Soon, Loblaws May Be The Only Option To Get Some Covered Prescription Drugs

A recent announcement by Manulife Financial’s (TSX: MFC) has sparked concerns among pharmacare policy experts as the firm plans some changes to its coverage of certain prescription drugs, limiting access to medications through a preferred pharmacy network arrangement with Loblaw Cos. Ltd (TSX: L).

While the company contends that the transition, effective from January 22, is aimed at enhancing services for plan holders, critics argue that it may lead to reduced competition and limited options for patients.

The exclusivity arrangement impacts approximately 260 medications covered under Manulife’s Specialty Drug Care program, designed to address complex, chronic, or life-threatening conditions like rheumatoid arthritis, Crohn’s, multiple sclerosis, pulmonary arterial hypertension, cancer, osteoporosis, and hepatitis C. Previously, Manulife also collaborated with national home and community health-care provider Bayshore HealthCare for specialty drug coverage.

Manulife’s Vice President of Product and Platforms, Doug Bryce, defended the move, stating, “At this time, to evolve our program, it’s appropriate to select a single service provider to move the program forward for the benefit of our customers and their employees.”

Critics argue that such exclusive arrangements, known as preferred pharmacy network arrangements, can impact smaller pharmacies and limit patient choices, especially in rural or remote areas where access to different pharmacy chains may be limited. Steve Morgan, an economist and professor of health policy at the University of British Columbia, expressed concerns about insurers exercising market power in the pharmacy sector, noting that this could squeeze smaller pharmacies beyond specialty medicines.

Marc-André Gagnon, a professor at Carleton University specializing in social, health, and pharmaceutical policy, highlighted the potential negative implications of “shadowy” agreements between insurance companies and pharmacies. He emphasized the lack of transparency in such deals, particularly concerning the significant markups on specialty drugs.

Manulife spokesperson Emily Vear defended the partnership with Loblaw, stating that it would offer “more options” for group benefits members to receive specialty medications. According to Vear, patients can either pick up drugs from a Loblaw-owned store or have them delivered to their homes, ensuring flexibility in accessing necessary medications.

On the other hand, University of Calgary economics professor Aidan Hollis argued that Manulife’s strategy aims to drive competition among pharmacies, asserting, “So that is not anti-competitive: it is the evidence that Manulife is using competition to drive down costs.”

While some experts believe that exclusive pharmacy network arrangements promote healthy competition, others argue against it. University of Toronto pharmaceutical economics professor Paul Grootendorst acknowledged pushback against such arrangements, particularly in Quebec, where regulations prevent the implementation of preferred pharmacy networks.

Quebec’s policy of not allowing preferred pharmacy networks makes it an outlier among provinces, according to Gagnon. He emphasized the potential imbalance in the system, where some pharmacies capture the most profitable drug market, leaving others to contend with less lucrative options.


Information for this briefing was found via Bloomberg and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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