Flush Pharma

The Ontario government announced that they want to restrict the price of generic copy drugs to a maximum of 25% of the cost of the original, down from the current 50%. This is an issue because the generic copies are functionally identical -- being a copy of the original and all -- and therefore can only compete on price. The story goes that the current arrangement is for pharmacies to receive "kickbacks" on drugs purchased from particular vendors.

The pharmacies have responded by saying cutting these kickbacks will result in reduced customer services -- ie reduced hours, lower staffing levels, charges for deliveries, increased dispensing fees, etc.

While true, they miss the point.

There is a cost to these services. The services yield higher value to the customer, true, but there is a cost, and the difference is that up until now the customer has not been paying directly for these services. However, through the higher generic drug prices being paid, they are in fact indirectly paying for them.

Having the costs of these extra services laid out for all to see and directly passed on to the consumer is a good thing. Now the consumer can make the choice to have the extra services at an extra cost, rather than paying for services they may or may not actually use.

Memo to the Pharmacies: if you have to trick people into subsidizing services, you are doing it wrong.