Nursing homes must stop asking for drug fees from pharmacies

Posted on October 18, 2016 in Health Delivery System – Opinion/Editorials – Pharmacies are currently making secret payments totalling more than $20 million a year to secure drug contracts with nursing homes. The practice must stop.
Oct. 17, 2016.   Editorial

They don’t pass the sniff test. Secret fees paid to nursing homes by pharmacies bidding for lucrative drug supply contracts don’t put the interests of patients first. What makes the “kickbacks,” as one critic calls them, even worse is that nursing homes can’t or won’t say exactly where the money is going.

Why does this matter? Lots of reasons.

As the Star’s Moira Welsh reported on Monday, < > a conservative estimate by the Star, based on information from sources and documents, puts the total amount paid by pharmacies to secure nursing home contracts at more than $20 million a year.

First, that’s a lot of money floating around in our health care system without being carefully accounted for. As Jane Meadus, a lawyer with the Advocacy Centre for the Elderly puts it, under the current system there “is no transparency.” But a publicly funded health care system must be transparent, or money can too easily go astray.

When pressed on how the fees were spent, for example, pharmacies and nursing homes would provide only general descriptions such as “nurse leadership sessions” and conferences.

How can anyone assess whether those are good value for money? Or even necessary? Nursing homes that demand the fees from pharmacies (and not all do) need to be a lot more accountable than that about where the money goes and why it’s needed.

And even if it is spent on a leadership session or conference, is that something pharmacies should be paying for rather than the nursing homes themselves? We don’t think so.

Second, the fees, which range from $10 to $70 per resident, put many contracts beyond the reach of smaller pharmacies. That reduces competition, which is bad for nursing homes in the long run.

Third, the service provided to nursing homes by pharmacies can be compromised when they have to pay fees. As one insider put it: “Do you want the money or do you want good service? Because we can’t afford to give both.”

In fact, the money can be spent more effectively. Hogan Pharmacy Partners in Cambridge is one pharmacy that does not pay the fees. Instead, it sends a registered pharmaceutical technician into each home they have contracts with on a daily basis to relieve nurses of much of their work with medications. That help from experts sounds like a better deal for both the nursing home and its residents.

Fourth, if pharmacies weren’t paying these fees they might consider lowering their dispensing and co-payment charges, which are now paid for by taxpayers and drug consumers. That could save money in a health care system short on funding.

No matter how you look at it, the payments are bad news for residents of nursing homes, their families and taxpayers, never mind pharmacies.

The bottom line is that pharmacies that bid for these lucrative contracts — valued at more than $1 billion in dispensing and co-payment fees for the last five years — should be focused on providing service to the homes and reducing costs to taxpayers. And nursing homes should not be handing out contracts to the highest bidder, but to the pharmacy that can provide the best service to them and their residents.

Ontario’s Ministry of Health and Long-Term Care is aware of these secret deals. Now it’s up to Health Minister Eric Hoskins to put an end to them.

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