HOW MEDICINE EATS PHARMACY’S LUNCH June 20, 2018

The pharmacy profession is faced with many challenges today.  The profession’s financial viability is under siege from many fronts as a result of government pressure to address spiraling healthcare costs, with a particular focus on the cost of drugs.

Pharmacy Business is in less financial trouble, as the retailing and mass merchandising of drug store type merchandise (DSTM) and endless aisles of OTCs, many of which are useless, continues to grow unabated.

Against this backdrop, the independent pharmacist today who attempts to set up a practice in a medical building together with several doctors and the usual ancillary medical services like radiology, lab, physio, etc. is confronted by yet another challenge.

Medical practitioners directly represent roughly 30% of healthcare costs, but through their ability to generate prescriptions, lab tests, and radiology they control a far larger percentage of healthcare costs (excluding hospital costs).  The problem is that many physicians believe they are entitled to benefit somehow from all these activities which they directly generate.

So today we are increasingly seeing two unfortunate scenarios developing.  These are not new developments, but lately they are becoming more and more the norm, and represent yet another challenge to individual practicing pharmacists attempting to set up their own practices outside of Big Pharmacy Retail (BPR).

Scenario 1 involves the situation where the physician is the developer of the medical building or medical centre.  The physician may build the real estate or may lease it, but in either case he/she is in control of the leasing of the complex.   Through various complicated arm’s length structures, the lease rate for the pharmacy in the building is set at a multiple many times greater than the going rate for the geographical area in which the complex is situated.   Through this disproportionately high rent, pharmacy profits (thin as they may be) transfer from the pharmacist to the physician.   Clearly, both the pharmacist and the physician are complicit in this scheme, and both are willing parties to this arrangement with the obvious conflict of interest implications.  The reason this scenario happens at all is the subtext that the pharmacist owes the physician something beyond rent for the prescriptions generated by the medical complex.

Scenario 2 involves the situation where the pharmacist is the developer of the medical complex, once again as either builder or lease holder.  In this scenario the pharmacist controls the leasing.  So in order to attract physicians as tenants, especially those who write high prescription volumes like pediatricians and general practitioners, the lease rate for medical office space is set at a fraction of the going rate for office space in the geographical area the medical complex is situated in.   Once again this transfers potential pharmacy profits from the pharmacist to the physician through subsidized lease rates.  This again represents a direct conflict of interest.

The two scenarios described are common practices, and every pharmacist knows the rules when it comes to any effort to situate themselves in a potential medical complex.

The College of Physicians & Surgeons of Ontario (CPSO) are well aware of this situation, but choose to turn a blind eye to it as it pursues what it believes to be more important transgressions like sexual abuse or opioid overprescribing.  The overall number of complaints the CPSO receives apparently runs into the thousands per year, most of which are frivolous, but every one of which still requires a file opening & investigation in every case.

The Ontario College of Pharmacists (OCP) is also aware of this situation, but once again turns a blind eye in the face of what it considers  to be more important issues like sexual abuse & fraudulent billing,

This whole situation is most unfortunate because these scenarios represent major obstacles to independent pharmacists working collaboratively with physicians and other healthcare providers in a collaborative setting with the goal of the development of improved patient care, to say nothing of the conflict of interest these scenarios create.

Both physicians & pharmacists need to be held accountable here, as these scenarios only serve to perpetuate the notion that pharmacy serves as a hand maiden to medicine.  Beyond this, this situation is not in the interest of patients or the healthcare system.

In this regard, both the CPSO and the OCP are derelict in their responsibility as regulators of the respective professions of medicine and pharmacy.

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