Pharmacare is the wrong solution at the wrong time

Could push our already strained healthcare system towards collapse

Download Pharmacare is the wrong solution at the wrong time

TORONTO, ON, Mar 30, 2015/ Troy Media/ – Last week, to great fanfare and much media attention across the country, the Canadian Medical Association Journal announced the publication of a new study trumpeting the great benefits of a federal government-funded pharmaceutical drug coverage.

According to proponents, the plan – dubbed “Pharmacare” – would save Canadians approximately $7 billion per year in drug costs, with little to no tax increases, and would greatly improve the health of Canadians by providing drugs to the 10 per cent of us who currently cannot afford prescribed medications.

Pharmacare sounds like a win-win

On the surface, such claims sound like a win-win. More coverage for less money, with better health outcomes. But on closer inspection, the CMAJ study makes some highly dangerous assumptions, and ignores a potential financial sinkhole that could further push our already strained healthcare system towards collapse.

Latest study on Pharmacare based on dangerous assumptions

For example, the study’s authors falsely claim that Canada is the only industrialized country with a universal healthcare system that does not provide national drug coverage to its citizens. However, in actuality, Canada is the only country in the industrialized world with universal healthcare that does not have a second, private tier of healthcare, and one of only three nations in the industrialized world that does not require its citizens to pay some form of user fee for medical services.

In fact, the CMAJ study cites, as examples for Canada, countries with extensive private healthcare systems. In these other countries, public drug coverage is affordable thanks to the savings achieved by shifting part of the healthcare burden to the private sector.

So, unless the CMAJ is interested in discussing Pharmacare within the context of a fundamental rethink of our healthcare system, including private care and user fees, the entire premise of their argument – comparing us to international peers – is misleading and inappropriate.

More to the story: 4 ways to make pharmacare work for Canadians by Dr. Steve Morgan

Additionally, the CMAJ study’s cost savings claims are highly suspect.

Canadians would save $8 billion annually, states the study, by eliminating out-of-pocket and private insurance expenses for prescription drugs. These reforms, they say, would only require $1 billion in extra government spending. The magical transformation of $8 billion of private spending into $1 billion of public spending would happen through better bulk pricing, increased use of generic drugs and smarter prescription choices.

But the study’s pricing assumptions are based on costs similar to those found in Europe. And any savings achieved by switching more patients to generic drugs, or by ensuring that physicians prescribe from a list of drugs, may quickly disappear when newer, more expensive brand name drugs are demanded by Canadians.

Also, the study bases all cost assumptions for future pharmaceutical use on historic levels of demand. This is a highly incorrect methodology that completely misses the impact on drug demand that will occur when the price of prescriptions approaches zero. Any first-year economics student can tell you that as price approaches zero, demand skyrockets. Our healthcare system, with its zero dollar pricing for patients, has shown just such growth in demand.

Pharmacare would break an already broken healthcare system

In Canada, healthcare spending consumes approximately 40 per cent of all provincial budgets, and the costs will likely rise as our population ages and sickens. Such levels of expenditure would be forgivable if our healthcare system was a world leader. But despite all of the money we pour into it, it’s broken. In June 2014, Canada’s healthcare system ranked 2nd worst in the industrialized world in a study by the Commonwealth Fund, beaten by every nation except the United States on metrics such as wait times, efficiency and health outcomes.

So, when our national healthcare system is broke and underperforming, and when even the CMAJ authors admit that their Pharmacare plan may initially require $5 billion in additional government funding, now is not the time to introduce an untested national program of unpredictable cost.

Dr. Brett Belchetz is an emergency room physician and Fraser Institute senior fellow.

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