Understanding limits on pharmacy markups and dispensing fees

May 17, 2024

Male pharmacist explaining prescription to woman at counter

Your group benefits plan includes limits on pharmacy markups and dispensing fees to help manage the costs associated with prescription drugs and to help sustain coverage.

Three main factors determine the price of prescription drugs:

  • Drug ingredient cost: the amount a pharmacist pays to buy the drug.
  • Pharmacy markup: any additional amount a pharmacist may charge for a drug, above the original drug cost (helps pay for the costs of running the pharmacy).
  • Dispensing fee: the professional fee a pharmacist charges to fill your prescription. In Canada, dispensing fees vary by pharmacy, typically ranging from anywhere between $4-16 for each prescription you fill.

If your pharmacy is charging a markup on a drug claim that is greater than the dollar amount set by your group benefits plan (up to 10% or $250), the markup allowed will be reduced to the maximum dollar amount set by your plan. Therefore, unreasonably high drug markups may impact your prescription costs and how much you need to pay out-of-pocket.


Here are some cost-saving ideas for filling prescriptions:

  • Shop around: Since the cost of prescription drugs varies depending on where you shop, call your local pharmacies to ask how much it will cost to fill your prescription(s). You may discover you can get a better price somewhere else and avoid paying out-of-pocket if their dispensing fees and mark-up meet/are below the amount covered by your plan. The ETFO ELHT reimburses dispensing fees up to $11 per prescription.
  • Request a three-month supply: For maintenance prescriptions that you fill regularly and take on a long-term basis, talk to your health-care provider or pharmacy about getting a three-month supply instead of just one month to reduce the number of dispensing fees you are charged. The plan covers up to five (5) dispensing fees per 12-month period for these types of drugs.
  • Find lower-cost alternatives: Use OTIP’s online My drug plan tool to check whether a drug is covered under your benefits plan, the approximate out-of-pocket expense to purchase the drug, and find any lower-cost/generic alternatives.

By making an effort to reduce your prescriptions costs, you can help safeguard your plan by keeping your benefits affordable, accessible and sustainable for when you, your family and your colleagues need it.  


For more information on your drug coverage and drug dispensing fee maximums, check your benefits booklet on OTIP’s plan member site.

Do you have a specialty medication that requires prior authorization? Your plan has partnered with Cubic Health’s FACET Program to administer the drug prior authorization program using evidence-based criteria and plan design considerations. Visit pa.otip.com to find the drug prior authorization form for your medication.


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