CBC News has learned that employees of Telus Communications’ health services arm will only receive reimbursement for certain medication prescriptions if they fill them through the company’s virtual pharmacy.

CBC News spoke with three Telus Health employees who shared screenshots detailing the new policy, which took effect March 1. It says the company’s “virtual pharmacy” is now the “preferred provider” for the group prescription drug plan and has “lower markups and dispensing fees than the industry average.”

  • Are you a Telus Health employee? We want to know what you think of the policy. Email [email protected].

Employees expressed frustration that they would no longer be able to choose where they would fill certain prescriptions if they did not pay out of pocket. They also feared that by using the virtual pharmacy they could miss deliveries of vital medicines and that people living in rural areas could be particularly affected.

These preferred pharmacy networks (PPNs) are agreements that ensure exclusivity between insurers and pharmacy chains. Companies use them to save on prescription drug costs. As the deals become more common in Canada, their impact on competition in the pharmacy sector is coming under increasing scrutiny.

Telus Health specializes largely in virtual health, an industry that exploded during the pandemic.

The Montreal company offers a wide range of services – including pharmacy management, electronic medical records and emergency services – aimed at patients, employers, insurers and healthcare professionals. It has a growing network of personal health clinics in several provinces.

A blue Venn diagram shows a check in one circle, a mortar and pestle in another, and an insurance company sign in another, each with the Telus logo.
Telus Health is self-insured – meaning the company and its employees pay into a benefit plan. Desjardins has a contract with Telus Health that covers claims processing only. Telus Health then sells some services through its virtual pharmacy. (Wendy Martinez/Illustration/CBC)

The new policy applies to two types of prescription medications: maintenance medications, which are taken regularly to treat conditions such as asthma or diabetes; and specialty medications used to treat complex or life-threatening conditions such as cancer or Crohn’s disease.

Telus Health is self-insured – meaning the company and its employees pay for a benefits package, with the company responsible for reimbursing claims-related costs. Enrolling in the plan is optional.

Desjardins has a contract with Telus Health for claims processing only, a spokesperson for the insurance company told CBC News. Telus Health then distributes some benefits through its virtual pharmacy.

Direct patients to the on-site pharmacy

The new policy is “a pretty bold move” by Telus Health, said Steve Morgan, an expert in pharmacare systems at the University of British Columbia.

He said more insurers are realizing they can save costs by taking on work that would normally be done by a separate company within the supply chain.

“You think you’re dealing with different entities at different levels of interaction with the system,” Morgan said. “But actually all of these companies are owned by the same player.”

The Canadian Pharmacists Association (CPhA) says on its website that directing employees to specific pharmacies is a growing trend, but maintains that companies should not be able to dictate where patients get their medications. It is calls for regulations Restrict PPNs to allow competition between pharmacies.

A sign reading “Telus Health Care Clinic” can be seen at the entrance to an industrial driveway.
A Telus Health clinic is pictured in downtown Vancouver on December 1, 2022. The company, which has acquired several Canadian telehealth companies in recent years, employs about 7,000 people. The company did not say how many were in Canada. (Ben Nelms/CBC)

According to Telus Health, there are benefits to moving

Telus Health said in a statement to CBC News that the policy is “consistent with the standard approach” of other pharmacy companies and that the move “provides a number of benefits, including improved coinsurance and lower dispensing fees.”

“In addition, we attach great importance to involving our employees in testing and using our services, because their valuable feedback allows us to continually develop our offering for our customers.”

Telus Health, which has acquired several Canadian telehealth companies in recent years, employs about 7,000 people. The company did not say how many were in Canada.

Sources say the employees are not unionized.

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Employees working in Quebec will not experience any changes as provincial law is in effect prohibits such offers.

However, PPNs are used by many of Canada’s major insurers. Sun Life’s PPN includes Express Scripts Canada Pharmacy, InnomarPharmacy and BioScript Pharmacy and is voluntary for the insurer’s employees.

Just a few weeks ago, Manulife announced a deal To do this, patients would have had to fill their prescriptions for specialty medications at Loblaw-owned pharmacies in order to receive a refund. After public backlashthe decision was reversed.

Shelves full of prescription medications are shown in a pharmacy.
Prescription medications line the shelves of a pharmacy in Montreal on March 11, 2021. (Ryan Remiorz/The Canadian Press)

Specialty medications are particularly expensive in Canada, costing more than $10,000 per patient annually, according to a 2023 study Drug Trend Report from Express Scripts Canada.

Because Canadians mostly get private insurance coverage through their workplace, they can expect employers to try new strategies to control drug costs, says Quinn Grundy, a researcher at the University of Toronto who studies companies’ health-care activities.

“Because they are also commercial companies, there is no guarantee that these strategies will put the interests of patients or the public first,” she said.

“There is now a situation where the employer’s concerns about costs and revenue are driving this decision, rather than the relationship between a patient and their healthcare provider.”

The three employees who spoke to CBC News said they felt Telus Health employees were being forced to use the company’s virtual pharmacy. A source said that under the new rules they would no longer be allowed to use the pharmacy near their doctor.

“Sign of the Future”

Telus Health was described as one of Canada’s largest Pharmacy Benefit Managers (PBM) – another service the company offers – from different Organizations including the CPhA.

PBMs, which act as a kind of intermediary between insurers, drug manufacturers and pharmacies in the US, are under close scrutiny.

The US Federal Trade Commission is currently exploring their practices, including steering patients to pharmacies owned by PBMs, and their impact on access and affordability of prescription drugs.

When it comes to insurers’ influence on the pharmaceutical sector, the U.S. is about a decade ahead of Canada — and PBMs also have “extraordinary power” over the industry, said Morgan, a pharmacare expert at UBC.

“Instead of lots of smaller pharmacy companies competing with each other and operating regionally and locally, you end up with large conglomerates that essentially dominate the pharmacy landscape,” he said.

He says events in the US show that this type of dynamic is “undermining” competition in the pharmacy sector.

Researchers believe that exclusive contracts and the increasing market dominance of PBMs in the U.S. have led to a shift in business away from independent stores, contributing to the emergence of “pharmacy deserts” in America – vast areas of the country lacking easy access have independent pharmacies.

“This is just a sign of things to come,” Morgan said. “We’re going to see many more examples of companies essentially restricting patient choice for the benefit of these very, very powerful corporate entities in the industry.”

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