Every couple of election cycles there is noise about a National Pharmacare program. It is highly lauded by those who, frankly, don’t know much abut drug coverage. Once again, we are in round 13 of a 12 round boxing match that has a been going on for 20 years, without a single punch being thrown.
National Pharmacare promises that the Federal government will create a universal system of drug coverage and negotiate more effectively for drugs to get the best price.
Sounds great, but I’d like to ask: why go to all this trouble?
Consider this:
Most Canadians are already covered (the Conference Board of Canada estimates only 3.4% have no drug coverage of some type). While there are debates about the accuracy of this number the fact is the problem is relatively small.
All the provinces have already come together to negotiate prices for generic and brand drugs. Each province and almost all private payers have pricing deals (so called Price Listing Agreements).
The Patented Medicines Pricing Review Board (PMPRB) is extensively revamping its mandate to ensure that drugs are not excessively priced compared to other OECD countries. Most importantly the PMPRB will be dropping the US as a comparator country, since that country’s drug prices are head and shoulders above any industrialized nation.
I fear that Federal schemes for National Pharmacare could hurt, not help, coverage.
Fear number 1: National Pharmacare will result in less, not more dollar coverage for Canadians.
Providing universal national coverage involves significant new spending by the public sector (currently, almost 40% of drug spending is private). That means governments will need net-new dollars. No doubt an elaborate scheme to extract this money from employers could be devised … but doesn’t that add complexity without any real benefit?
Any National Pharmacare scheme will not be able to provide first dollar coverage without downloading costs to consumers, unless, once again, net new dollars are added to the system. The result could easily be “universal” coverage — but asking patients to dig into their own pockets.
Co-pays for drugs (particularly expensive ones) are another huge issue. Approximately 20% of drug spending today falls to out-of-pocket cash payments by individuals themselves. Would a National Pharmacare program take on those new costs? Unlikely.
Fear number 2: National Pharmacare will drive a bigger disconnect between drug spending and health outcomes.
The Canadian health “system” (I use the term loosely) is a system of reimbursement in separate, unrelated silos. There is little overall management – each spending envelope (drugs, hospitals, public health, physician fees) makes its own decisions about funding, unrelated to its impacts on other spending – factoring in neither the benefits nor offsets in other areas. Each agency fights for its own dollar and bureaucrats are pretty transparent about these motivations. In comparison, even in the highly fragmented US healthcare system, a single individual has a single payer for most health costs, allowing that payer to make rational decisions about where scarce dollars have the largest impact on health outcomes – and not fight for any particular budget.
National Pharmacare does nothing to solve that. In fact, it drives the existing spending on health services and drug spending further apart. Another silo, in the form of National Pharmacare, will create a deeper disconnect — now not just within the province but between the Feds and each province. Do we really need more federal-provincial squabbles?
Could improvements be made in how drugs are covered?
Certainly. Why not just take measures to ensure those uncovered have access to insurance? Provinces could be required to ensure all their residents have access to drug insurance. Alberta and Quebec already do this, even though they themselves don’t provide the coverage. A province could adopt a universal plan such as BC, leveraging public and private spending. A plan similar to Trillium in Ontario could also include coverage of catastrophic costs, and at lower thresholds, mitigate the costly impact of co-pays. All of these assist those without coverage.
There are certainly improvements in the process of payer approval that are needed. Electronic pre-approval allows physicians to prescribe knowing what coverage the patient has. but these are small, incremental changes.
A few simple incremental changes to provincial coverage would include all residents and achieve the endpoint. And the Feds could set standards, the way the Canada Health Act does for health services.
There are countries that have national drug plans. Those countries are not Canada, and we should not expect their path to be the same as ours. Let’s take the simpler one that gets the same results.
We don’t need to create a National Pharmacare program, we need better drug coverage.