it has heard over the past week.

“Though this change impacts only a small number of our members, it helps ensure that all Canadians we support have choice, access, and flexibility in managing their health,” Mr. Irshad said. “We are proud to partner with thousands of pharmacies across the country and contribute to a strong and healthy Canadian health care system.”

In a statement posted on the company website, Manulife said the changes will be implemented “swiftly.”

“As we’ve said all along, our goal is to ensure patients have convenient access to care, and we believe strongly in choice,” Loblaw spokesperson Catherine Thomas wrote in an e-mailed statement on Monday. “We’re pleased they have now decided to promote patient choice in specialty PPNs. Shoppers Drug Mart pharmacies will continue to support patients, providing a holistic approach to care for Canadians living with some of the most complex diseases.”

Some patient groups welcomed news of the reversal. Kate Lee, vice-president of research and patient programs at Crohn’s and Colitis Canada, said she had been worried for patients who lived in areas not serviced by Loblaw-owned pharmacies. “Bottom line, we’re really happy that Manulife listened and changed their policy,” she said.

In response to concerns last week, Loblaw had insisted that the deal was not narrowing options for people filling certain prescriptions, noting that Manulife’s specialty drug coverage had operated through a different network in the past, and that small independent pharmacies had not served those people under the previous network. The company said customers would now have the option of filling prescriptions at hundreds of Loblaw-owned pharmacies, whereas previously they primarily received their medications through the mail.

The federal government was among those raising concerns. Innovation Minister François-Philippe Champagne told reporters on Parliament Hill last week that he was watching the situation closely. “We want more competition in this country, we want more options, we want more choices, so, that’s not going in the direction we want to see,” he said.

Expanding its health care business has been a key strategy for Loblaw, which has been experimenting with offering more health services in its pharmacies. Shoppers has also been opening health care clinics, including 103 locations in Alberta. The company has plans to open nearly 150 new pharmacy care clinics, Shoppers president Jeff Leger wrote in a statement.

Shoppers Drug Mart’s ability to offer “heightened patient care” factored into the discussions with Manulife, according to Loblaw’s statements last week.

Under the original deal with Manulife, Shoppers would have distributed around 260 medications under the insurance company’s specialty drug care program, including treatments for rheumatoid arthritis, Crohn’s and multiple sclerosis.

Manulife said the number of customers in the program is “less than 1 per cent” of its total plan members and customers in other drug programs have the option to choose their pharmacies.

Quinn Grundy, an assistant professor at the University of Toronto who researches the pharmaceutical sector, said while just a small number of patients would be enrolled in a specialty drug care program, they represent a large expenditure for Manulife because of the high costs of their treatment. She pointed to recent federal data that showed spending on drugs was being increasingly driven higher by rare-disease treatments that cost more than $250,000 a year per patient.

“We can’t lose sight of the fact that we pay too much for drugs in Canada and a payer like Manulife is looking for ways to control the cost of these incredibly expensive specialty medicines,” Dr. Grundy said.