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Colleen Flood is the University of Ottawa Research Chair in Health Law & Policy, Director of the Centre for the University of Ottawa Centre for Health Law, Policy & Ethics

Chaired by former Ontario health minister Eric Hoskins, the Advisory Council for the Implementation of National Pharmacare released its final report Wednesday.

The Hoskins report unequivocally calls for inclusion of pharmacare into public medicare. As with the rest of medicare, it recommends the federal government transfer additional funding to the provinces that comply with criteria of universality, accessibility, portability, and public administration.

National pharmacare has been 55 years in the making but no doubt private insurers and drug companies will now be even more determined to stall or undermine its implementation. This is to be expected as national pharmacare will disrupt present business models. Prepare for more efforts to persuade Canadians that the sky is falling, both in terms of access and in cost, and threats that if Canadians don’t stick with the status quo they will lose access to innovative medicines.

But to truly promote innovation, Canada’s purchasing system for medicines should send clear signals through what it buys and how much it spends that it will reward high-value medicines, but will not pay high prices across the board for generics and so on. As just one example, my private insurer pays $88 for 100 tablets of my generic antihistamine in Canada while in New Zealand, with a national drug plan and savvy buying, they pay $2.02 for the same.

The engine of Hoskin’s proposed national insurance plan is an arm’s-length agency that will determine a national formulary for the entire country. The most important medicines will be on this formulary. This agency will also be empowered to negotiate with drug companies to get a fair price that recognizes how effective the drug is in saving lives and improving health.

There are many things to like about a national formulary, which should steer doctors and patients away from drugs not on the national list and help them to choose more wisely drugs that work well. The committee proposes that the agency be arm’s length, but does not specify how to prevent it from becoming a mere creature of provincial and federal governments, driven by politics and not by evidence. Legislation should insist that governments appoint members for their expertise alone, and that all coverage decisions are evidence-based. To make sure that decision-making is within the boundaries of what is affordable, the federal and provincial governments each year should approve the budget for the national formulary, and then leave the experts to determine what drugs are included.

Further, there should be some clear means to appeal decisions regarding listing, to ensure Canadians know that the agency is doing the best job it can for them.

Another critical feature is that negotiation over the price of prescription drugs should happen simultaneously with the decision to list. The value-added of a particular drug relative to other drugs and treatments will very much depend on its price. Putting drugs on the formulary before negotiating the price will mean the agency has no leverage vis-à-vis the price.

As Canada finally catches up with the rest of the world with regards to prescription drugs, we may find we catch up only to fall behind once again. Artificial intelligence is poised to significantly disrupt the practice of medicine and is likely to emerge mainly in the form of various medical devices. Does it make sense to fund a high-cost drug when an AI medical device is a better intervention?

Canada should take a leap forward here and look to include in a national formulary not only with the most important medicines, but the most important medical devices. The secret sauce in all of this will be smart, strategic negotiations on behalf of all Canadians with drug and device manufacturers to reward real breakthroughs and the backbone to say no to coverage for drugs and devices that just don’t deliver on value for money.

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