Jean Coutu sounds off on 'lack of respect' from Gaetan Barrette

The 90-year-old founder of the Jean Coutu chain of pharmacies says the negotiations with the provincial government have left a “bitter taste” in his mouth.

"What surprised me most is the lack of respect in this public debate," Jean Coutu told shareholders at a meeting in Varennes on Tuesday."A lack of respect with tactics of negotiations, reductions in fees (...) almost always unjustified."

Coutu spoke of a "difficult relationship" with Quebec Health Minister Gaetan Barrette during negotiations for the government to recover over $300 million in professional fees that pharmacists made from charges in filling presriptions.

"It îs an average of $100,000 for each of our locations. It was extremely difficult to digest. I will not say that it is dictatorship, but it is not far off, "he said.

An agreement was reached in April to halt the taking of pharmacists' fees until 2019.

At the request of Jean Coutu Group, the agreement with pharmacies also re-established a limit of 15 per cent on professional allowances, the amount rebated by drug manufacturers to pharmacies for ordering their drugs. The government had increased the limit to 45 per cent temporarily, and the higher the rebates go, the smaller the profit margins for drug makers.

Jean Coutu Group is also closely monitoring negotations between Quebec and generic drug manufacturers.

The CEO of the company says the resumption of talks last week between generic drug makers and the Quebec government is a good sign that a deal can be reached without the province resorting to tendering in order to get cheaper generic drugs.

“It makes sense (and) I think he could get the same savings by doing so,” CEO Francois Coutu said after the company's annual meeting.

Quebec Health Minister Gaetan Barrette resumed negotiations with the Association of Generic Drug Manufacturers after saying he would give the industry more time to improve its proposal, adding that his patience has limits.

The province has passed a law and put in place regulations to allow it to launch tenders that could hurt the profitability of Jean Coutu Group's Pro-Doc generic prescription drug subsidiary if an agreement is not reached.

Julie White, a spokeswoman for the minister wrote in an email that the negotiations were “still going on positively.”

Jean Coutu Group chief financial officer Andre Belzile said a negotiated agreement is in the best interests of everyone.

“It's less risky in terms of supply of drugs, avoiding potential shortages going forward,” he told reporters.

“We are very confident that we will come with an agreement.”

Jean Coutu Group (TSX:PJC.A) said its profits fell seven per cent to $45.5 million or 25 cents per share in the first quarter.

The decrease was primarily due to a lower contribution Pro Doc following the removal of a maximum on professional allowances paid to pharmacists in January.

Overall revenue increased to $750.4 million from $723.6 million a year earlier, from market growth and the reversal of provisions recorded to meet regulatory changes.