Deal between Manulife and Loblaw to supply specialty drugs raises concerns about access and competition

Some pharmaceutical care policy experts are raising concerns about competition and patient access to much-needed medications after Manulife Financial Corp. announced that its coverage of certain prescription drugs will only apply at Loblaw Cos. pharmacies. Ltd.

The new agreement, details of which were shared with plan holders earlier this month, affects about 260 drugs under the insurance company’s Specialty Drug Care program. Drugs in this class are intended to treat complex, chronic, or life-threatening conditions, such as rheumatoid arthritis, Crohn’s disease, multiple sclerosis, pulmonary arterial hypertension, cancer, osteoporosis, and hepatitis C.

Manulife said that starting Jan. 22, the program would move “primarily” through Shoppers Drug Mart and other Loblaw-owned pharmacies. Previously, the company had also covered specialty drugs through national home and community health care provider Bayshore HealthCare.

“At this time, to evolve our program, it is appropriate to select a single service provider to advance the program for the benefit of our customers and their employees,” Doug Bryce, Manulife’s vice president of products and platforms, said in the announcement. .

These types of agreements that provide exclusivity, known as preferred pharmacy network agreements, are common in the United States and are growing in Canada, said Steve Morgan, an economist and professor of health policy at the University of British Columbia.

“It’s a way for insurers to exert market power in the pharmaceutical sector,” Morgan, who studies pharmaceutical care systems, said in an email.

“This is a concern for smaller pharmacies, which will be pressured by these practices as they expand beyond specialty medications… It is also a potential concern for patients who may have fewer options for their medications.”

The significant markups that pharmacies charge on specialty drugs may play a key role in “dark” deals with insurance companies, said Marc-André Gagnon, a professor at Carleton University whose focus is social, health and pharmaceutical policy. . He noted that those drugs are already on the higher end in terms of cost.

“There is a lot of money for these specific drugs, which means there is a lot of room to organize a reimbursement system between the drug manufacturer, patient support programs, insurer and pharmacies,” he said.

“You end up with these very shady deals that are completely under the table, basically, in a system where there is no transparency and we just don’t know anything about what’s going on.”

He said this has negative implications for both competition and patient access, especially for those living in rural or remote regions “who may not have the same easy access to all the different pharmacy chains.”

“We will end up with smaller players that will basically be driven out of the market because they won’t be able to compete, because they don’t have access to the same revenue streams,” Gagnon said.

In a statement, Manulife spokesperson Emily Vear said the agreement with Loblaw will provide “more options” for group benefit members to receive their specialty medications, and patients will be able to pick up medications at a Loblaw-owned store. or receive them at your home.

“We believe in providing our members with more options on how to access and receive the services they need for their health and well-being,” he said.

“This exciting partnership also allows access to a dedicated team of expert professionals, such as nurses and pharmacists, to help manage and administer our members’ medications.”

On its website, Bayshore HealthCare says Specialty Drug Care plan members can have their medications delivered to their home, a clinic or doctor’s office, but it doesn’t mention pickup options at pharmacies.

Loblaw spokeswoman Catherine Thomas said in a statement that the company is confident the patient experience “will remain unchanged, if not better.”

“They can pick up their prescriptions at one of the more than 1,800 pharmacies in our network or have them delivered directly to their home,” he said.

Other experts dispute the idea that preferred pharmacy network agreements harm competition.

“The purpose of Manulife’s strategy is to force pharmacies to compete for its business,” economics professor Aidan Hollis of the University of Calgary said in an email.

“So that’s not anti-competitive: it’s proof that Manulife is using competition to cut costs.”

Hollis, whose research focuses on innovation and competition in pharmaceutical markets, said the strategy “is unusual in Canada but unprecedented.” He pointed to a preferred pharmacy network agreement for specialty medications introduced by insurance provider GreenShield in 2015 through HealthForward.

“If anything, it’s competition in action,” said Paul Grootendorst, a professor of pharmaceutical economics at the University of Toronto.

“Suppose Shoppers were at 80 per cent of the market, you could see it potentially squeezing out the smaller guys, there could be abuse of dominance, but I don’t see that happening here.”

But he acknowledged that there is opposition to such agreements, particularly among those who believe that each person should be able to freely choose their pharmacy. Grootendorst said that’s why Quebec has banned these agreements.

On its website, Manulife says the exclusive availability of its Specialty Drug Care plan does not apply in Quebec, where “regulations prevent us from offering a preferred pharmacy network.”

Gagnon said this policy makes Quebec an outlier among its sister provinces. She said the lack of such restrictions elsewhere creates an unequal system in which some pharmacies attract “all the big money involved with drugs” while smaller ones “struggle to cope.”

“If all the super-profitable medications for the pharmacy chains are captured by only some of the actors, that is a problem for the rest of the pharmacies,” he said.

“They end up with leftovers, drugs that are much less profitable.”

This report by The Canadian Press was first published Jan. 30, 2024.

Companies in this story: (TSX:L, TSX:MFC)

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