A series of amendments to Ontario's pharmaceutical drug regulations under both the Ontario Drug Benefit Act and the Drug Interchangeability and Dispensing Fee Act have certain implications for generic drug manufacturers, pharmacies and their legal advisers.
The changes initially sparked an outcry by pharmacies in particular, which complained they could lose money as a result of the changes.
The changes, most of which took effect July 1, were ostensibly intended to lower prices for generic drug products in both the public and private sectors. But they will also affect many of the previous commercial arrangements between manufacturers and pharmacies for the promotion of retail distribution of generic drugs. For example, the new legislation eliminates professional allowances that generic drug manufacturers have been able to pay pharmacies to encourage them to carry their products. The legislation also limits rebates paid by manufacturers to wholesalers, pharmacies and companies that own franchises.
In a recent firm food and drug regulatory newsletter about the changes, Ingrid VanderElst explains their implications: "Under the final regulations, benefits provided in accordance with 'ordinary commercial terms' continue to be excluded from the prohibition against rebates, but further limitations have been placed on these benefits." She also notes that the benefits that are excluded from the rebate prohibition must meet certain terms to comply, including a written agreement between the generic drug manufacturer and retailer outlining a volume or prompt-payment discount in order to meet the criteria. "If requested, the manufacturer and the person who receives the benefit must report the net selling price of the drug products to the executive officer of the Ontario drug programs," she cautions.
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