Pharmacy location and medical need: regional evidence from Canada

Pharmacists’ role in the health care systems of different countries has expanded over the last three decades, for several reasons. First, demand for medication dispensing and counselling – core pharmacy services – has grown in lockstep with the variety of prescription medications that are available. Second, pharmacists’ scope of practice has expanded. In Canada and in various other jurisdictions, pharmacists are administering vaccines, screening for hypertension and other diseases, counselling on smoking cessation, prescribing drugs for minor ailments, and providing a variety of other primary care services [1, 2].

For pharmacists to effectively deliver healthcare, they need to be accessible to patients. Patient access to pharmacist services has been the focus of a growing literature. These include studies of pharmacy service availability: across urban and rural areas of New Zealand [3] and the United States; [4] in areas populated predominantly by lower income households in England [5] and in various cities in the United States; [5‐8] and among the elderly living in Scotland [9] and Portugal [10]. Waterson developed an economic framework to determine the optimal number of pharmacies and compared the density of pharmacies in Melbourne, Australia to the optimum [11]. Jagadeesan and Wirtz review studies of local pharmacist service availability in other countries [12]. The Organisation for Economic Co-operation and Development (OECD) has compiled data on the pharmacy density of member countries [2].

Several studies have investigated patient access to pharmacy services in Canada. Two focused on access in the provinces of Ontario [13] in 2010 and Nova Scotia [14] in 2011. The studies found that most urban dwellers in these provinces live close to a pharmacy; access is somewhat lower in rural areas. Another study focussed on pharmacy access across neighbourhoods in the Greater Toronto Area in 2014; Toronto is the capital of Ontario [15]. Neighbourhoods were characterized by level of healthcare need, i.e., the capacity to benefit from healthcare. Need was measured using average household income, and the elderly (65 +) and child (0–9) shares of the population. The study found that about 14% of the population had low access relative to healthcare need; about 13% of the population was over-serviced relative to need [15].

Little is known about pharmacy access outside of Ontario and Nova Scotia. This paper, therefore, examined pharmacist services availability across Canada and also examined how pharmacist services availability varied with two indicators of healthcare need that are routinely used in the aforementioned literature. These characteristics are older age (the share of the population 65 +) and median household income.

Pharmacists’ expanded scope of practice raises questions about individuals’ access to pharmacy services. Previous studies for Canada have focussed on the geographic proximity of residential households to pharmacies in Nova Scotia and Ontario. In this paper, I focus on access to pharmacist services across the 10 Canadian provinces using more recent data. I find that pharmacy availability – both the number of pharmacies per capita and the total operating hours of these pharmacies, both overall and on weekends – was higher, the greater the elderly share of the population and the lower is median income.

Given that lower regional income is associated with higher levels of unmet healthcare need, this finding suggests that pharmacies may be well placed to provide care in areas that need it. As an example, earlier research has found that rates of lung cancer and cardiovascular-related mortality are higher in lower income Canadian neighbourhoods [20]. Smoking cessation counselling and hypertension screening – services routinely provided in pharmacies – may be effective in addressing these health problems.

The density of pharmacies in Canada appears to be higher than in the UK, the US and other countries examined in the literature. For instance, Norris and colleagues note that in New Zealand in 2010 there were about 4,800 individuals served per pharmacy; [3] in Canada in 2019 this number was 3,440. There are likely two reasons for the surfeit of pharmacies in Canada. The first reason lies with Canada’s approach to financing prescription drugs, which includes not only drugs themselves, but also payments to pharmacies and wholesalers. The public sector covers less than one half (about 45%) of prescription drug costs, typically for those 65 + , those with very low income and others who face high drug costs relative to income. Voluntary, private insurers cover about 35%; this is mostly employer-sponsored coverage extended to employees and dependents. The remaining 20% is covered directly by patients, typically in the form of copayments and deductibles [21]. The voluntary, private insurance sector is non-existent, or at least much smaller, in other OECD countries [2]. Instead, most OECD countries rely on public drug coverage, or compulsory social insurance coverage, although such coverage usually requires patient cost sharing. This gives the state some control over spending on pharmacist services. The New Zealand government, for instance, sets an annual budget for pharmacist services [22]. Expenditure control is lower in mixed public–private insurance systems, especially systems such as Canada’s where private insurers tend to impose weaker reimbursement constraints than do public plans [23].

While, to the best of my knowledge, there is no literature that compares pharmacy remuneration across countries, it seems to be the case that total pharmacy remuneration is higher in Canada than in other countries examined in the literature. This level of remuneration allows more pharmacies to be commercially viable than otherwise, including pharmacies with lower prescription volumes.

The second possible reason that Canada has a relatively large number of pharmacies is due to its permissive rules on pharmacy ownership and location. All provincial pharmacist regulatory authorities have rules on the books requiring that pharmacies be majority owned by pharmacists. But in most provinces, corporations can work around these rules; [24] pharmacists are still required, however, to manage a corporate-owned pharmacy. Pharmacies in Canada also face no special location restrictions. In many jurisdictions in Europe and elsewhere, new pharmacies must locate a certain distance away from existing pharmacies, or satisfy a local pharmacy needs assessment [25, 26].

The combination of relatively unconstrained pharmacy remuneration in Canada and permissive rules on pharmacy ownership and location help explain Canada’s density of community pharmacies. It is less clear why pharmacies tend to locate in regions with lower household income or higher elderly shares of the population. One possible explanation is that prescription demand (and thus pharmacy sales revenues) is particularly high in these areas. The prevalence of chronic health problems increases with age and those 65 and older are eligible for relatively generous provincial government drug plan coverage. Similarly, there is a well-established association between income and health. But lower income individuals under 65 in Canada typically would not have superior coverage to those with higher income given that they are less likely to qualify for generous employer-sponsored drug coverage. There is public drug coverage for the indigent in each province, and it is possible that lower income individuals who do not qualify for this public coverage are willing to pay out of pocket for pharmacy services. But it is unclear if these are the factors responsible for the income-pharmacy access gradient found in this paper. Further investigation seems warranted.

The density of pharmacy services – both the number of pharmacies per capita and the total hours these pharmacies are open – tend to be higher in regions of Canada with older and lower income residential populations. This suggests that pharmacies are well positioned to provide primary care services in these regions.