Dispensing Fees Report for 2011 is out and it tells us a lot about professional fees in the healthcare industry.
In reviewing the average dispensing fee report from Telus Health Solutions, a large National Pharmacy Drug Benefit Manager (PBM), there are some interesting themes that emerge. In contrasting this 6 month period (January 2011 to June 2011) over the same period in 2010, we noted that the average dispensing fee in Ontario has risen by 1.7% to $9.97. This inflationary increase is not unreasonable, but there were some notable variances across the different pharmacy chains. Shoppers Drug Mart’s professional dispensing fee rose by +1.39%, which is in-line with provincial trends. Pharmx Rexall’s fee however rose on average by a whopping 8%, to $10.23. This average fee is still less than that of Shoppers Drug Mart, but reflects a desire to be more in line with the fee charged by Shoppers Drug Mart.
Bucking the rise in professional fees was COSTCO. This organization has apparently reduced their fees by -5.3%, to $3.89, which is a fairly significant shift and affirms their dominance as a rock bottom dispenser of prescription drug medications in Ontario and Canada…(If only one could leave the store without the accompanying $300 in groceries!!)
Medi-Trust pharmacies has also bucked the trend of rising fees and has also reduced their fees, although somewhat negligibly (-0.02%) down to $7.79. The advantage to a Mail Order provider however is not necessarily in just the cost of the professional dispensing fee, but in their adjudication of their Standard Maximum Allowable Provincial Pricing file, which is typically referenced as Actual Acquisition Cost + a 10% allowable wholesale mark-up. The problem with the price files of many PBM’s (including Telus) is that there maximum Wholesale Price (their reasonable and customary listing) does not fully reflect the ‘true price’ at which a large national chain, such as Shoppers Drug Mart is able to obtain their prescription inventory. Since, PBM’s adjudicate based on the pharmacists submitted price file, there is an inability to cut back the Actual Acquisition Costs by chain. Pharmacist are aware of these challenges, and will maximize the submitted cost of a drug to maximize their profits. Vigilance in terms of managing those submitted costs is left to Medi-Trust or other Providers, who are attempting to establish ‘preferred provider networks’ in an attempt to drive more business through their buying groups.
Preferred Provider Networks may potentially offer relief to Private Payors. Unfortunately, for now, their use is still in its infancy and organizations such as Medi-Trust are still defined by their ability to drive down professional dispensing fee costs for maintenance medications (greater than a 100 day supply), rather than their ability to reign in the Actual Acquisition Costs that dictate the Maximum Allowable price files that dictate the amount charged to plan sponsors.
The complete Ontario dispensing fee listing for the Telus book of business for the January 2011 to June 2011 period is referenced below.
|Pharmacy||Avg Disp Fee Submitted|
|LAWTONS / SOBEYS||$8.65|
|MEDICAL PHARMACIES (OSH)||$8.61|
|MEDITRUST (mail order)||$7.79|
|PHARMA PLUS / MEDICINE SHOPPE||$10.32|
|PHARMEX (mail order)||$6.66|
|SHOPPERS DRUG MART/PHARMAPRIX||$10.80|
|A&P / DOMINION / MIRACLE MART||$9.60|
For the past 18 years, Chris Pryce of Human Capital Benefits has been advising employers on all aspects of managing employee benefits programs and related products. If you have any questions, you can contact Chris at 416.924.8280 or by email at email@example.com