• Prior to 2006, the market in Ontario operated as a single-tier system for pricing.  Government and private spending on prescription drugs increased at about the same annualized rate. The introduction of Bill 102 in 2006 changed that, resulting in significantly higher cost increases for individuals and private sector plans. The Canadian Institute for Health Information (CIHI) reported annual increases for government programs of 5.5% compared to 9.6% for private plans.
• The average dispensing fee has also been steadily increasing for private-sector plans since 2006 from $9.95 to $10.61 in 2009, 51.6% higher than the $7 paid by public plans.

3. Lower drug pricing will benefit the end consumer in a short period of time

• Lower generic drug costs, in the absence of any other increases added by pharmacies, could save Ontario employers as much as $350 million per year.
• Private plans pay for 35% of drug costs and individuals pay 17% of drug costs out of pocket either because they have no coverage or pay the portion that is not covered by their benefit plan (the deductible).
• Individuals without any coverage and paying out of pocket would see an immediate benefit from lower prices for their generic drugs.
• For employers with Administrative Services Only (ASO) plans* (where the employer self insures paying actual claim costs but has outsourced the administration of the plan), savings from lower claim costs flow directly to the employer plan and therefore will result in lower premiums.
• Insured plans are renewed annually with rates based on experience, with savings priced in as plans renew. Savings will enable employers to sustain or enhance their health benefit plans. For example, lower generic drug costs can help offset the rising costs of other health benefits (e.g., new patented drugs, biologics, mental health services) as well as help fund wellness and health promotion programs.

Note: There are over 5,000 ASO Plans in Ontario, with 3 out of 7 people in Ontario receiving their benefits through an ASO plan. The Canadian market is very competitive with 30 Insurance companies providing this service in Ontario to over 50,000 employers.