Pharmacy monopolies are coming for Ontario. Quebec banned them — will we?
Last year, an exclusivity deal between Loblaw-owned pharmacies and Manulife was cancelled after a great deal of public backlash. People took it as a win, but few are aware that these deals, known as Preferred Provider Networks (PPNs), are rapidly becoming more common in Ontario's healthcare system.
PPNs are often presented as a way to save money and streamline services. That’s true if you happen to be a drug insurance company or a vertically integrated conglomerate willing to treat pharmacy as a loss leader.
But what if you're a community pharmacy — one that actually relies on prescription services as a core, sustainable business? Or a patient who needs culturally competent care, lives with a complex condition, and values their relationship with their pharmacist?
What if getting timely support is important to you, or being able to choose where you take your business?
The rise of “closed” and “mandatory” PPNs — where patients must use insurer-selected pharmacies to be reimbursed by their drug plan — is a concerning trend that threatens patient choice, continuity of care, and the future of community pharmacies in this province.
And the idea that PPNs save patients money doesn’t hold up.
The Competition Bureau of Canada warned that closed and mandatory PPNs “could lead to harmful health outcomes by limiting patients’ options for accessing care — particularly for seniors and those living in rural communities.”
The Bureau also made it clear that there’s no evidence PPNs actually save patients money or improve affordability in any meaningful way. In the U.S., where PPNs have been the norm for many years, one in three pharmacies has closed since 2010.
The FTC found that specialty drug markups inside these networks increased employer costs and sometimes exceeded 1000 per cent, with no savings passed on to patients or plan sponsors.
Here in Ontario, as per 2022 Canada Drug Agency data, just four companies now control more than 95 per cent of the province's private infusion clinics — consolidation happens fast when there’s no oversight.
No other G7 country other than the U.S. or Canada allows private insurers to steer patients into closed pharmacy networks for the purpose of cutting their costs.
Closed PPNs may sound efficient on paper, in reality, they limit patient freedom and put added strain on community pharmacies. Patients either have to change pharmacies or pay more out of pocket to stick with a pharmacist they know and trust.
Some level of preferred networks based on competence or specialized care makes sense — but that should be determined by regulators or accreditation bodies, not insurers. The real issue is with closed PPNs, which restrict patient choice, fragment care, and exclude most pharmacies. With drug prices already capped, these networks aren't about savings — they're about market control.
Supporters of PPNs say they make services more sustainable. But pharmacies haven’t had the power to set prices in years. Between 2014 and 2020, Ontario’s Public Drug Plan has reduced dispensing fees and markups paid to pharmacies on a per claim basis. Margins are dictated to pharmacies by payers. Full stop.
Right now, financial arrangements between pharmacies and wholesalers, and between insurers and drug companies, are kept out of public view. That lack of transparency makes it hard to know who’s benefiting — and who pays the price. If we want a fair system, we need clear rules that apply to everyone.
Quebec figured much of this out in the 1990s. Its laws prevent exclusive pharmacy contracts and make patient choice a protected right. Ontario can — and should — do the same.
If we want to protect access to care and level the playing field for pharmacies, Ontario should:
- Ban closed PPNs, just like Quebec did. And regulate Pharmacy Benefit Managers (PBMs).
- Ensure open access networks where any qualified pharmacy can participate.
- Require transparency on how drug pricing, commercial terms, and product listing agreements are negotiated.
- Publicly report on how these systems affect patients and pharmacy access.
Patients should never be penalized for choosing a pharmacy they know and trust. Pharmacists should have a fair opportunity to independently support their communities. And our healthcare system should uphold the values of fairness, access, and transparency.
Let’s stop pretending closed PPNs are about saving money. They’re about monopolization. And it’s time Ontario said no.
---
Michael Nashat is an investor and pharmacy executive as well as a senior director of OnPharm United.