Tyler Shandro won’t negotiate new pharmacy funding framework

In February 2018, the Alberta government, under the NDP, announced a new pharmacy funding framework. That framework was supposed to expire at the end of March 2020.

Rather than renegotiate it, however, Tyler Shandro, the health minister decided this past January to simply extend the previous framework until March 2022.

The NDP government negotiated the framework in an effort to save $150 million in health spending related to pharmacies between 2018 and 2020.

Prior to the funding cuts introduced by the NDP, Alberta pharmacies were expecting an average 6.15% increase each year in compensation funding. After the cuts, those increases dropped to 2.15%.

Keep in mind that population growth and inflation combined come to about 3.5–4.0%, so a 2.15% increase in funding isn’t even enough to cover increases to costs due to inflation and population growth.

The funding cuts mostly affected service fees, such as the following:

• Lower dispensing fee: $12.30 to $12.15
• Lower admin fee for publicly-funded immunizations: $20 to $13
• Limit number of frequent dispensing fees: previously no limit
• Elimination of extra money pharmacists with additional prescribing authority previously received for annual care plans, standard medication management assessments, and follow-ups
• Limit of 12 follow-ups for comprehensive annual care plan follow-ups and standard medication management assessments: previously no limit.

Also, starting in the first year of the UCP term-although negotiated by the NDP-the government has been withholding at least 10% of pharmacy funding to address any shortfalls in pharmacy compensation budgets. That percentage can be increased to meet budget targets.

Not only did Shandro extend the framework, he added the following to Section 2(7) of his ministerial order:

A Clinical Pharmacist who performs a Pharmacy Service for a Resident, and a Community Pharmacy which makes a Claim for such Pharmacy Service pursuant to this Compensation Plan agrees and warrants that, by making such Claim, they . . . adopt and agree to the provisions of the ABC Pharmaceutical Services Provider Agreement regarding the Authorized Adjustment policy as established by Ministerial Order, as may be updated, amended or replaced from time to time, effective April 1, 2020.

The Authorized Adjustment policy is found in section 2.8 of Appendix A in the Alberta Blue Cross Pharmaceutical Services Provider Agreement, which I’ve included below:

There was no section titled “Authorized Adjustment” anywhere in the original agreement, let alone in Appendix A, which makes it seem as though it was added specifically this year. According to 2.8 (b), the purpose seems to be “to constrain growth for Drug Benefit Fees and Pharmacy Services Fees within the Government of Alberta’s currently projected budget”.

Last February, Sarah Hoffman, then health minister indicated how much they projected to spend on pharmacy expenditures during the 2019–2020 fiscal year: $564 million ($556.2 million, if you don’t include the publicly-funded vaccines).

In contrast, Shandro indicated that his ministry projects spending $586 million in the current spending year and $617 million in the next.

That seems like more than the NDP had budgeted, but it basically covers only population growth and inflation. Keep in mind, however, that the NDP cut funding growth from 6.15% to 2.1%, which was below population growth and inflation, so funding for pharmacies was already underfunded. The increases projected by Shandro last December won’t cover the shortfall from the last two years and will accelerate underfunding over the next two.

Note that 2.8 also says that the authorized adjustment is determined “at the sole discretion” of the health minister, that he can even set it to $0, and that he needs only 5 days notice to make any such changes.

Another change made to the agreement was in section 3(2). This section states that if a clinical pharmacist determines that they need to adapt a prescription, they’ll be paid $20 for each prescription. Previously, this section excluded Schedule 1 drugs. Now, it also excludes insulin that’s “subject to an Insulin Order”.

And given that the previous agreement wasn’t renegotiated, what guarantee is there that the extended agreement will be renegotiated before 2022?

Originally published at kimsiever.ca on 29 May 2020.