The Ontario Ministry of Health and Long-Term Care (the Ministry) has proposed draft amendments to Regulations made under the Ontario Drug Benefit Act (ODBA) and the Ontario Drug Interchangeability and Dispensing Fee Act. The proposed changes are intended to reduce technical requirements for listing a product on the Ontario formulary and align policies with industry standards and other provinces. The consultation period will close on November 27, 2019.

The proposed changes

Key changes to the Regulations include:

  • Remove the requirement for the Drug Notification Form (DNF) from formulary drug submissions. A DNF is a form submitted to Health Canada as proof of a “first sale” of the drug and indicates that the manufacturer has supply of the drug. Currently, in Ontario, the absence of this form is one of the most frequent reasons why a submission for listing is deemed incomplete. Removal of the DNF requirement would ease burden on industry and enable earlier formulary submissions.
  • Reduce requirements for biosimilar drug submissions. Health Canada has an approval method for biosimilar drug products that assesses whether there are clinically meaningful differences between the biosimilar product and the reference biologic product. The proposed amendments would rely upon Health Canada’s approval and eliminate the requirement that the manufacturer submit clinical evidence of efficacy and safety, along with evidence of the pharmacoeconomic benefit of the product. Eliminating these duplicative submission requirements will enable biosimilar products to be funded more quickly.
  • Permit generic drug price adjustments. Pricing of interchangeable generic drugs changes depending on the number of market competitors with the lowest price typically achieved with 3 or more generics in the market. The proposed changes would reduce the regulatory burden on industry since manufacturers would no longer need to apply for price adjustments when the number of competitors change.
  • Streamline drug submission requirements for generic line extension. The proposed changes simplify the submission requirements if Health Canada has approved a line extension for sale in Canada (for example, a dosage strength or formulation that is different from what the brand is offering). Manufacturers will no longer be required to submit clinical evidence of the product’s efficacy and safety, or evidence demonstrating the product’s pharmacoeconomic benefit to have their line extensions listed on the Ontario Formulary.
  • Revoke provisions authorizing Ontario to conduct price review of certain single source generic products. This pricing assessment is already conducted through the current pan-Canadian generic pricing framework. The Ministry characterizes this change as a “housekeeping change that removes out-dated clauses”.
  • Permit short-term funding by exempting certain submission requirements in the event of drug shortages. Where there is a shortage of a listed drug product and it is in the public’s interest, a manufacturer will no longer be required to submit clinical evidence of the product’s efficacy and safety, or evidence of the product’s pharmacoeconomic benefit in order to be listed. This provision would only apply to drug products that have the same or similar active ingredients or therapeutic uses as the drug product subject to the shortage.
  • Modify the cap for ordinary commercial term (OCT) payments from 10% to 25%. Ontario currently caps OCT payments (which are excluded from the definition of rebate in the ODBA) at 10%. OCT payments allow pharmacies to receive benefits provided in the ordinary course of business. The proposed changes would modify the cap to increase OCT payments from 10% to 25%. This would permit manufacturers to offer greater discounts to pharmacies and wholesalers and brings Ontario more in line with the rebates that are currently permitted in other Canadian provinces and territories.

A copy of the consultation documents published by the Ministry can be accessed here. Comments on the proposed changes can be submitted by email before November 27, 2019.

Proposed Changes reducing the Ministry’s payments to pharmacies

In a separate consultation process, the Ministry is also proposing a reduction in payments it makes to pharmacies for dispensing drug benefits for Ontario Drug Benefit program recipients, other than long-term care home residents. Under the draft Regulations, the Ministry would deduct a percentage from the sum of the dispensing fee and mark-up for all drug claims. The proposed reconciliation adjustment is two-tiered, with adjustments based on the cost of the drug:

  • Tier 1: Maximum of 16% for drug costs equal to or over $1,000; and
  • Tier 2: Maximum of 4% for drug cost under $1,000.

The proposed reconciliation adjustments would be temporary to March 31, 2023, and would allow for an estimated cumulative costs savings of $180.1M by 2022-2023. A copy of the consultation documents published by the Ministry can be accessed here. Comments on the draft Regulations are due November 30, 2019.