TORONTO — The Ontario government said it has uncovered a "multimillion-dollar" illegal rebate scheme that involved the reselling of drugs by several generic drug makers, wholesalers and pharmacies.Seven generic drug companies, four wholesalers and one pharmacy have been fined $33.8 million by the province for paying or receiving more rebates than permitted, assistant deputy health minister Helen Stevenson said Monday as she described the scheme as "widespread" among audited companies and pharmacies.Stevenson said audits revealed "major discrepancies" between what the generic drug companies reported having paid and the amount pharmacies reported receiving in "professional allowances" or rebates."We have just been able to see the tip of the iceberg," said Ontario Health Minister David Caplan. "I don't know how far deep that goes yet."
According to the province, forensic audits found some pharmacies were purchasing a greater amount of drugs than they required, collecting rebates on the full amount then returning what they didn't need to the wholesaler.The government said the wholesaler then resold the drugs, triggering a second professional allowance payment. The scheme enabled professional allowances to be collected several times, the province said.In 2006, the province enacted legislation to end a long-standing practice that saw generic drug companies offer gifts, vacations and rebates of up to 60 per cent to pharmacies that stock their products.Under the Transparent Drug System for Patients Act, generic drug manufacturers are allowed to provide professional allowances to pharmacies. The money is to be used for patient care activities such as holding flu clinics.
But audits revealed some "extraordinary" results, Stevenson said.
Over a one-year period, generic drug companies reported paying pharmacies more than $680 million in professional allowances while pharmacies told the province they received $320 million.In one instance, a generic drug company reported paying a pharmacy $5 million, while the pharmacy reported it received nothing, Stevenson said.Another pharmacy received 2,431 per cent more professional allowance money than it reported, while a third pharmacy said it spent its rebate money holding 1,600 clinics, or five clinics a day for each day of the year.Stevenson said the "drug recycling" scheme keeps generic drug prices high because the drug companies are paying such large professional allowances to pharmacies.The scheme also raises concerns about patient safety and drug traceability in the event of a drug recall, she said, noting audits are continuing over the next several months.The province said 20 charges have been laid for providing false or misleading information against a generic manufacturer, wholesaler, pharmacy and three individuals.Complaints against five generic drug wholesalers have also been filed with Health Canada regarding suspected violations under the Food and Drug Act.Caplan said the province has uncovered a problem that is not unique to Ontario and the ministry will be sharing its findings with other provinces."I think what we have uncovered has certainly opened a lot of eyes and is spurring action," Caplan said noting, "this is a pan-Canadian problem."
Sidebar:
Rebate penalty orders issued for paying or receiving excessive professional allowances (rebates)
Seven generic manufacturers:
- Taro Pharmaceuticals Inc. Brampton, ON $22,512.68
- Cobalt Pharmaceuticals Inc. Mississauga, ON $31,851.51
- Genpharm Inc. Etobicoke, Ont. $1,791,957.71
- Novopharm Ltd. Toronto, Ont. $1,201,958.88
- Pharmascience Inc. Montreal, $101,490.28
- Sandoz Canada Inc. Boucherville, Que $96,306.83
- Ratiopharm Inc. Mississauga, Ont. $295,063.42
4 wholesalers:
- Amerisource Bergen Corporation Canada Montreal $5,797,422.00
- Kohl & Frisch Ltd. Concord, Ont. $4,537,729.00
- A.O.C. Company Ltd. Toronto, Ont. $6,831,904.00
- Pharmastop $8,737,398.00
1 pharmacy:
- Kohler's Drug Store Ltd., Hamilton, Ont. $4,406,642.75
TOTAL $33,852,237.06
20 provincial offence charges laid for providing false and/or misleading information, or obstructing an inspection against a generic manufacturer, a wholesaler, a pharmacy, and 3 individuals
1 generic manufacturer:
- Ratiopharm Inc. 2 charges
1 wholesaler:
- Still being served — name not yet disclosed 2 charges
1 pharmacy:
- Kohler's Pharmacy 4 charges
3 individuals:
- Names not disclosed 12 charges
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