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Pharmacies Should Not Repeat The Practice Of Rebates With Medical Cannabis

Pharmacies Should Not Repeat The Practice Of Rebates With Medical Cannabis

This piece is part 2 in a series looking at the intersection of the pharmaceutical industry in Canada with the burgeoning cannabis industry. In Part 1 , I examined the extent of oversight that exists for Licensed Producer interactions with physicians. Now, I will examine what pharmacies bring with them in their role as retailers of cannabis, both positive and negative.

Pharmacies and Medical Cannabis

Currently, pharmacies do not actually sell cannabis in their physical locations. For example, Shoppers Drug Mart has launched an e-commerce platform for retailing medical cannabis but will not carry any product in any of their physical pharmacies.

Similar to the reservations expressed by medical professional regulatory associations, pharmacy regulators are reticent to involve pharmacists in the cannabis ecosystem, calling for further regulatory safeguards. As such, pharmacies that only sell through e-commerce platforms are fulfilling the role Licensed Producers have served since the inception of the MMPR in 2014 to the Cannabis Act replacing the ACMPR.

As the industry and societal attitudes evolve however, it is likely this hurdle will be overcome and cannabis will eventually make its way to pharmacy shelves. This will definitely be a positive development for patients, as it will be the first retail sales channel for medical cannabis since all current retail locations are recreational sales only. It is also likely cannabis education will start to permeate academia, bringing more validity to the benefits touted by pharmacist associations of medical expertise. Ontario recently instituted a mandatory requirement for pharmacists to take an approved cannabis course, so this process is already starting.

The pharmacy ecosystem does have a dark side however, and it is likely since many components of the medical cannabis system are based on the pharmaceutical industry, that this dark side may also cast a shadow over distributing medical cannabis.

Pharmacy Rebates

The price of generic drugs in Canada is the 7th highest in the OECD, only slightly less expensive than the United States, and much of the reason why has little to do with medicine. The practice of rebates increases the cost of medicine and is a practice that few Canadians are aware of.

The most publicized case in Canada involving pharmacy rebates involved Costco, and a whistleblower from a generic drug supplier. After there was a change in purchasing executives at Costco, the practice of soliciting rebates began. During the transactions involved in selling generic drugs to a pharmacy, the pharmacy will solicit a rebate percentage from the drug manufacturer. This is often used in consideration for carrying one manufacturer’s products over another. While this concept may not be objectionable to some, the magnitude of the rebate certainly should be, the rebate percentages are often between 50% - 70%, explaining the high cost consumers pay for generic drugs in Canada.

On the subject of legality, rebate schemes are generally legal in most of Canada. They are restricted in Quebec, currently banned in Ontario but legal in the rest of the country. Ontario’s enforcement of rebates is also questionable, as a loophole many companies exploit is using a third company, often referred to as a ‘banner’ to pay rebates in the form of ‘marketing fees’ to pharmacies. They will place a stand in the pharmacy, however its purpose is not to advertise but provide cover for the practice of paying rebates to the pharmacy. Ontario is unlikely to strengthen this legislation, given Christine Elliott, the Minister of Health for Ontario lobbied against the McGuinty government bringing in the rebate ban as an MPP.

What Does This Mean For Cannabis?

Many provinces have written legislation that prevents retail cannabis stores from giving one producer’s cannabis preferential treatment over another. It remains unclear however, should pharmacies start retailing medical cannabis if these provisions will also be applied to pharmacies via relevant legislation. Given how rebate schemes have largely flown under the radar in Canada, this is certainly a situation that is ripe for exploitation should legislators not be vigilant.

Another parallel between the two industries is the case of McKesson that also featured prominently in the fifth estate investigation, a drug distributor that also owns Rexall, IDA and Guardian pharmacies. Some Licensed Producer parent corporations do also own cannabis clinics.

Pharmacies are slowly becoming part of the medical cannabis equation in Canada, and will represent a step forward for patient access to medical cannabis. Rebates occupy a dark side of the pharmaceutical industry, and this must be considered as the medical cannabis distribution system is carved out. As with oversight on licensed producer to physician interactions, we should not accept the current state of the pharmaceutical industry as ‘good enough’, but seek to improve upon its gaps.

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