MISSISSAUGA, Ont. - Another drug store chain is ratcheting up the pressure on the Ontario government and its plans to rein in soaring drug costs, warning it will freeze hiring and start charging drug delivery fees because of lost revenues.
The Rexall drug store chain said Tuesday it will impose a hiring freeze at its corporate head office and will begin charging for prescription drug deliveries at its Ontario pharmacies starting next Monday.
Earlier this week, industry leader Shoppers Drug Mart (TSX:SC) already cut store hours and streamlined seven of its stores in the London area of southwestern Ontario.
The moves by Rexall and Shoppers come in the wake of provincial government plans to cut generic drug costs in Ontario by reducing payments from drug makers to pharmacies in a bid to reduce the costs of generic drugs.
Rexall CEO Andy Giancamilli said the government actions have forced the company to review its business model as well as its operations and future investment plans in Ontario.
"We are disappointed these measures must be taken, particularly given our long-standing commitment to the professional development of pharmacists," Giancamilli said in a release.
"The imminent health care cutbacks imposed by the McGuinty Liberal Government have forced us to take immediate action and review our existing business model for the delivery of health care to ensure the viability of our business in the communities we serve."
Tuesday's cuts also include eliminating pharmacy student and intern programs in the province effective immediately, Rexall said.
Rexall is the flagship pharmacy for Katz Group Canada, the private Edmonton-based drug store operator. The Rexall family of pharmacies include Rexall, Pharma Plus, Rexall Pharma Plus, The Medicine Shoppe, Guardian and I.D.A.
Some analysts estimate the proposed drug cost changes could reduce revenues by $1 billion a year at Ontario's drug store industry.
