Are we at our tipping point?


As provincial governments continue to reduce pharmacy fees and generic drug costs, where does this leave independent pharmacy?

With growing pressures on Canada’s health funding, coupled with increasing demand from an aging population, we can expect provincial governments will continue to make cuts to pharmacy. As of April 1, 2018, the prices of nearly 70 of the most commonly prescribed drugs in Canada will be reduced by between 25 to 40 per cent. Provinces are also reducing public funding for pharmacy fees. For example, Alberta recently announced a projected $150 million in savings over the next two years with pharmacy fee reductions and caps starting on May 17, 2018.

The Canadian retail pharmacy landscape remains fiercely competitive with pressures from both chain drug stores and mass merchants. We have already seen significant consolidation with potentially more independent owners considering selling their businesses with enormous cost pressures on the horizon. Does Canada end up like the U.S. with very few independent pharmacies left?

Independents that do want to sustain themselves going forward would be wise to consider looking at their options. With expected increasing dispensing volumes and lower margins, pharmacies need to improve their efficiency in filling prescriptions. This may include investing in dispensing automation, the use of certified pharmacy technicians, or utilizing a central dispensing service. Pharmacists play a vital role in the delivery of frontline care and these services provided to patients need to become part of the operation’s sustainable revenue stream. Some of these services may be publicly funded, but innovation is required to transform pharmacy practice from dispensaries to neighbourhood health and wellbeing centres with recognition that patients and third-party payers will reimburse pharmacists for the value they provide.

Independent pharmacy in Canada has reached its tipping point.

  • Proactive refill system can generate additional revenues
  • Corporate chains like SDM are using outbound communication to increase their refill business by 20-30 per cent
  • More efficient workflow, lower inventory, saves money
  • Sets up Appointment Based Model (ABM)
  • ABM creates the work environment to create additional revenues with pharmacist services
  • Proactive refill allows for use of centralized fulfillment service
Central Fill
  • Lower Cost to Fill Rxs
  • Frees up pharmacist time to generate revenue from services Increased accuracy of dispensing
  • No need for investing in in-house automation
  • Lower inventory
  • Same terms on professional allowances

Packaging includes compliance cards, strip packing, vial filling, manual pick-up (e.g. inhalers).