A national group representing pharmacists has complained to Canada’s competition watchdog that a company that checks insurance claims at drugstore checkouts is abusing its dominance of the market, “squeezing” pharmacy profits with a new fee and potentially hampering people’s choice over where they receive their medications.
On Tuesday, the Canadian Pharmacists Association (CPhA) filed the complaint with the Competition Bureau, alleging anti-competitive behaviour by Mississauga-based Express Scripts Canada. The company is the largest in the country of what are known as “pharmacy benefit managers,” which act as intermediaries between pharmacies and insurance companies. Insurers subcontract their claims processing to these companies, which in turn adjudicate people’s coverage so that they don’t have to pay out of pocket for the full costs of their drugs at a pharmacy.
On Jan. 1, Express Scripts Canada implemented a mandatory new fee for pharmacies to use that service. The move raised concerns across the industry that pharmacies that could not afford to pay would lose a significant number of customers: people who would be unwilling or unable to pay out of pocket and wait for reimbursement from their insurers.
Express Scripts Canada is a subsidiary of U.S.-based Express Scripts Holding Co., which is owned by U.S. insurance company Cigna Corp. The company’s clients include some of Canada’s largest insurers, including Manulife Financial Group MFC-T, as well as large plan sponsors.
“Pharmacists have no recourse, if they don’t sign these agreements or if they don’t follow them. It means the potential loss of a significant portion of their patients,” said Joelle Walker, vice-president of public and professional affairs for the CPhA, in an interview. “It could be up to 40 per cent of a pharmacy’s business, which to lose, could be quite substantive.”
The issue of choice over where people get their medications was recently brought to light when Manulife announced – and then walked back – a deal with Loblaw Cos. Ltd L-T. that would have limited chronically ill patients limited to buying certain specialty medications exclusively from Shoppers Drug Mart and other Loblaw-owned pharmacies.
While such deals (known as “preferred provider networks” or “preferred pharmacy networks”) are different from pharmacy benefit managers, what they have in common is the potential for patients to be steered to pharmacies over others based on business agreements, Ms. Walker said.
This week, the CPhA released a new position statement calling for regulation, and opposing “payer-directed care” and patient steering.
“It certainly is more problematic, probably, in rural and remote communities where there is not a selection of pharmacies to choose from. It can also interrupt the relationship between a patient and a pharmacist,” Ms. Walker said. “It really speaks to where the whole model of private payers and insurers, and particularly pharmacy benefit managers, is going.”
While other pharmacy benefit managers, such as Telus Health, also charge fees, pharmacists can opt out – choosing instead to cover the cost of a drug (aside from a patient’s co-pay) and to wait for reimbursement from the insurer. Express Scripts Canada has no such option, according to the complaint to the Competition Bureau.
Tuesday’s complaint points out that the company also owns a pharmacy that delivers by mail, Express Scripts Canada Pharmacy. It alleges that the fee is intended to “squeeze” the profit margins of rival pharmacies, and that the result will be that competition is “likely to be lessened or prevented significantly.”
While the fee can vary, the complaint says that a “significant” number of pharmacies will have to pay the maximum amount of $2,400 a year to Express Scripts Canada, putting financial strain especially on independent pharmacies. The complaint argues that this qualifies as “exclusionary conduct” under the act, defined as raising rivals’ costs in order to make them less effective or eliminate them from the market.
In some cases, Express Scripts Canada will claw back reimbursement claims for prescriptions that were previous verified, if the company finds that pharmacies do not pass “unfair, opaque and abusive” audits that it conducts, according to the complaint.
In an e-mailed statement, Express Scripts Canada chief administrative officer Stéphanie Myner-Nham declined to comment on the allegations in the complaint.
“Express Scripts Canada will continue working with our pharmacy stakeholders to provide quality, affordable, and safe medications to Canadians,” she said.
Pharmacy benefit managers first came about in the 1950s in the United States, and have expanded significantly as health care spending has grown, according to the complaint. While their role differs slightly in Canada, they have grown here as well, acting as intermediaries between pharmacies and plan sponsors.
In the U.S., these companies have grown more powerful, and in 2022, the U.S. Federal Trade Commission launched an inquiry into the industry, which is continuing.
“It’s a space that’s growing, and one that we think needs to be regulated now, so that we don’t get into a situation like in the United States,” Ms. Walker said.
Susan Krashinsky Robertson