Drug dispensing fees need to be explained

Originally published in The Ottawa Citizen July 30, 2002
Original Title: Count, Pour, Lick and Stick

Many patients express their disdain over medication dispensing fees. All Canadian pharmacies charge this fee. I too had some misgivings about the fees but did not have the necessary background to draw any firm conclusions. Further enquiry to determine their origin and their original purpose was needed. Do people get value for their money? Why do dispensing fees vary? A spokesman for the Ontario Pharmacists’ Association (OPA) addressed these issues in an interview several weeks ago.

In the 1960’s the price of a medication consisted of a combination of a price mark-up and the dispensing fee. Pharmacists were under no obligation to reveal the dispensing fee amount to the customer. The Government of Ontario enacted legislation mandating that both the prescription medication cost and the dispensing fee appear on every receipt. The original fee was initially three to four dollars.

Quebec pharmacists do not have to post or reveal their dispensing fees. This leads to the misconception that Quebec pharmacists do not charge a fee. Naturally people conclude that if pharmacies across the river can remain financially viable without extra fees, why not those in Ontario? Contrary to popular belief, all Canadian pharmacies charge dispensing fees but not all provinces have a law similar to Ontario’s.

The fees, set by the individual pharmacist, must be registered with the College of Pharmacists and posted in the pharmacy. It is based on the cost of a maximum of 100 days of prescribed medication. For greater quantities there is a concomitant fee increase.

The Ministry of Health and Long Term Care (MOHLTC) determines the maximum price of prescription medications. These prices appear on the Ontario Drug Benefit (ODB) formulary that lists all the medications covered under social assistance and elderly benefit plans. The pharmacist cannot charge more than a 10% mark-up on the ODB mandated cost for all patients regardless of coverage eligibility.

Pharmaceutical companies submit their list price to the MOHLTC for inclusion in the formulary. The MOHLTC decides whether it will accept this price. It can impose its own value well below cost. The pharmacist has no choice. They have to use this fee.

There are 150 prescription medications that exceed the formulary list price. Pharmacists have to subsidize these increased costs out-of-pocket. They are forbidden to mark-up the cost of the medication. In 2000, pharmacists lost about $22.5 million subsidizing the cost of these medications.

An audit of dispensing fees done by Cunningham and Associates, Chartered Accountants indicated that the cost incurred for the pharmacists time, overhead and cost of doing business was $5.85 in 1987 and $9.31 in 1999. Over the past ten years, the average cost of pharmacy practice increased by 31%. In 2000-2001 prescription volume increased by 8% to 46 million placing an increased strain on human resources.

The MOHLTC caps a maximum dispensing fee of $6.47 for people on social assistance or over 65 years of age. This fee cap has not changed in 12 years. Both the cost of the medication and the dispensing fees for this large group of people is governed by the MOHLTC; another example of health care central planning. Of the $1.9 billion dollars spent by the Ontario government on drug benefits, dispensing fees accounted for 3.2% of the total.

In effect, the fee has not kept pace with the real cost of doing business. It falls upon those outside of the government assistance plans to compensate for the capped fee.

The fee generally is a small percentage of the overall price of the medication. It is a means for the business to recoup lost revenue due to the government’s fixed retail pricing.

Are patients getting value for their dollar? According to the OPA indeed they are. The fee covers the business expenses of the dispensary and all the extra services each pharmacist offers to their patients.

Pharmacists not only “count, pour, lick and stick” but oversee potential medication and food interactions, allergies and potential interactions with herbal preparations. The College of Pharmacists mandates patient counseling for each new prescription. This include a full disclosure of potential side-effects, complete dosing instructions, ensure an understanding of why it is being used and how to know if it is working as intended. Much unpaid time is spent on the telephone discussing therapeutic options and prescription clarification with physicians. They deal with third party insurance payment plan paperwork.

The pharmacist should answer every question posed by the customer. Inevitably, the customer develops a personal/professional relationship with their pharmacist establishing a contract for trust. The pharmacist learns about their client’s medical history. Over time they are able to determine whether a particular off the shelf or new prescription medication has the potential to interact with their present regimen.

People tend to think that price comparison-shopping for medications is akin to buying a car. This can be a difficult process because an accurate price requires a precise description of the medication and its dosage. Pharmacists are forbidden to advertise the cost of prescription medications. Most do not mind providing the price over the phone. People have the right to ask about the cost of their prescription before dispensing. No one should be blindsided.

The OPA has to better communicate the concept of dispensing fees. It has to explain to people why some medications that cost pennies (penicillin, prednisone, tetracycline among others) have dispensing fees of four to 12 dollars added onto the final price. It is understandable that the consumer becomes jaded and suspicious.

Do you think your pharmacist provides a valuable service? What is your take on dispensing fees? Your comments to the Citizen are always appreciated.

© Dr. Barry Dworkin 2002

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