Ontario to ban exclusivity deals between insurers, pharmacies

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The Ontario government will introduce a bill to ban closed preferred pharmacy networks, a kind of exclusivity deal between insurers and pharmacies that restricts where patients can buy medication.

Ontario Finance Minister Peter Bethlenfalvy announced the plans as part of the government’s fall economic statement on Thursday.

PPNs, as the networks are known, are a feature of many employer-sponsored benefit plans. An insurer may provide a discount if a member goes to an in-network pharmacy, or it may even refuse to reimburse a claim if a member tries to go outside the network.

The province held two public consultations on PPNs in the summers of 2024 and 2025.

The most recent proposed two options for legislation: an “any willing provider” framework that allows pharmacies to join insurers’ networks if they can meet certain quality and pricing standards; and a standardized process for patients to apply to their insurers to get prescriptions filled outside a network.

Mr. Bethlenfalvy’s statement said the Ontario government will introduce legislation that enacts both options.

“The framework would enable any pharmacy willing to match a PPN’s financial terms to join, enabling expanded consumer choice and competition in the pharmacy sector, while maintaining cost-effective access to medications,” the statement said.

From the archives: Access to medication is increasingly being dictated by preferred pharmacy networks

PPNs exist throughout the insurance industry. An insurer’s network is considered “open” if it allows any pharmacy to apply and “closed” if it does not.

When launching the first round of consultations last year, the province cited reporting by The Globe and Mail on the pervasiveness of PPNs and said Ontarians had concerns about the rise of such agreements.

Closed networks were thrust into the spotlight in early 2024 after Manulife Financial Corp. and Shoppers Drug Mart announced a deal that would have forced some patients with chronic conditions to fill their prescriptions at Loblaw-owned pharmacies.

The two companies said they cancelled the deal after public outcry.

But The Globe reported in September that they had quietly created a new arrangement this year, in which Manulife contracted a Shoppers’ subsidiary to run its “specialty drug care” program for patients on high-cost medication.

Patients with Manulife insurance who were taking the popular weight-loss drugs Wegovy and Mounjaro had to speak to Shoppers’ representatives, who encouraged them to fill their prescriptions at Shoppers’ pharmacies.

GreenShield Canada has also operated closed PPNs, including for Wegovy.

Insurers oppose Ontario’s proposed restrictions on exclusivity deals with pharmacies

Insurers have argued that PPNs keep costs down for plan sponsors by negotiating lower rates from pharmacies, however they have never provided estimates of how much is saved.

Stephen Frank, president and chief executive officer of the Canadian Life and Health Insurance Association, said in a statement that insurers are looking forward to working through the details of the proposed legislation.

“It’s essential that any framework supports high-quality care and ensures medications remain affordable and accessible,” he wrote.

Pharmacies – particularly independent ones – have opposed closed PPNs because they say the networks favour large chains and make it difficult for smaller operations to stay in business.

“We certainly welcome this and applaud the government moving in this direction to protect patient choice – and also for allowing pharmacies to have fairness in being able to serve their patients in all communities,” said Justin Bates, chief executive officer of the Ontario Pharmacists Association.

The Neighbourhood Pharmacy Association of Canada, which represents pharmacies of all sizes, said the government’s framework should ensure that only pharmacies that are able to deliver the services can join the networks.

“The pharmacy sector must lead in defining what ‘able’ means and in developing PPN readiness criteria that reflect operational realities and uphold patient access,” chief executive officer Sandra Hanna said in an e-mail.

Pharmacists, including board members at the Ontario College of Pharmacists, have argued it is inappropriate to restrict patient choice.

Ontario would be the second province to restrict closed PPNs after Quebec, which passed a ban in 2016.

In September, the Canadian Pharmacists Association released a legislation template for provinces to consider. It suggested banning arrangements that “unduly influence” patients to fill prescriptions or seek out services at specific pharmacies.

“We see this as a positive step to help protect patient choice and hope that other provinces will follow Ontario’s lead,” Joelle Walker, the association’s vice-president of public and professional affairs, wrote in a statement.