While we have publicly funded health insurance in Canada, it is principally for hospital and physician services.
When it comes to prescription drugs, only a minority of citizens have public insurance coverage, essentially those over the age of 65, people on social assistance, and a small number of patients with conditions that result in catastrophic drug costs.
More than 23 million Canadians depend on private insurance to pay for their prescription drugs. The bulk – 9.4 million workers and their 13 million dependants – rely on employer-sponsored plans, while another 339,000 self-employed workers purchase health insurance for themselves and their 424,000 dependants.
Last year, $10.1-billion in claims were paid out by private insurers, a significant chunk of the country's $28-billion prescription drug bill.
Despite Canadians' reliance on private insurance for essential medications (as well as "supplemental" services not covered by medicare like dental care, physiotherapy, medical transport, semi-private rooms, and so on), the insurance industry has kept a low profile.
But that's about to change with the publication of a policy document from the Canadian Life and Health Insurance Association. The report, entitled Ensuring The Accessibility, Affordability and Sustainability of Prescription Drugs in Canada, is one of the most significant contributions to the debate on pharmacare (and medicare reform more generally) in many years.
Why?
Because in addition to repeating what most everyone in the health policy field has been saying for years, that Canada needs to ensure that all Canadians have affordable access to essential prescription drugs, the CLHIA makes clear that it is on board. (Private insurers bitterly opposed medicare in the 1950s and 1960s but they are taking a different tack with pharmacare.)
In addition, the insurance industry offers up a comprehensive list of reforms that should be implemented, many of which will be supported by pharmacare proponents across the political spectrum.
Let's be clear: The insurance industry does not want a universal public insurance plan for prescription drugs. But that's not a realistic option in the current political and fiscal environment anyhow.
What the CLHIA does advocate is a mixed private-public system (which is what we have now) but one that ensures all Canadians have prescription drug insurance. Unfortunately, the report is silent on the issue of regulation of private insurance and the importance of not allowing "cream-skimming" (where private insurers take healthy, profitable clients and dump the expensive ones on public plans). But dividing the spoils needs to be part of a larger debate on what pharmacare should look like.
Where there is unanimity is that our current prescription-drug policies are largely a failure: The non-system is too expensive and unfair, and allows too many Canadians to fall through the cracks. It offends the principle of universal health care.
Because costs are soaring, both public and private drug plans are looking for ways to cut costs by limiting coverage, and that is creating growing inequality and unfairness in access to essential medical care. Policy-makers have to deal with that problem, and urgently.
Canada has the second highest per capita drug costs in the world (after the U.S.) and the reason is we do an abysmal job of controlling drug costs. The CLHIA report notes that if Canada were to simply bring its costs down to the average level of OECD countries, the drug bill would drop by $9.6-billion a year.
The patchwork of drug plans we have, public and private, is incoherent and difficult to navigate. For example, almost every drug plan, federal, provincial, or employer-based, has its own formulary (a list of drugs that will be reimbursed). The amount paid for drugs by various plans is largely secret, negotiated based on volume purchased not usefulness (or value) drugs provide.
"There should be one price for prescription drugs for Canadians regardless of whether they have public coverage, private coverage or pay out-of-pocket," the CLHIA says. Amen.
The group also calls for a common national minimum formulary so Canadians know what drugs are paid for regardless of the insurance plan they have, and for transparency on pharmacists' dispensing fees.
Private insurers are also demanding a "fundamental reform" of the Patented Medicines Prices Review Board, the federal body that sets prescription drug prices. Its current role, to ensure that brand name drug prices "are not excessive" should be changed to ensure that drug prices (brand name and generic) are "as low as possible." That common sense from the CLHIA is welcome.
The report also points out that a more rational approach is needed for coverage of specialty drugs for conditions like cancer and auto-immune disorders. These expensive drugs account for less than one per cent of prescriptions but 20 per cent of all costs. An example is Remicade, a drug that costs $35,000 a year but could potentially be used by 1.6 million Canadians. Coverage of "catastrophic" costs like those are all over the map, varying by province and employer.
In short, the Canadian Life and Health Insurance is calling for tactical reforms in the short-term and fundamental reforms in the long-term.
That will require a lot more co-operation between government and industry (not to mention consumer groups and employees/citizens) rather than working at cross purposes. Done right, one of the missing pieces of medicare – access to essential prescription drugs – will be fashioned.
André Picard