FROM OUR ARCHIVES
Ed. note: This commentary was originally published Dec. 10, 2016.
It’s time for a universal pharmacare program.
Canadians don’t like to hear this, but when it comes to pharmaceuticals, our health insurance system has plenty in common with the United States. In fact, the U.S. is marginally ahead of us where prescription medication is concerned.
Provinces usually cover medications for the very poor – but so does the U.S. system. Provinces also tend to cover seniors, although not as generously as in the U.S., since many provinces have or are in the process of de-insuring so-called “wealthy” seniors because of budget constraints. Limited provincial drug plans are riffled with deductibles and co-payments, meaning financial barriers still deter many from getting the drugs they need.
This U.S.-style approach to prescription medications leaves us with U.S.-style results (that’s not good). Many Canadians have no drug insurance and one in five Canadians now report that someone in their household is not taking their prescription medicine due to concerns about costs.
The results are devastating for Canadian health.
Here’s something else we have in common with the U.S.: despite not covering everyone, we still manage to spend more on drugs than most other countries.
Consider England and New Zealand, where everyone is covered for a broad range of prescription drugs, there are minimal co-payments and, for poor or high users, many drugs are completely free. All this and they still spend much less on prescriptions than Canada or the U.S.
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Universal drug plans mean national bodies negotiate fairer prices for prescription drugs. The results are dramatic. In 2009, the cholesterol-lowering drug simvastatin (20 mg) cost 2.4 cents in New Zealand compared to a whopping 62.5 cents in Ontario.
So while some critics claim that universal drug insurance is a nice idea but not affordable, it’s very clear that such insurance is actually the key to affordability.
So how can we make universal pharmacare happen?
One strategy is to expand the Canada Health Act to include pharmaceuticals but let the provinces largely run the show. Participating provinces would agree to a fair process using an independent agency to identify essential medicines. The federal government could provide a limited budget of, say, $5 billion for this program, paid as transfers to the provinces over 10 years.
Provinces could also collect premiums as a percentage of income, like a pension plan, to help cover the costs. Or they could stream premiums from private insurance plans into a central purchasing pool.
The list of essential medicines wouldn’t be set in stone. If drug prices are negotiated down, resources are freed up to add more drugs. And each province could negotiate its own prices with drug companies, but ideally most would agree to negotiate together to increase purchasing power.
A more ambitious strategy would be to create a federally-administered pharmaceutical plan for essential medicines. This offers a new vision for health care in Canada by maximizing the buying power of a nation. Under this plan, pharmacies could bill the federal government directly when Canadians present prescriptions for essential drugs.
It’s not as expensive as it sounds.
About $5 billion would likely cover a core list of approximately 150 essential medicines, making them free for all. Money could be saved by eliminating tax-breaks offered to private insurance plans. Private insurers would still cover drugs not included in the basket of essential medicines or other health services.
There would be no need to change the Canada Health Act. In the spirit of co-operative federalism, this option could be offered to provinces without any legal requirement to participate.
And employers would have the benefit of a significant reduction in the costs of keeping their workforce healthy.
With at least two viable models for universal pharmacare, it’s possible to be fiscally conservative without burdening Canadian patients in need of drugs.
Colleen Flood is a Professor at the University of Ottawa and a University Research Chair in Health Law & Policy.