Pharmacies and Benefits Managers: Dancing with the Devil

As regulated health professionals, Ontario pharmacists owe a primary duty to the public. However, pressures within the profession are threatening to shift focus from patient-centred care to commercial concerns.

Recently, Express Scripts Canada (“Express Scripts”) decided to unilaterally impose a mandatory fee for pharmacies using its services. Express Scripts is what is known as a pharmacy benefits manager, which is an intermediary service that manages prescription drug benefits for health insurers. In essence, insurers and insurance plan sponsors may subcontract their claims to pharmacy benefits managers, which adjudicate patient coverage on their behalf. Like other such companies, Express Scripts’ software enables pharmacies to submit claims simultaneously with dispensing, often requiring patients to pay only a relatively small co-payment.

Unsurprisingly, since they offer a streamlined and convenient service, pharmacy benefits managers now occupy a dominant market position and continue to acquire an ever-increasing share of the business of pharmacy. Indeed, Express Scripts’ clients include some of the largest insurers in Canada, such as Manulife, Desjardins, and Empire Life. For many pharmacists, Express Scripts handles claims for the lion’s share of their patients.

Bolstered by this market dominance, as of January 1, 2024, Express Scripts now requires pharmacies to pay a mandatory fee in order to submit claims electronically. If the pharmacy declines or is unable to pay this fee, it will not be able to submit claims to Express Scripts. Patients insured by an Express Scripts client will thus have to pay out-of-pocket for their medication and submit a claim to their insurer directly. The obvious concern for pharmacy owners is that those patients will go elsewhere to have their prescription filled.

As a result, the Canadian Pharmacists Association (“CPhA”) filed a complaint with the Competition Bureau on February 28, 2024, alleging that Express Scripts was engaging in anti-competitive behaviour. In a statement, the CPhA wrote:

CPhA's complaint underscores the broader implications of ESC's practices, which extend beyond contractual grievances to patient care and access. By dictating terms to pharmacies, ESC effectively limits the choices and accessibility of health-care services for Canadians. This not only restricts competition but also undermines the foundational principles of equity and access in the Canadian health-care system.

In bringing this matter to the attention of the Competition Bureau, CPhA seeks not just to address the specific issues related to ESC, but to prompt a thorough examination of the [pharmacy benefits manager] industry as a whole. The practices employed by [pharmacy benefits managers] have far-reaching consequences for the health-care sector, influencing everything from the availability of medications to the financial sustainability of pharmacies.

We will be monitoring the CPhA’s complaint to the Competition Bureau with interest. However, this is far from the only commercial pressure affecting the practice of pharmacy today. For instance, the CBC recently reported that pharmacists at some Shoppers Drug Mart pharmacies in Ontario have been subject to “borderline abusive” pressure to conduct unnecessary MedsChecks in order to turn a profit.

The MedsCheck program is intended to reimburse pharmacies for one-on-one meetings with eligible patients (i.e., those living with a chronic condition and taking three or more prescription medications; living in a long-term care home; or suffering from Type 1 or Type 2 Diabetes) to discuss their medication, identify any issues with same, and explain all. Since the beginning of the COVID-19 pandemic, the Ontario government has allowed pharmacists to conduct these consultations over the phone. While the service is free to the public, each MedsCheck can be billed to the province for up to $75.

According to the CBC, some former employees believe that Shoppers Drug Mart is taking advantage of this program for financial reasons. Some pharmacy staff have apparently alleged that they have been pressured to regularly “cold-call” customers who were technically eligible for a MedsCheck but were not “high risk” and did not need a consultation with a pharmacist. Some also claimed that they have been given MedsCheck “quotas”. In an internal letter sent to Shoppers Drug Mart management last year, a group of pharmacy owners said that this was creating safety concerns, affecting the quality of care that they could provide, and affecting the mental health of pharmacy employees.

Shoppers Drug Mart denies these allegations. Regardless, the question remains: how can pharmacies handle these increasing pressures and manage both the business and the practice of pharmacy? Some may be tempted to bill aggressively to compensate for unavoidable overhead or cut corners to meet corporate expectations. However, pharmacists would be wise to remember not only that their duty is first and foremost to the public, but also that it is they who will face the consequences of any perceived impropriety.

Obviously, pharmacists are expected to provide high quality care to their patients. However, their professional obligations also require that they bill patients and insurers reasonably, transparently, and in keeping with the standards of the profession. As a rule of thumb, pharmacies should not charge patients any amounts above and beyond what is allowable as a co-payment under their provider agreement with a benefits manager. In addition, markups should be consistent for all cash payers and private payers, alike. At the time of writing, Express Scripts seems to be setting the standard for markups at 9% on brand name products and 10% for generics.

Pharmacies that charge excessive or unreasonable markups run the risk of triggering an insurance audit, which can have dire consequences. With the click of a button, benefits managers, like Express Scripts, can identify pharmacies that are charging above the norm and demand an explanation of their billing practices. Not only is gathering and responding to historical claims information intrusive and time consuming, but also it can come with a huge price tag. If the benefits manager is not satisfied with the pharmacy’s explanation, it will demand reimbursement for any amount deemed an overpayment. In more extreme circumstances, the pharmacy may be delisted, meaning that it will not be able to submit claims to the pharmacy benefits manager. This can obviously have extremely serious adverse effects, sometimes resulting in the closure of a pharmacy. Further, other benefit managers might “catch wind” of this and initiate their own audits, causing a snowball effect.

In addition, both billing issues and standard of care issues (such as providing unnecessary and/or subpar MedsChecks) can give rise to regulatory concerns. Critically, it is the pharmacist who will bear the brunt of an Ontario College of Pharmacists (the “College”) investigation, even if they are acting on the direction of corporate ownership. A College investigation can result in terms and conditions on the pharmacist’s ability to practise, a practise suspension, or—in the worst case—the permanent revocation of their Certificate of Registration. Insurers and pharmacy benefit managers are also increasingly making it a term of their agreements with pharmacies and pharmacists that significant regulatory concerns in and of themselves may be grounds for delisting.

It is understandable that pharmacists and pharmacy owners might be seeking creative solutions to deal with the ever-increasing commercial pressures on their practices. However, a pharmacist’s highest duty is, at all times, to their patients. If there is one takeaway from all of this, it is to avoid the risk arising from aggressive billing or the provision of unnecessary or substandard services in order to mitigate these commercial pressures. Instead, pharmacists would do well to challenge their professional organizations and buying groups to lobby for changes in the profession so that patient-centred care can remain at the fore.

For more information about this or any other related topic, please contact Neil M. Abramson, Anne Lewis, or another member of Torkin Manes’ Health Professionals Group.