Ontario proposes regulatory changes to simplify drug formulary listing and cut government payments to pharmacies

Generics/General | Posted 13/12/2019 post-comment0 Post your comment

Following a number of changes in Canada’s generics and biosimilars landscape in 2019 [1-3], the Ontario Ministry of Health and Long-Term Care (the Ministry) is proposing a number of changes to streamline drug formulary listing and reduce the payments it makes to pharmacies for dispensing drug benefits.

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Proposed changes to streamline drug formulary listing
The Ministry has proposed draft amendments to Regulations made under the Ontario Drug Benefit Act (ODBA) intended to reduce technical requirements for listing a product on the Ontario formulary and align policies with industry standards and other provinces.

Key changes to the Regulations include:
Remove the requirement for the Drug Notification Form (DNF) from formulary drug submissions. A DNF is submitted to Health Canada as proof of a ‘first sale’ of the drug and indicates that the manufacturer has a supply of the drug. Removal of the DNF requirement would reduce the burden on industry and facilitate earlier formulary submissions.
Reduce requirements for biosimilar drug submissions. Health Canada uses an approval method for biosimilar drugs which involves assessing whether there are clinically meaningful differences between the biosimilar and the reference biological product. The proposed amendments would eliminate the requirement for the manufacturer to submit efficacy, safety and pharmacoeconomic evidence to Ontario, and would instead rely upon Health Canada’s approval, enabling accelerated funding of biosimilar products.
Permit generic drug price adjustments. This would reduce the regulatory burden on manufacturers as they would no longer need to apply for price adjustments when the number of market competitors changes.
Streamline drug submission requirements for generic line extension. The proposed changes simplify the submission requirements if Health Canada has approved a line extension for sale in Canada, e.g. a new tablet size, strength or formulation.
• Revoke provisions authorizing Ontario to conduct price review of certain single source generic products. This pricing assessment is already conducted through the current pan-Canadian generic pricing framework.
• Permit short-term funding by exempting certain submission requirements in the event of drug shortages. When there is a shortage of a listed drug product and it is in the public’s interest, a manufacturer of a clinically appropriate alternate drug would be exempt from certain submission requirements.
• Modify the cap for ordinary commercial term (OCT) payments from 10% to 25%. OCT payments (which are excluded from the definition of a rebate in the ODBA) allow pharmacies to receive benefits provided in the ordinary course of business. The proposed higher cap would permit manufacturers to offer greater discounts to pharmacies and wholesalers. This would increase Ontario’s competitiveness in the pharmacy sector by better aligning its policies with those in other Canadian jurisdictions.

Proposed changes to reduce the Ministry’s payments to pharmacies
In a separate consultation process, the Ministry has proposed draft amendments to Regulations made under the Ontario Drug Interchangeability and Dispensing Fee Act. It is proposing to reduce the payments it makes to pharmacies for dispensing drug benefits for Ontario Drug Benefit programme recipients, other than long-term care home residents. Under this proposal, the Ministry would temporarily deduct a percentage from the sum of the dispensing fee and mark-up for all drug claims. The proposed reconciliation adjustment is two-tiered, with adjustments dependent on the cost of the drug:
• Tier 1: Maximum of 16% for drug costs equal to or higher than CA$1,000
• Tier 2: Maximum of 4% for drug cost less than CA$1,000

The proposed adjustments would be in place until 31 March 2023 and estimated cumulative cost savings are expected to reach CA$180.1 million by 2022‒2023.

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1. Siu ECK, Tomalin A, West K, et al. An ever-evolving landscape: an update on the rapidly changing regulation and reimbursement of biosimilars in Canada. GaBI Journal. 2019;8(3):107-19. doi:10.5639/gabij.2019.0803.014
2. GaBI Online - Generics and Biosimilars Initiative. Canada amends its drug pricing regulations [www.gabionline.net]. Mol, Belgium: Pro Pharma Communications International; [cited 2019 Dec 13]. Available from: www.gabionline.net/Policies-Legislation/Canada-amends-its-drug-pricing-regulations
3. GaBI Online - Generics and Biosimilars Initiative. Health Canada issues draft guidance on generics labelling and equivalence [www.gabionline.net]. Mol, Belgium: Pro Pharma Communications International; [cited 2019 Dec 13]. Available from: www.gabionline.net/Guidelines/Health-Canada-issues-draft-guidance-on-generics-labelling-and-equivalence

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