Pharmaceutical service provider replaces X.25 network with VPN

Supporting 870 pharmacies across Ontario on its network, PROPharm Ltd. knows firsthand the importance of network reliability. Simply put, if the network goes down, prescriptions don’t get filled.

Established in 1977 to provide Canadian pharmacists with computerized dispensary systems, the Markham,

Ont.-based firm operates as part of Katz Group Canada Ltd. Its Windows-based applications and services enable drug stores to track patients and their medications, print vial labels, check for drug interactions, verify insurance claims and basically handle all dispensary activities, including credit and debit card transactions.

Up until 2001, PROPharm connected to its client stores using an X.25 service leased from Bell Canada — a service that was not only slated to be discontinued but was also increasing in price.

“”The costs were escalating to the point where our network was a six-digit money-losing proposition,”” recalls George Edwards, PROPharm vice-president, retail systems. “”Our criteria in looking at a new network were it had to be dramatically less expensive . . . and we wanted it to be as fast as our current network.””

Given the substantial savings it needed to achieve, the company decided to move to an Internet Protocol (IP) network. “”We realized we needed to utilize the free infrastructure of IP so that was our main focus,”” says Edwards. “”We did ask for other proposals … but there was really nothing that came in from a costing perspective to where we needed to be.””


Working with four key business partners — IBM Canada Ltd., Ingenico Corp., AJB Software Design Inc. and Getronics Canada Inc. — PROPharm designed and implemented an IP-based virtual private network (VPN). IBM’s Linux division created a custom solution, using Linux servers at each store to handle security, communications and run the dispensary applications.

IBM also provides a secure co-location facility, where PROPharm has established its network monitoring centre, with redundant components and diesel engine power backups to ensure high availability. Ingenico ensured the new network could handle credit and debit authorizations and that it could communicate with PROPharm’s legacy applications.

AJB provided a retail transaction switch to handle financial transactions and drug claim verifications in the new environment. And, Getronics provided installation services, completing the rollout to all 870 stores in less than four months.


Each pharmacy now uses a local Internet service provider (ISP) to connect to PROPharm’s network using VPN, with about 98 per cent running high-speed digital subscriber line (DSL) service. Those in remote areas of northern Ontario where there is no DSL coverage available are using dial-up service while some are currently piloting cable services.

According to Ben Nivet, Getronics’ account representative for PROPharm, ISPs are doing a better job today of guaranteeing network availability through service level agreements, making IP networks more viable. However, in those cases where modifications or changes were required to an ISP network to provide VPN connectivity, Getronics worked with the local ISPs on PROPharm’s behalf to ensure the criteria was met.

In total, the conversion to IP has cost $2.5 million, an investment that was well worth it, according to Edwards. In its first year of operation, the IP network has saved PROPharm $1 million in operating expenses. It has also cut the time it takes to verify insurance claims in half, meaning it takes about three seconds to verify each claim.

“”It went above and beyond our design goals,”” notes Edwards, adding security has also lived up to expectations. “”I guess if there’s one area where we haven’t been as pleased, it’s with the service.””

Originally, as DSL service was put into the stores, it was added onto existing lines resulting in intermittent interruptions. After troubleshooting the problem, PROPharm realized the ISP connections required dedicated phone lines, which meant the cost of the project came in slightly higher than anticipated.

Another snag was encountered when the Linux servers were having difficulty handling power fluctuations in the stores, requiring PROPharm to dial in, reboot and run procedures to get them working again. Working with IBM, PROPharm was able to configure the Linux servers to be more robust.

“”I wouldn’t say the first year was all good, because certainly it was a learning curve for everybody involved,”” says Edwards. “”But we’re now at a point where we’ve achieved our goals in all areas.””

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