The "funding cut" to Alberta pharmacies

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I know I haven't posted anything in ages, and I apologize, but I'll try to be a little more regular in the future.

What's finally got me out of my writing funk is the recent announcement that the Alberta government was "making significant cutbacks to community pharmacy". "100's of rural pharmacies might have to close their doors". Check out this site I care about my pharmacist for what pharmacists are saying about it. As a pharmacist myself how can I not be outraged at something like that?

Maybe because it's a load of bullshit.

First off, the government doesn't "fund" community pharmacies. They are independent businesses (or members of corporate chains) who have contracts with the government to provide pharmacy services for specific Alberta citizens (seniors, social services, disability, etc). These contracts limit the amount they can charge patients on government sponsored programs for filling their prescriptions. To simplify, this consists of the actual invoiced cost of the drug, a tiny "inventory allowance", and a dispensing fee. All in all, the pharmacy makes about $10 "profit" on each prescription. (this is before all other expenditures, such as rent, wages, supplies, etc, so the actual "profit" is much, much less)

So where is this big "cut to funding" coming from? Did the government change the contract so they are paying less of a dispensing fee? Did they axe the inventory allowance (a tiny amount that is almost insulting anyway)? No. So what did they do?

They made the drug itself cost less. They made deals with the pharmaceutical companies, and negotiated a direct cut to the cost of generic drugs. And since pharmacists do not mark-up the drugs, this is a savings that will transfer straight to Albertans, either directly or as savings for the government drug plans.

So now, you're probably wondering, how the hell this is being portrayed as a "funding cut to pharmacies". I mean, look at it. With everything presented here so far, it should be completely revenue-neutral to the pharmacies themselves. Hell, if anything, it should be beneficial, as they will have to carry less inventory just sitting on the shelves waiting for a customer to need it.



Ready for me to tell you the real story?

The one little thing that the articles (and that crybaby pharmacist website) forgot to tell you. Or they hinted at it, but didn't explain. A large portion of pharmacy "funding" comes from the drug manufacturers in the form of rebates. It's been a while since I've been in a position to see the actual dollar value, but it's a very significant amount. Basically, the drug companies will pay the pharmacy to sell their product over a different companies product. So, yeah, when a person gets a prescription, they pay what the pharmacy paid for the drug, with no mark-up, but they don't get any benefit of that little kick-back rebate payment. That goes right to the cash register, and to the black side of the ledger.

But that still doesn't explain where this "government cuts to funding" has come from. Pretty easy to close the loop from here, but I'll do it for you. They have forced a reduction in the up-front cost of the generic drugs. In the end, the drug company isn't going to take the hit to their bottom line, so the rebate payments will be reduced, or axed outright. This is the "funding cut" that the stories are telling you about.



So, that still sounds pretty bad, why aren't I concerned?

Well, for one, I'm simply annoyed at how dishonestly the pharmacists in the news have been portraying this. THE GOVERNMENT DID NOT CUT YOUR FUCKING FUNDING!!!! As far as I can tell, they didn't even ban rebate payments (like they did in Ontario). They simply have negotiated a better "at-the-register" price for themselves and for all of your customers. Really, this isn't about the lost money. It's about doing things the way they've always been done, and resisting a change when it comes.

Personally I don't think the rebate system had any place within our socialized medicine system. Progressive pharmacists are always whining about how our only source of revenue is tied to a product. Well, who made it that way? You certainly didn't do yourself any favours by having the rebates for selling generic drugs be the only way you could be profitable.

Even when we've had the chance, we haven't charged people for our additional services. Remember that "pharmacist prescribing" that was such a big step forward a couple years ago? How much money do you charge for that process? Er....if you're like every pharmacy I've seen it's a big fat $0. When that came through I was working for Shoppers Drug Mart. You can say a lot of things about them, but one thing I've always thought they've done well is charge a fee for services, and justify it. But when pharmacists got the right to prescribe, what did they charge. NOTHING. They decided that gaining another dispensing fee for the filling of the prescription was enough.

So there's a spot these hard-done-by pharmacies can make some of their "cut" funding back. Charge for your pharmacists time involved in prescribing. If someone asks your pharmacist for that service, you charge for it. And even if the pharmacist decides that the person doesn't meet the criteria for a prescription, you charge them for the time it took to decide that.

Raise your OTC prices. Or even better, charge directly for OTC consults. Do you think the $0.50 you make on a bottle of $4 cough syrup is reasonable when your pharmacist spent 10 minutes finding out whether it was safe for the patient and explaining how to use it? What if the pharmacist spends 10 minutes counseling a patient on something and they don't buy anything. Why the hell is that free? What if the patient grills your pharmacist for 20 minutes, finds out 10 products he needs to get to cure all of his ills, and then goes to Walmart since they have it all for cheaper. Why is that free?

That's where your money should be coming from. Not from sneaky little back-room deals. If you're calling yourself part of the "government funded health care system", then your revenue for what they pay for should be up front and on the table. And seriously....we're the "most trusted profession"....so don't go to the media with a story that hovers on the edge of being an outright lie. If you're too embarrassed to admit what the government cuts really are, then maybe it's time to get a new source of revenue. One that you're proud of and would put right in the headline of the news story if some group tried to take it from you.