An Update for Pharmacists on Preferred Provider Networks

At its July 8, 2024 meeting, the Ontario College of Pharmacists Board of Directors (“OCP”) followed through with its commitment made on March of 2024 (discussed in our previous blog) to adopt a position statement that is critical of preferred provider networks (or “PPNs”).

PPNs Defined

A PPN is an arrangement between a payor (e.g., health insurance provider) and a pharmacy. In this arrangement, the pharmacy provides lower drug mark-ups and dispensing fees in exchange for serving patients insured under the payer. There are two types of PPNs: closed and open.

Closed PPN: The payer sets the terms and conditions with a limited group of pharmacies and the contractual agreements are not transparent.

Open PPN: Eligibility to join the PPN is broader and conditions to join are transparent to pharmacies.

Regardless of whether it is an open or closed PPN, patients can choose a pharmacy outside of the PPN, but the patient must pay a higher co-pay or deductible for prescriptions.

The OCP’s position statement

The OCP’s position statement focused on closed PPNs, since in the view of OCP, closed PPNs have the potential to cause greater harm because they limit access and choice to a much larger degree than open PPNs. The OCP’s position on closed PPNs is as follows:

Closed PPNs (and other payer-directed care models) pose potential risk of harm to patients, contravene established ethical principles guiding the profession and conflict with standards of quality patient care. As Ontario’s pharmacy regulator, OCP has zero tolerance for any payment or reimbursement models involving pharmacies and pharmacy professionals that put patients at risk, disregard patient autonomy, or that get in the way of a pharmacy professional’s duty to put patient interests first.

Key Takeaways

This position statement represents only a first step on the part of the OCP to fight the proliferation of closed PPNs in Ontario. OCP Board President James Morrisson stated that this statement “signals [the OCP’s] intention to use our regulatory influence, and to partner with others as appropriate, to protect patients from harm.”

This is a welcome step for many pharmacies and pharmacy professionals, who have long raised concerns about the perils of closed PPNs. Given the strong position taken by the OCP, pharmacies and pharmacy professionals who continue to participate in closed PPNs do so at the risk of regulatory consequences.