Manulife says coverage for certain specialty drugs will only apply at Loblaw-owned pharmacies

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Canadian insurance company Manulife announced that its coverage of certain specialty prescription drugs would only apply to pharmacies owned by Loblaw, an agreement that drug policy experts say raises concerns about competition and patient access to essential medicines.

These types of exclusivity agreements, known as preferred pharmacy network agreements, are common in the United States and are gaining ground 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 drug insurance systems, said in an email.

The Manulife-Loblaw deal — details of which were shared with plan holders earlier this month — affects approximately 260 drugs under the insurance company’s Specialty Drug Benefits 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 hypertension, cancer, osteoporosis, and hepatitis C. .

“This is a concern for small pharmacies, which will be crushed 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,” Morgan added.

The specialty drug care program will be implemented “primarily” by Shoppers Drug Mart and other Loblaw-owned pharmacies starting Jan. 22, according to Manulife. Previously, the company also covered specialty medications through national home and community health care provider Bayshore HealthCare.

“At this time, evolving our program requires selecting a single service provider to advance the program for the benefit of our customers and their employees,” said Doug Bryce, vice president of product and services. Manulife platforms, in the announcement. .

A pharmacy storefront is photographed at night.
A Shoppers Drug Mart pharmacy is shown in Bowmanville, Ontario on January 12, 2022. (Doug Ives/The Canadian Press)

“Dodgy deals” harm competition and patient access

Pharmaceutical markups on specialty drugs — which are costly upfront — can play a key role in “phantom” deals with insurance companies, said Marc-André Gagnon, a professor at Carleton University who focuses on social, health and pharmaceutical policies.

“There is a lot of money for these specific drugs, which means there is a lot of leeway to arrange a rebate system between the drug manufacturer, patient support programs, insurer and pharmacies” , did he declare.

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

Gagnon said this has negative implications for both competition and patient access, particularly for those living in rural or remote areas “who might not have the same easy access to all the different channels of pharmacies”.

“You’ll end up with smaller players who will be priced 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.

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In a statement, Manulife spokesperson Emily Vear said the deal with Loblaw would provide “more options” for group plan members to receive their specialty medications, with patients able to pick up their medications at a Loblaw-owned store or have them delivered to their home.

“We believe it is important to provide our members with greater choice in how they access and receive the services they need for their health and well-being,” she said.

“This exciting partnership also provides 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 indicates that Specialty Drug Plan members could have their medications shipped to their home, clinic or doctor’s office, but it does not mention pharmacy pickup options .

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 shipped directly to their home,” she explains.

Other experts say the deal is good for competition

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

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

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

Hollis, whose research focuses on innovation and competition in pharmaceutical markets, said this strategy “is unusual in Canada, but not unprecedented.” He pointed to a preferred pharmacy network for specialty medications introduced by insurance provider GreenShield in 2015 through HealthForward.

“On the contrary, this is competition in action,” said Paul Grootendorst, a professor of pharmaceutical economics at the University of Toronto.

“Let’s say Shoppers (Drug Mart) has 80 percent of the market. You could see that could potentially crush the smaller groups, there could be an abuse of dominance, but I don’t think that’s happening here.”

He acknowledged, however, that there was resistance to such arrangements, particularly from those who believe that everyone should have the freedom to choose their pharmacy. Grootendorst said this is why Quebec banned these agreements.

On its website, Manulife indicates that the exclusive availability of its specialty drug plan does not apply in Quebec.

Gagnon said the lack of such restrictions outside Quebec creates an unequal system where some pharmacies attract “all the money involved in drugs” while smaller ones “struggle to get by” .

“If all the highly profitable drugs for pharmacy chains are captured by just a few players, that poses a problem for the rest of the pharmacies,” he said.

“They are left with the leftovers, the drugs which are much less profitable.”

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