Prescription drugs are seen on shelves at a pharmacy in Montreal on March 11, 2021. The Ontario government said in a consultation paper released Friday that it is considering 'whether policy intervention is needed or appropriate' in relation to preferred provider networks in the province.Ryan Remiorz/The Canadian Press
The Ontario government is considering whether new regulations are needed to limit exclusivity deals between insurers and pharmacies, launching a consultation process Friday that seeks comment from businesses and consumers on the issue.
Regulators across the country have been taking a closer look at such arrangements, known as “preferred provider networks” or PPNs, in recent months.
After public backlash earlier this year, Canada’s largest insurer, Manulife Financial Group, cancelled a PPN arrangement that would have restricted plan members to receiving specialty medications exclusively through pharmacies owned by Loblaw Cos. Ltd., including Shoppers Drug Mart.
On Friday, the Ontario Ministry of Finance announced a 60-day public comment period asking insurance companies, pharmacy operators, consumers and employers to help the government better understand the role of PPNs in the province’s group benefits insurance sector.
The government said in a consultation paper released Friday that it is considering “whether policy intervention is needed or appropriate” in relation to PPNs in the province and is looking for information on issues including the impact of PPNs on the cost of drugs and quality of patient care.
The private health insurance industry has been expanding its use of PPNs over the past decade. PPNs are complex agreements that can vary between insurance companies.
In an open or voluntary PPN, plan members are given an approved list of pharmacies to access certain specialty drugs. They can still fill a prescription at an out-of-network pharmacy, but it may be more expensive. In a closed or mandatory PPN, insurers restrict plan members to using the approved pharmacies, and they cannot fill their prescriptions elsewhere.
“As closed PPNs provide the most exclusive access to patients, for participating pharmacies, they may provide greater discounts than open PPNs,” the consultation paper noted. “However, these potential savings may come at the cost of consumer choice and the potential for more competition in the pharmacy sector.”
Insurance companies say these exclusive deals can deliver savings on the premiums group benefits plan members pay for specialized drug care, because the pharmacies are able to supply in bulk. In turn, it can reduce co-pays for consumers or make the continued coverage of these pricier drugs more feasible for employers. However, the paper said that more information is needed to determine whether this is happening.
While Manulife backtracked on its exclusive agreement with Loblaw, the deal sparked public outcry and prompted the Ontario College of Pharmacists (OCP) to draft a position statement critical of PPNs, after pharmacists expressed concerns that such arrangements restrict patient autonomy and may limit some patients’ access to treatment.
The consultation paper noted the “growing public discussion and media coverage” of PPNs, citing reporting in The Globe and Mail about the issue earlier this year, and noted the need to “proactively address Ontarians’ concerns” about the rise of these agreements.
Patient groups have been advocating for an end to PPNs that they say can limit access to drugs. Independent pharmacists say such deals unfairly lock out thousands of small businesses across the country because they do not have the clout to strike the same kinds of deals with insurers that larger chains are able to negotiate.
Among the issues that the consultation is looking at is whether PPNs can have an impact on competition in the pharmacy sector; if closed and mandatory PPNs have an effect on consumers’ choice and ability to access the medicines they need; and how prices differ in insurance plans involving PPNs compared with those without such deals.
It is also seeking basic information on the scope of PPNs in the province, and how large a portion of various pharmacies’ businesses rely on such deals.
If the government does not choose to maintain the status quo, it will consider whether new policies could be introduced, such as an “any willing provider” framework that could require insurers to make participation in their PPN arrangements open to any pharmacies willing to adhere to their terms.
Currently, the insurance regulatory framework does not outline any specific requirements regarding PPNs that an insurer may offer in Ontario.
As part of its consultation – which is open for public comments until Oct. 22 – the government is seeking input on whether policy interventions on PPNs are desirable and how such interventions could impact costs, competition and quality of care.
The consultation paper also cited a position statement issued last month by the OCP, which said that PPNs and other payer-directed care models pose a “potential risk of harm to patients, contravene established ethical principles guiding the profession and conflict with standards of quality patient care.”
The OCP has indicated a readiness to develop new regulations restricting the use of PPNs in Ontario. The difference between these possible OCP regulations and the “any willing provider” policy being considered in the government’s consultation is that the OCP would regulate pharmacists and pharmacies, while the latter policy would address insurers.
The paper noted the need for more clarity on whether new OCP regulations would require amending legislation.