Closed preferred pharmacy networks came under scrutiny in 2024 when Manulife and Shoppers Drug Mart announced a deal that would force some patients to fill prescriptions at Loblaw-owned pharmacies.Ryan Remiorz/The Canadian Press
The Ontario government will introduce a bill to ban closed preferred pharmacy networks, a kind of exclusivity deal between insurers and pharmacies that restricts where patients can buy medication.
Ontario Finance Minister Peter Bethlenfalvy announced the plans as part of the government’s fall economic statement on Thursday.
PPNs, as the networks are known, are a feature of many employer-sponsored benefit plans. An insurer may provide a discount if a member goes to an in-network pharmacy, or it may even refuse to reimburse a claim if a member tries to go outside the network.
The province held two public consultations on PPNs in the summers of 2024 and 2025.
The most recent proposed two options for legislation: an “any willing provider” framework that allows pharmacies to join insurers’ networks if they can meet certain quality and pricing standards; and a standardized process for patients to apply to their insurers to get prescriptions filled outside a network.
Mr. Bethlenfalvy’s statement said the Ontario government will introduce legislation that enacts both options.
“The framework would enable any pharmacy willing to match a PPN’s financial terms to join, enabling expanded consumer choice and competition in the pharmacy sector, while maintaining cost-effective access to medications,” the statement said.
PPNs exist throughout the insurance industry. An insurer’s network is considered “open” if it allows any pharmacy to apply, and considered “closed” if it does not.
In launching the first round of consultations into the issue last year, the provincial government cited reporting by The Globe and Mail on the pervasiveness of PPNs, and noted that Ontarians had concerns about the rise of such agreements.
Concerns about closed networks were thrust into the spotlight in early 2024 after Manulife Financial Corp. and Shoppers Drug Mart announced a deal that would have forced some patients with chronic conditions to fill all their prescriptions at Loblaw-owned pharmacies.
The two companies said they cancelled the deal after public outcry.
But The Globe reported in September that they had quietly created a new arrangement this year, in which Manulife contracted a Shoppers’ subsidiary to run its “specialty drug care” program for patients on high-cost medication.
Patients with Manulife insurance who were taking the popular weight-loss drugs Wegovy and Mounjaro had to speak to Shoppers’ representatives, who encouraged them to fill their prescriptions at Shoppers’ pharmacies.
GreenShield Canada has also operated closed PPNs, including for Wegovy.
Insurers have argued that PPNs keep costs down for plan sponsors by negotiating lower rates from pharmacies. However, insurers have never provided estimates of how much plan sponsors save through PPNs.
Insurers oppose Ontario’s proposed restrictions on exclusivity deals with pharmacies
Pharmacies – particularly independent ones – have opposed closed PPNs because they say the networks favour large chains and make it difficult for smaller operations to stay in business.
Pharmacists, including board members at the Ontario College of Pharmacists, have also argued it is inappropriate to restrict patients’ choice of health care professionals.
Ontario would be the second province to restrict closed PPNs after Quebec, which passed a ban in 2016.