ontario regulation 221/10

made under the

drug interchangeability and dispensing fee act

Made: June 5, 2010
Filed: June 7, 2010
Published on e-Laws: June 9, 2010
Printed in The Ontario Gazette: June 26, 2010


Amending Reg. 935 of R.R.O. 1990

(General)

1. Subsection 1 (3) of Regulation 935 of the Revised Regulations of Ontario, 1990 is revoked.

2. (1) Section 2 of the Regulation is amended by adding the following subsection:

(1.1) Where the value of all of the benefits provided under subsection (1) exceeds the value of X in the formula below, in respect of all of a manufacturer’s interchangeable products that are dispensed by a pharmacy and that are not reimbursed under the Ontario Drug Benefit Act, then the benefits that are in excess of X are a rebate and not a professional allowance,

X = 50% of P

where,

  “X” is the total dollar amount of professional allowances that may be provided by a manufacturer to persons listed in subsection 12.1 (1) of the Act, and

“P” is the total dollar amount of a manufacturer’s interchangeable products, whether or not the products are listed drug products under the Ontario Drug Benefit Act, that are not reimbursed under the Ontario Drug Benefit Act, based on the number of units dispensed by the pharmacy, at each product’s price, which shall not exceed the price the product may be sold at under subsection 8 (1) where that subsection applies to the product.

(2) The formula set out in subsection 2 (1.1) of the Regulation is amended by striking out “50%” and substituting “35%”.

(3) The formula set out in subsection 2 (1.1) of the Regulation is amended by striking out “35%” and substituting “25%”.

(4) Subsection 2 (2) of the Regulation is revoked and the following substituted:

(2) A benefit is not a professional allowance if the contents of the Code of Conduct set out in Schedule 1 are not complied with.

(5) Section 2 of the Regulation is amended by adding the following subsection:

(3) For the purposes of section 12.1 of the Act, a “rebate” does not include the value of a benefit that is provided in accordance with ordinary commercial terms that meet all of the following conditions:

1. The benefit is provided in the ordinary course of business in the supply chain system of interchangeable products between any of a manufacturer, a wholesaler, an operator of a pharmacy or a company that owns, operates or franchises pharmacies.

2. The value of the benefit is set out in a written agreement between any of a manufacturer, a wholesaler, an operator of a pharmacy and a company that owns, operates or franchises pharmacies.

3. The benefit relates to an ordinary commercial relationship that is any of the following:

i. A prompt payment discount.

ii. A volume discount.

iii. A distribution service fee.

4. In the case of product that is not supplied to an eligible person under the Ontario Drug Benefit Act, the total value of any benefits does not exceed 10 per cent of the value of the interchangeable products based on the number of units dispensed by a pharmacy at each product’s price, which shall not exceed the price the product may be sold at under subsection 8 (1) where that subsection applies to the product.

5. A person who receives the benefit reports to the executive officer, if required by the executive officer to do so, the net selling price of the drug products representing the price of the product less the value of the benefits received.

(6) Subsections 2 (1), (1.1) and (2) of the Regulation are revoked

3. Section 7 of the Regulation is revoked and the following substituted:

7. Where it is proposed that the strength and dosage form of a product be designated as interchangeable and it is proposed that it also be designated as a listed drug product under the Ontario Drug Benefit Act, an additional condition to be met in order for it to be designated as interchangeable is that the proposed drug benefit price must be no greater than the price permitted under that Act for the strength and dosage form of the product.

4. (1) Paragraphs 4, 5, 5.1, 5.2 and 6 of subsection 8 (1) of the Regulation are revoked and the following substituted:

4. If the product is a listed drug product under the Ontario Drug Benefit Act, the price of the product may not be more than the drug benefit price permitted under that Act where it is supplied to an eligible person under that Act.

5. Subject to paragraph 6, if the product is a listed drug product under the Ontario Drug Benefit Act, but the manufacturer is not selling the product for the purpose of supplying it to an eligible person under that Act, the manufacturer shall not sell the product at a price higher than 50 per cent of the drug benefit price of the original product as set out in the Formulary on the date the product was first proposed for designation as interchangeable with the original product.

6. If the price set out in paragraph 5 is lower than the drug benefit price permitted under the Ontario Drug Benefit Act, then the manufacturer shall not sell the product at a price higher than the drug benefit price permitted under the Ontario Drug Benefit Act.

(2) Paragraph 5 of subsection 8 (1) of the Regulation, as remade by subsection (1), is amended by striking out “50 per cent” and substituting “35 per cent”.

(3) Paragraphs 4, 5 and 6 of subsection 8 (1) of the Regulation, as remade by subsection (1), are revoked and the following substituted:

4. If the product is a listed drug product under the Ontario Drug Benefit Act, the manufacturer shall not sell the product at a price higher than the drug benefit price permitted under that Act whether or not the product is supplied for the purposes of that Act.

(4) Subsection 8 (1) of the Regulation is amended by adding the following paragraph:

9. If required by the executive officer, the manufacturer of a product that has been designated as interchangeable shall inform the executive officer of the price that the manufacturer receives for the product, net of the value of any professional allowances or ordinary commercial terms.

(5) Paragraph 9 of subsection 8 (1) of the Regulation is amended by striking out “professional allowances or”.

(6) Subsection 8 (2) of the Regulation is amended by striking out “October 1, 2006” at the end and substituting “July 1, 2010”.

(7) Subsection 8 (3) of the Regulation is revoked.

(8) Section 8 of the Regulation is amended by adding the following subsection:

(4) Despite paragraphs 4 to 6 of subsection (1), the following conditions must be met in order for a product that has atorvastatin as its active ingredient and that has been designated as interchangeable to be continued to be designated as interchangeable:

1. If the product is a listed drug product under the Ontario Drug Benefit Act, the price of the product may not be more than the drug benefit price permitted under that Act where it is supplied to an eligible person under that Act.

2. Subject to paragraph 3, if the product is a listed drug product under the Ontario Drug Benefit Act, but the manufacturer is not selling the product for the purpose of supplying it to an eligible person under that Act, the manufacturer shall not sell the product at a price higher than 50 per cent of the drug benefit price of the original product as set out in the Formulary on the date the product was first proposed for designation as interchangeable with the original product.

(9) Subsection 8 (4) of the Regulation is revoked.

5. The Regulation is amended by adding the following section:

9. (1) A product that is a private label product shall not be designated as interchangeable.

(2) In this section, 

“private label product” includes a drug product in respect of which,

(a) the manufacturer applying for the designation of the product as a listed drug product does not directly fabricate the product itself, and

(i) is not controlled by a person that directly fabricates the product, or

(ii) does not control the person that directly fabricates the product, and

(b) either,

(i) the manufacturer does not have an arm’s-length relationship with a wholesaler, an operator of a pharmacy or a company that owns, operates or franchises pharmacies, or

(ii) the product is to be supplied under a marketing arrangement associating the product with a wholesaler or one or more operators of pharmacies or companies that own, operate or franchise pharmacies.

6. (1) Schedule 1 to the Regulation is amended by adding the following sentence at the end of the paragraph that begins “Operators of pharmacies” under the heading “Reporting”:

(This requirement only applies with respect to professional allowances received before July 1, 2010.)

(2) Schedule 1 to the Regulation is amended by striking out the paragraph that begins “Operators of pharmacies” under the heading “Reporting”.

(3) Schedule 1 to the Regulation is revoked.

7. (1) Subject to subsections (2) to (5), this Regulation comes into force on the day it is filed.

(2) Subsections 2 (1), (4) and (5), section 3, subsections 4 (1), (4), (6), (7) and (9), section 5 and subsection 6 (1) come into force on July 1, 2010.

(3) Subsections 2 (2), 4 (2) and 6 (2) come into force on April 1, 2011.

(4) Section 1 and subsections 2 (3) and 4 (3) come into force on April 1, 2012.

(5) Subsections 2 (6), 4 (5) and 6 (3) come into force on April 1, 2013.