Tuesday , June 15 2021

The Ontario government fines Costco $ 7 million after illegal kickbacks

The Ontario government fined Costco for over 7 million dollars after finding that the company has accepted illegal commissions in 29 pharmacies in warehouses throughout the province from 2013 to 2015.

The Ontario Department of Health announced on Friday that it would sanction CWC Pharmacies (Ontario) Ltd., a wholly owned subsidiary of Costco Wholesale Canada Ltd.

Costco says he has approached the ministry in 2015 to confirm the legality of payments he has received from generic manufacturers of advertising services.

A ministry statement said Kosto voluntarily stopped receiving payments until the government review was completed.

This investigation revealed that the company has received $ 7.25 million for services that the ministry has violated the conditions for accepting discounts. Payments are used to reduce drug levy and drug mark-ups, according to Costco.

The government's statement states that Costco has "fully co-operated" with the review and has agreed to pay the fine.

The statement says that while the company believes the payments are legal at the moment, it admits they do not respect Ontario's concession laws.

The Ontario government forbids the pharmacy operator to accept concessions from a drug maker who has a product included in the country's drug database in the province, according to the ministry.

The ministry determines concessions such as "currency, discount, refund, travel, free goods or any other prescribed benefit" in exchange for the placement of specific drug brands in pharmacy shelves.

The ministry's inspectors found that the CWC received "receipts from agreed service charges with certain generic manufacturers".

The Costco statement also mentions the decision of the Ontario Pharmacist College last year to pay the same payments, resulting in two Costco pharmacy directors who are found guilty of professional misconduct. They were all fined $ 20,000 and ordered to pay $ 30,000 to college.

Michael Law, Canadian Department of Drug Research at the University of British Columbia, said that generic medicines prices in Canada are higher than in other countries, such as the United States.

By law, some Canadian provinces are trying to cut costs, such as Ontario, imposing laws prohibiting concessions. He said prices have dropped significantly over the past five years, but there are still unlawful payments.

According to the law, pharmaceutical companies sell their medicines to pharmacies that buy them at a price determined by the province.

"Since these prices are higher than the cost of selling the drug, then the pharmaceutical company will pay the secret amount back to the pharmacy as a rebate," he said.

The law believes that if concessions still exist, Canadians still pay too much for generic medicines.

"This means there is a lot of money in the system," he said.

"The fact that there are even concessions is a sign that we pay too much, at least in some cases."

Alanna Rizza, Canadian Press

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