The response (below) to my call for the provincial government to stop bedevilling British Columbians struggling to survive serious health challenges (and the poverty that so often goes with it) has me pondering whether the government pays attention to what you say or, spotting a few key words – Air Miles®, PharmaCare – reply using a rote response or form letter.

Nowhere in the reply were the facts or points I raised addressed.

Of course the reply didn’t contain any facts or evidence to support the government’s  assertion ‘the government was subsidizing the incentive programs’. Further, the government’s reasoning (more accurately what passes for reasoning in government and the bureaucracy) is based on multiple coulds.

Could. And based on the speculation of could, the government took a benefit from the seriously ill who practiced good fiscal management.

Although……basing policies on what government insists on believing, on the speculation of could, rather than facts, does explain the sad state of BC’s finances, healthcare, education, housing, deficit, debt, etc.

Those collecting points were maximizing the bang for the taxpayer buck. By collecting points they got the medications taxpayers paid for and through the collection of points they got $20 worth of food or gas to supplement their (inadequate) support (and if the politicians and bureaucrats feel it is adequate, I propose we set the salaries of MLA’s and bureaucrats at this ‘adequate’ level).

So, not only is the government’s incentive program policy not saving the taxpayers any money, it is wasting the cash value of the rewards that are no longer collected.

I also found myself wondering if, after the Bureaucratese of the reply had been slapped together, anyone had bother reading what had been written.

Take the lecture on the free market. While it might be suitable as an introduction to economics in middle school its simplistic view fails to capture the complexity of the free market as it functions in the real world.

Such as the difference in the economics of standalone pharmacies versus pharmacies contained within (or part of) a retail operation such as grocery stores or London Drugs; or the consequences of a pharmacy being part of a larger entity (Safeway) which has an incentive program that applies to the goods of the entire store.

So, we have government policy based on the speculation of could and economics and finances suitable to middle school but not for application in the real world.

Then we have this beauty:

” pharmacies set their drug prices and dispensing fees based on what they believe the market will bear – or more specifically on what they believe their customers will pay.”

“ While PharmaCare does not have the ability to “shop around” it does set maximum amounts for which government will pay.”

PharmaCare sets out what (the maximum) it will pay. Therefore the pharmacies have no need to base their prices on  “what they believe their customers will pay.” If the pharmacies know what PharmaCare will pay, then by the governments own assertion that is what the pharmacies will charge for medication for those on PharmaCare.

According to the government reply, the amount PharmaCare would have been paying when British Columbians in need were allowed to collect Air Miles® (or other incentive programs) was the maximum amount PharmaCare had set for each specific medication being taken.

According to the government reply, the amount PharmaCare is paying now that government  policy prevents the collection of Air Miles® etc is the maximum amount PharmaCare sets for each specific medication being taken.

So, according to the governments own rational it does not matter whether Air Miles® (or other incentive program points) are collected or not, knowing what the maximum amount PharmaCare will pay for any specific medication, means that (the maximum) is what pharmacies will charge.

By the governments own rational, changing the policy on incentive program points collection has not saved the taxpayers any money. Conversely the collection of incentive program points did not cost the taxpayers any money.

The effect of the change in policy is to fail to obtain the maximum bang for the taxpayer buck by not collecting the rewards that are available as a result of taxpayer dollars spent on medication.

And then::

“Rather than offering loyalty rewards, if a pharmacy sets its drug price or dispensing fee at a lower amount to attract customers, then customers, PharmaCare and all taxpayers will save money.”

Setting aside for the moment the fact that, according to the government’s own rational, the price charged to PharmaCare (loyalty rewards or no loyalty rewards) will be the maximum that PharmaCare has set out as the amount it will pay for a specific drug, consider the following points.

In the free market cutting prices to attract business leads to price wars. Incentive programs tend to be offered by large retail chains/organizations (such as Safeway Wal-Mart) who have the financial  wherewithal to win such a war.

When was the last time (if ever) you heard or read advertizing for pharmacies that was based on the prices for prescription drugs?

Even if a pharmacy does charge a lower unadvertised price how are people going to find it? Do you check around to find the lowest price ever time you get a prescription?

If you are on PharmaCare it makes sense to make an effort to fill your prescription somewhere you earn rewards that are useful to you or your survival. If you cannot collect rewards, are you not going to choose a pharmacy  based on convenience or cost savings realized by using that pharmacy?

Also affecting the decision as to which pharmacy to use – I always get my medication at the same place. They have my records and we have a year’s long relationship. As a safety measure I have no interest in going to a strange, unknown pharmacy. (I have had my pharmacy catch and correct what could have been a fatal error in medication prescribed).

Then there is the question of how people are suppose to check prices. Pharmacies do not quote prices over the phone – you have to go to the pharmacy. How reasonable is it to expect people living on extremely limited budgets to spend their gas budget driving from pharmacy to pharmacy to compare prices – particularly after you have taken away the $20 reward they used for gas at the end of the month? How reasonable is it to want people to compare prices  when market forces dictate that all pharmacies will be charging the same amount – the amount set out by PharmaCare.

I do not have the information to properly analyze how PharmaCare sets the maximum price it will pay for each medication it covers. However I would assume that PharmaCare behaves at least semi-rationally (I know – a dangerous assumption when referring to government). Meaning that PharmaCare would set its maximum rate based on the wholesale cost (the cost to pharmacies) of the specific medications.

Unless PharmaCare is allowing for a ridiculously large mark-ups (if it allows any mark-up at all), then pharmacies make little or no money on the mark-up over cost on filling PharmaCare prescriptions. Thus if PharmaCare is behaving in a fiscally responsible manner in setting the maximum it will pay for a specific medication, a pharmacy will need to charge the maximum PharmaCare will pay.

Once again,  incentive or no incentive program, the amount charged by a pharmacy is going to be the maximum amount PharmaCare has set out as what it will pay.

If the government has evidence to support its claim that the collection of points in incentive programs is costing taxpayers dollars they need to present that evidence.

Evidence based on facts, not the speculation of ‘could’ or fairy tales. Because, if the government of BC insists on making policy based on speculation and fairy tales, I want to know why the government hasn’t solved all its financial and service woes by having Rumpelstiltskin in the legislature basement spinning straw into gold?

The government needs to remember it is suppose to help, not persecute or hinder, the Wellness of citizens in need.

It should be maximizing the bang for the taxpayer buck, rather than wasting the rewards that accrue to the dollars taxpayers spend on medication by allowing the collection of reward/incentive points – points that cost the taxpayer not one additional cent.

Perhaps if the government ceased to waste time and resources chasing mirages of nonexistent savings or dreaming up ways or excuses to abuse British Columbians in need of help, the government COULD address major issues such as the rationing and cutbacks of healthcare.

Whether malice or maladroitness it is time the government ceased to tyrannize British Columbians suffering from serious health issues and a lack of personal resources by allowing them to collect Air Miles® (or participate in other incentive programs).

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Dear Mr. Breckenridge:

I am writing in response to your emails of July 11 and 18, 2011, regarding the restriction on incentive programs such as Air Miles®. I am pleased to respond on behalf of the Honourable Michael de Jong, QC, Minister of Health.

As you are aware, the British Columbia PharmaCare program is the publicly funded drug insurance program operated by the BC Ministry of Health. The purpose of the PharmaCare program is to assist British Columbians, particularly those with lower incomes, with the cost of eligible prescription drugs and designated medical supplies.

Community pharmacies in BC are retail enterprises that operate in a free market. A free market is defined as an economic system in which prices are determined by unrestricted competition between privately owned businesses. Like other retail businesses, pharmacies set their drug prices and dispensing fees based on what they believe the market will bear – or more specifically on what they believe their customers will pay.

There is a wide variation on what pharmacies in BC charge for prescription drugs. If people purchasing prescription drugs at the higher cost drug stores shopped around, they could save up to 25 percent on their annual drug bill.

For example, people taking commonly prescribed atorvastatin (generic Lipitor) 10 mg once daily could pay over $40 for a 30 day supply of the drug at the more expensive pharmacies in the province. The same amount of the same drug could cost less than $30 dollars at less expensive pharmacies. PharmaCare currently reimburses up to $31.56 for a 30 day supply.

Incentive programs encourage people to shop at a particular pharmacy or pharmacy chain by enticing them with such things as loyalty points, coupons, discounts, goods, rewards and similar schemes rather than with lower prices. Incentive programs cost retailers money, which they build into the price they charge consumers. Customers, particularly those where an insurer pays all or part of their drug costs, may become more concerned about the rewards they are receiving than the cost of the drug. Over time this can contribute to price escalation.

This new policy respects the right of pharmacies to offer incentive programs for customers, but takes government out of the business of subsidizing them.

PharmaCare is also a community pharmacy customer, spending as much as $1 billion annually on prescription drugs for its beneficiaries. While PharmaCare does not have the ability to “shop around” it does set maximum amounts for which government will pay.

While PharmaCare sets a maximum amount it will pay, not all pharmacies bill at the maximum amount. Rather than offering loyalty rewards, if a pharmacy sets its drug price or dispensing fee at a lower amount to attract customers, then customers, PharmaCare and all taxpayers will save money.

Please be aware that the restriction on inducements only affects the portion of a prescription paid by PharmaCare. You may still choose to get your prescription from a pharmacy that offers incentives so you can accrue points/rewards on the amount you pay out-of-pocket.

Further information on PharmaCare’s policy on inducements has been posted on the PharmaCare website. The Information can be viewed at:

http://www.health.gov.bc.ca/pharmacare/pdf/inducements.pdf.

I appreciate the opportunity to respond to your concerns, and trust that this explains the rationale for restricting incentive programs.

Sincerely,

Bob Nakagawa, B.Sc. (Pharm.), ACPR, FCSHP

Assistant Deputy