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Rebate Update: Amendments to Ontario Regulations remove cap on Ordinary Commercial Term Benefits and restrictions on Private Label Products

In November 2019, we highlighted the key proposed amendments to Regulations made under the Ontario Drug Benefit Act (ODBA) and the Drug Interchangeability and Dispensing Fee Act (DIDFA). The proposed amendments aim to reduce administrative burden for the industry and address misalignments with industry standards and policies in other provinces and territories.

Most of the finalized amendments came into effect on or before January 1, 2020, following public consultations. One notable change from the proposed amendments is the removal of the financial cap on Ordinary Commercial Term (OCT) benefits, as opposed to the previously proposed increase to 25%.

The prohibition against “rebates” under the ODBA and DIDFA does not apply to benefits in accordance with OCT, which are benefits provided in the ordinary course of business that meet certain conditions. Removal of the OCT cap for interchangeable drugs, previously set at 10% of the value of the drug, permits manufacturers to offer greater benefits to wholesalers and pharmacies.

The Government of Ontario has also announced that, as of July 1, 2020*, “Private Label Products” will no longer be prohibited from being designated as a listed drug product or interchangeable.

*On April 7, 2020, the Government of Ontario announced further amendments that changed the effective date retroactively to April 1, 2020 to ensure Ontario’s drug supply amid the COVID-19 outbreak.