The provincial budget was greeted with a collective sigh of relief three weeks ago by the brand-name drug companies, pharmacists and advocates for senior citizens. They had all feared that the budget would include an assault on the Ontario Drug Benefit plan, which pays for prescription drugs for seniors. But the budget was silent on the topic.

That does not, however, mean that the government has lost interest in curtailing its expenditures on prescription drugs.

As our population ages and new drugs are brought onto the market, this is the cost category that is rising fastest in the provincial health portfolio. Last year, the Ontario government spent $3.3 billion on prescription drugs — more than the province rakes in from all its casinos and lotteries and the LCBO combined.

This year, spending on prescription drugs is expected to increase by another $319 million, or almost 10 per cent.

"Let's say it's a very noticeable line in a budget," said Health Minister George Smitherman in an interview last week.

Smitherman hastened to add that the government is also concerned about "patient outcomes" and believes many senior citizens are over-medicated. He said he wants to see "more appropriate prescribing practices" that have the dual benefit of slowing down the growth in expenditures and improving seniors' health.

To this end, he plans a series of consultations over the next four to six months with all the "stakeholders" in this area, including the drug companies (brand name and generic), senior citizens, pharmacists and doctors.

"It's a file which, if you operate with undue haste, you're very unlikely to achieve a palatable outcome," said Smitherman.

If that sounds overly cautious, it is likely because Smitherman has already been burned once in handling the hot potato of prescription drugs.

In a side deal with the doctors last fall, Smitherman agreed to pay them another $50 million if they would write up $200 million fewer prescriptions for their patients.

The side deal was junked after a public uproar.

What is the government's next plan for dealing with prescription drugs?

Smitherman was reluctant to go into details, but he conceded that "reference-based pricing" is one of a "wide range of options" under consideration.

Reference-based pricing is used in both British Columbia and Saskatchewan. Under this system, the government designates the cheapest drug in a category as the one it will pay for. If patients want more expensive drugs in the same category, they have to pay the difference in price.

Rumours that Ontario was about to introduce reference-based pricing prompted major pre-budget lobbying campaigns by the brand-name drug companies, advocates for seniors and the pharmacists.

The drug companies lobbied the Office of the Premier; the pharmacists got more than 500,000 names on a petition; and CARP, a leading advocacy group for seniors, distributed a pamphlet entitled, "When Accountants Decide What's Best for Patients."

Smitherman scoffed at the notion that the lobby drove reference-based pricing out of the budget. But he has certainly taken notice of the lobbyists, especially the pharmacists, whom he hopes to enlist in his struggle with the drug file.

Asked about a rumour that he is dangling a $50 million incentive in front of the pharmacists — the same amount offered the doctors in last fall's aborted side deal — Smitherman responded cryptically: "That is a number that I have heard speculated about widely."

Getting the pharmacists onside is only half the battle for the government, however. The drug companies can probably be ignored, but Smitherman must mollify the senior citizens.

Time is of the essence here, with the provincial election already set for October 2007.

The McGuinty government is unlikely to do anything that would annoy a large segment of the voting public, such as senior citizens, within two years of that date.

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