Ontario Takes Legal Action Against Pharmacies, Generic Drug Companies And Wholesalers



    Audit Uncovers "Drug Purchasing" Scheme

    TORONTO, April 27 /CNW/ -

    NEWS

    Ontario is taking legal action against a number of pharmacies, generic
drug manufacturers and wholesalers after the discovery of their involvement in
a scheme where drug products were being sold several times.
    The Ministry of Health and Long-Term Care's Ontario Public Drug Programs
conducted audits at pharmacies, generic manufacturers and wholesalers after
finding discrepancies in the reporting of professional allowances paid and
received. Further audits are ongoing. Professional allowances are monies
generic drug manufacturers pay pharmacies for buying their prescription drug
products.
    The audits found that some pharmacies have been purchasing a greater
amount of generic drugs than they require, collect professional allowances on
the full amount, and then return what they don't need to the wholesaler. The
wholesaler then re-sells the product, triggering a second professional
allowance payment. This scheme enables professional allowances to be collected
multiple times.
    This practice raises serious safety concerns since it would be very
difficult to track the original source of the drug or to be able to track it
throughout the distribution system.

    
    As a result of the audit findings, the following enforcement actions have
been taken by the Ontario government:

    -   Rebate penalty orders have been issued in the amount of $33.8 million
        against 7 generic drug companies, 4 wholesalers and 1 pharmacy -
        these orders are penalties for paying or receiving excessive
        professional allowances (rebates)
    -   20 provincial offence charges have been laid for providing false
        and/or misleading information, or obstructing an inspection against a
        generic manufacturer, a wholesaler, a pharmacy and 3 individuals
    -   3 pharmacies have been put on notice that their Pharmacy Subscription
        Agreements may be terminated and Suspension Orders issued. The
        agreements in effect provide a license for pharmacies to work within
        the Ontario Public Drug Programs structure
    -   Demand letters have been issued that require 51 pharmacies, 1 generic
        manufacturer and 1 wholesaler to provide information on professional
        allowances; these may be followed by full-scale audits
    -   Complaints have been filed with the Ontario College of Pharmacists
        against one pharmacist, one wholesaling business and 3 pharmacies so
        that the College may investigate their conduct
    -   Complaints have been filed with Health Canada against 5 wholesalers
        regarding suspected violations under the Food and Drug Act as it
        relates to public safety issues

    QUICK FACTS

    -   Under the Ontario Drug Benefit Act and the Drug Interchangeability
        and Dispensing Fee Act, on a biannual basis, drug manufacturers are
        required to report to the government the amount of professional
        allowances paid out to pharmacies.
        -  Pharmacies are required to report the amount of professional
           allowances they have received.
        -  Pharmacies are required to report on how professional allowances
           are spent, with the requirement that they must be used for direct
           patient care.
        -  Professional allowances are capped at 20% for the Ontario Drug
           Benefit plan (ODB) market.
        -  There is no cap for the private market, however, as with the ODB
           market, these allowances must be used for activities outlined in
           the regulations.

    -   Generic companies reported providing $680 million in professional
        allowances to pharmacies in 2008 (based on reporting from January to
        June 2008, on an annualized basis).

    -   Rebates are illegal under the Ontario Drug Benefit Act and the Drug
        Interchangeability and Dispensing Fee Act. A payment of more than 20%
        on the ODB side is considered a rebate as well as any payment that is
        not for direct patient care.

    LEARN MORE

    Read more about today's actions.

    Read about Ontario Public Drug Programs
(http://www.health.gov.on.ca/english/public/program/drugs/drugs_ep.html).

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                                                      Ontario.ca/health-news
                                                      Disponible en français


    BACKGROUNDER
    -------------------------------------------------------------------------
               ONTARIO TAKES LEGAL ACTION AGAINST PHARMACIES,
                   GENERIC DRUG COMPANIES AND WHOLESALERS

    Background
    ----------
    

    Through changes made by Bill 102 to the legislation that governs
Ontario's publicly funded drug programs, the government is improving patient
access to prescription drugs, ensuring better value for money spent on
prescription drugs, strengthening the accountability within the drug system,
and ensuring that pharmacists are valued and compensated for the important
services they provide. This legislation, the Transparent Drug System for
Patients Act, 2006, made changes to the Ontario Drug Benefit Act (ODBA) and
the Drug Interchangeability and Dispensing Fee Act (DIDFA).

    
    Professional Allowances
    -----------------------
    Prior to Bill 102, generic drug companies used to pay rebates to
pharmacies that carried their products. These rebates were reportedly between
$600 million to $800 million.

    Bill 102 created Professional Allowances as follows:
    -   Under the ODBA and DIDFA, drug manufacturers (including distributors
        and suppliers) are allowed to provide professional allowances and
        pharmacies are allowed to receive professional allowances as follows
        -  For the Ontario Drug Benefit (ODB) market, manufacturers may
           provide and pharmacies may receive up to 20% of generic drug
           product sales (per pharmacy) in professional allowances.
           Furthermore, these allowances must be used for activities outlined
           in the regulations. That is, activities focused on patient care
           that benefits customers, such as flu clinic days and high blood
           pressure clinics as examples.
        -  For the private market (Ontarians without insurance coverage,
           employee benefit plans and the insurance companies who provide
           these plans) there is no limit on the amount of professional
           allowance paid or received. However, as with the ODB market, these
           allowances must be used for activities outlined in the
           regulations.
    

    Drug manufacturers are required to report to the Ministry of Health and
Long-Term Care the amount of professional allowances paid, and pharmacies are
required to report to the Ministry the amount of professional allowances
received. In addition, pharmacies are required to report on how professional
allowances are spent. Ministry staff have the right to conduct audits and
inspections and review any records pertaining to professional allowances. Any
professional allowance payment not meeting the regulated requirements is a
"rebate" and is prohibited.

    
    Enforcement of Professional Allowance Regulations
    -------------------------------------------------
    

    The Ministry reviewed the reports provided by drug manufacturers and
pharmacies and found major discrepancies. For instance, the Ministry found
discrepancies between the amounts that manufacturers reported having paid, and
the amounts that pharmacies reported having received. Based on the
discrepancies, the Ministry conducted audits of companies across the supply
chain - including generic drug companies, wholesalers, and pharmacies. The
audits were conducted at 14 locations, including three generic drug companies,
five wholesalers, and six pharmacies.
    Through the audits, the Ministry uncovered drug purchasing schemes
whereby pharmacies purchase a greater quantity of generic drugs than they
require, collect the professional allowance on the greater quantity, and then
return what they don't need to the wholesaler. The wholesaler then re-sells
the product, again triggering a second professional allowance payment. This
scheme enables alleged professional allowances to be collected multiple times.
Not only is this practice illegal, it also raises serious safety concerns. For
example, in the case of a recall, it would be very difficult to track the
original source of the drug or to be able to track it throughout the
distribution system.

    
    Results
    -------
    The audits revealed improper activities across the supply chain. As a
result, the Ministry is taking the following enforcement actions:

    -   Rebate penalty orders have been issued in the amount of $33.8 million
        against 7 generic drug companies, 4 wholesalers and 1 pharmacy -
        these orders are penalties for paying or receiving excessive
        professional allowances (rebates)
    -   20 provincial offence charges have been laid for providing false
        and/or misleading information, or obstructing an inspection against a
        generic manufacturer, wholesaler, pharmacy and 3 individuals
    -   3 pharmacies have been put on notice that their Pharmacy Subscription
        Agreements may be terminated and Suspension orders issued. The
        agreements in effect provide a license for pharmacies to work within
        the Ontario Public Drug Programs structure
    -   Demand letters have been issued that require 51 pharmacies, one
        generic manufacturer and one wholesaler to provide information on
        professional allowances; these may be followed by full-scale audits
    -   Complaints have been filed with the Ontario College of Pharmacists
        against one pharmacist, one wholesaling business and 3 pharmacies so
        that the College may investigate their conduct
    -   Complaints have been filed with Health Canada against 5 wholesalers
        regarding suspected violations under the Food and Drug Act as it
        relates to public safety issues

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                                                      ontario.ca/health-news
                                                      Disponible en français
    





For further information:

For further information: Andrew Morrison, Ministry of Health and
Long-Term Care, (416) 314-6197

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