Independent drugstores will suffer, pharmacist says

Pharmacist Wafa Boshara said she might have to let her service level slide if the government reduces her revenue on generic drugs.

TORONTO - Independent pharmacist Bryan Hastie says if Ontario eliminates professional allowances paid to drug stores by generic drug manufacturers, he may have to join his larger competitors and cut staff -- but at his husband-and-wife operation, that means closing shop.

"If I didn't have the professional allowance income, I couldn't afford to pay myself," Hastie said in an interview from his Kitchener, Ont., pharmacy Thursday.

"And I make about a third of what a Shoppers Drug Mart pharmacist would make."

Hastie, who has owned a Medicine Shoppe franchise for three years, said it's a little unusual for the independents to be fighting on the same side as large competitors.

"But Shoppers Drug Mart's got the biggest pockets and they can stand up....and they can afford it," he said.

The Ontario government says ending the professional allowances will cut the price of generic drugs by at least 50 per cent, knocking $500 million a year off the cost to the province's public drug plan for seniors and others.

But it also means independent pharmacies--about half of all drug stores in Ontario-- are at risk of closing their doors, Hastie said.

Large drug store chains like Shoppers Drug Mart (TSX:SC) and privately owned Rexall, have been grabbing headlines with their threats to cut store hours, services and jobs in response to the government's plan to end the funding.

But the province's independent pharmacists, who say they'll be disproportionately affected by the cuts, stepped up their campaign against the cuts with a full page ad in major newspapers Thursday. The ads urge consumers to fight the Ontario government's plan to cut at least $750 million from the drug store industry's revenues.

The Independent Pharmacists of Ontario ads say eliminating the allowances will reduce services, lead to cuts in pharmacy hours and produce longer wait times.

The association's president Ben Shenouda said the ads are the first in a series meant to educate patients about the myths and facts about funding allowances.

Canada's largest drug store chain, Shoppers Drug Mart posted a similar ad Wednesday calling on customers to visit a website set up by an unusual coalition that joins pharmacy giants with their smaller rivals in fighting the government's plan to cut the special payments.

Shenouda said small pharmacies, like his shop in Brampton, Ont.,, rely on prescriptions for 80 per cent of revenues because they don't sell much else. Shoppers, which sells everything from dish soap to DVDs, relies on prescriptions for 43 per cent of revenues, he added.

Ontario Health Minister Deb Matthews, who angered pharmacists by suggesting they were "holding patients hostage" by withholding services, offered an olive branch Tuesday, suggesting there could be increased funding for pharmacists who provide additional patient services.

Matthews has argued the changes will actually benefit small and independent pharmacies since the plan to reduce drugs costs includes $150 million in funding, including a new $100-million fund to compensate pharmacy owners for providing professional services such as flu shots.

But Hastie said the money isn't sufficient to close a gap in dispensing fees and he may have to double his $10 dispensing fee to cover the costs of running his business.

Hastie says he realizes some of his loyal customers may no longer be able to afford his higher dispensing fee and trade in the personal level of service he provides to save money.

"Big pharmacies are (an) easy (target for the government) because it's a corporation, its a faceless enemy...but the ones with the deepest pockets are going to suffer the least," he said.

"Guys like me where my prescription business is 90 per cent of my business, loss of this revenue is going to be disastrous."