Most people have heard of the “dispensing fee” that pharmacies charge for filling prescriptions—but many don’t know what this fee actually covers or why it exists.
The Old Way: Retail Markups
In many countries, medications are sold like ordinary retail goods. Pharmacies purchase them, mark up the price, and resell them to customers. In these systems, pharmacists may not even be involved in the sale, and customers often receive no guidance on proper medication use. Markups of 50% or more are common, as retail businesses must cover operating costs—typically at least 15–20%—before any profit is made. In countries like Canada, overhead is often much higher, especially in large cities and in pharmacies that employ highly trained professionals.
The Shift to Dispensing Fees in Canada
Decades ago, Canadian pharmacies also relied on markups. But as drug use increased and prices surged—especially with the advent of biotechnology—governments sought a more cost-controlled model. Instead of allowing retail markups, provinces introduced a professional or dispensing fee. This fee was designed to cover a pharmacy’s operating costs and provide a return on investment (ROI) for the pharmacy owner—who typically has seven years of university education and takes on significant financial risk.
Most pharmacies today would gladly trade the current fee system for a traditional markup model—especially now that many prescription drugs cost hundreds or thousands of dollars.
Full Transparency and Disclosure
Every prescription receipt for each prescription dispensed shows directly on it, the cost of the medication, the dispensing fee, and the total price to be charged. Which business, or healthcare professional tells you directly how much their cost is (medication cost) and how much extra they are charging you (the fee)? How come pharmacists are singled out legislatively to show their customers this? Doctors don’t, dentists don’t, chiropractors don’t, your car mechanic doesn’t, no one else has to – except pharmacists! Why do we accept this – Because we are caring, professional and realise that prescription medications, for many, are a necessity. We feel affordability should not be the cause of you not getting better. That also doesn’t mean that we don’t want to get paid fairly and equitably for the work that we do. Just because pharmacists are seen as pushovers, doesn’t mean that the government has license to pay us inadequately for our medication costs, overhead costs, staffing costs and a modest profit. Pharmacists have consistently been voted the most trustworthy professional in Canada for the past two decades. We earn your trust on every visit that you see us.
Both You and Your Pharmacist Hate Expensive drugs
Both you and your pharmacist have to pay for these expensive medications. You have to pay for ONE prescription, your pharmacist has to pay for TEN or more prescriptions worth of drugs that sit on the shelf and in most cases have to be paid for in full before they are sold. Your pharmacist has to pay for the whole bottle of medicine even if you use 50 or 90 tablets in a bottle of 100 tablets. Many times, we won’t get another prescription for that very expensive medication and it will sit there on the shelf collecting dust until it expires. Often the manufacturer will not reimburse us the cost of those 10 expired tablets. If that bottle of 100 tablets cost us $700 and we only sold 90 of them, we only recovered $630. Considering the pharmacy only made a profit of less than $15 for that prescription, your pharmacist just lost $55, forget about turning a profit or keeping the lights on. The pharmacy would have to sell 4 more prescriptions just to break even. And obviously a $15 profit on a $5 prescription is a higher percentage gross profit of $15 than on a $1600 prescription. The average cost for the medicine in a prescription in Ontario is over $80. That’s a gross profit of about 18 percent. That is hardly enough to keep the lights on, let alone pay for any profit or retirement savings for your pharmacist.
Ontario’s Approach: A Broken Equation
Ontario’s Drug Benefit (ODB) program—covering seniors and low-income residents—allows a 6% markup, which matches the 6% surcharge pharmacies pay to wholesalers. In other words: no actual markup. In most cases, what we pay is what we charge you. Some inexpensive medications are granted a slightly higher margin, but many products (like Ensure™ or Boost™) offer no markup at all—and some are reimbursed below the pharmacy’s cost. Private insurance plans are somewhat better, offering around 8 – 10%, though this still falls short of covering overhead.
Thus, pharmacies must rely on dispensing fees to stay afloat.
What Dispensing Fees Actually Cover
Dispensing fees are based on a simple formula:
Fee = (Cost of Providing Services + ROI) ÷ Expected Annual Prescriptions.
This spreads operating costs evenly across all prescriptions. But the term “dispensing” fee is misleading—because the pharmacist does far more than simply hand out pills.
Each prescription must be:
- Legally validated
- Reviewed for safety and efficacy
- Checked against the patient’s medical history, allergies, medications, and even genetic factors
This is done for every prescription—whether the medication costs one dollar or one thousand dollars. Pharmacists act as the final safeguard between the public and potentially dangerous drug interactions or errors.
Beyond dispensing, pharmacists:
- Offer health advice without appointments
- Recommend or discourage over-the-counter treatments
- Intervene when prescriptions aren’t appropriate
- Provide counseling and care at no additional charge
No other health professional delivers so much frontline care for free. These services are supported by the dispensing fee. Some may question why the fee for a cheap drug exceeds the drug’s cost—but patient safety and pharmacist expertise are constants, regardless of medication price.
A System Under Pressure
In 2006, the average cost of dispensing a prescription in Ontario—before ROI—was estimated at $14. Today in 2025, think about how much everything from rent to electricity is so much more expensive compared to in 2006. Thus the cost of dispensing a prescription accounting for overhead is over $15. The government pays a dispensing fee of $8.83 and most private insurance plans pay a maximum dispensing fee of $11.99. Despite rising costs, most pharmacies charge less than that due to competitive pressure. Larger retailers sometimes even lose money intentionally on prescriptions by using them as a “loss leader” to draw in customers. This sends a dangerous message: that cost is more important than quality when it comes to healthcare.
Private insurers often reimburse less than the actual cost of dispensing and may pressure patients to switch pharmacies based solely on lower fees—again, prioritizing price over care.
ODB Fee Reductions: A Flawed Policy
The ODB’s standard dispensing fee is $8.83—but for low-income residents, it’s cut by $2 (to $6.83). These fees don’t come close to covering real costs. Worse, pharmacists are expected to collect these “user fees” from patients on the government’s behalf. No other public health provider is asked to act as a tax collector. Though these fees are meant to discourage unnecessary medication use, their collection isn’t even mandatory. That raises the question: are they truly important, or just a means to claw back funds from pharmacies?
Why User Fees Are Harmful
Pharmacists oppose user fees—especially for low-income individuals—for two reasons. First, they unfairly burden people who can least afford care. Second, research (like the RAND Health Insurance Experiment) shows that user fees cause low-income patients to skip necessary treatments.
Access to a pharmacist should depend on quality of care—not ability to pay. Just like other health professionals, pharmacists should be chosen based on their expertise, not their price tag.
What You Should Ask Instead
Many pharmacists are disheartened when the first question a potential new patient asks is: “What is your dispensing fee?” A better question would be:
“Can you help me manage my diabetes?” (Yes)
“Do your pharmacists hold extra certifications or training expertise beyond pharmacy school” (Many do)
The Pandemic & Public Perception
During COVID-19, pharmacists continued serving their communities on the front lines—earning public praise. But this wasn’t a new role. Pharmacists have always provided critical, underrecognized care.
They also had to enforce the province’s 30-day limit on prescriptions to prevent hoarding—an essential but unpopular measure that led to some very uncomfortable and unpleasant conversations with customers. Despite filling more prescriptions more often, pharmacists still receive the same total remuneration. More work, less pay. Equal pay for equal work is not just fair—it’s necessary.
The Bottom Line
The public deserves to know what dispensing fees actually represent: the cost of safe, accessible, professional healthcare. These fees are not “price gouging”—they’re how pharmacies survive, how pharmacists do their job, and how patients stay safe.
Pharmacists do much more than fill bottles. They protect lives, answer questions, and provide care when and where it’s needed. It’s time we recognized the value of their work—and stopped reducing it to a number on a receipt.
