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Opinion Federal budget 2019: On Pharmacare, the Liberals offer big questions and small investments

Rosalie Wyonch is a policy analyst at the C.D. Howe Institute.

If you were expecting the Liberals to launch a much-anticipated national pharmacare plan as part of its election-year budget, you were likely sorely disappointed. Despite the release of the interim report of the Advisory Council on the Implementation of National Pharmacare earlier this month, and various politicians making various noises about the possibility of such an ambitious proposal, there was almost no new information in the budget about pharmacare, other than new funding that would land years from now. And with important questions left unanswered, provinces and private-insurance companies continue to endure much uncertainty about what the future holds.

Here’s what the budget does provide for: $35-million over four years, starting 2019-20, to establish a “Canadian Drug Agency Transition Office.” Starting in 2022-23, the budget also proposes an investment of up to $500-million per year to help Canadians with rare diseases get access to medications.

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Both of these echo the interim report’s recommendations, and both are good ideas. The proposed Canada Drug Agency would conduct health technology assessments, negotiate prices and listing terms, monitor the real-world effectiveness of prescription drugs and develop and manage a national formulary, or list of medicines. Some of these things already occur, but in separate agencies: the Canadian Agency for Drugs and Technologies in Health (CADTH) conducts cost-effectiveness analysis, and the pan-Canadian Pharmaceutical Alliance (pCPA) already conducts price negotiations for all the public drug insurance plans in Canada. The Patented Medicines Pricing Review Board (PMPRB), meanwhile, regulates the maximum price of patented pharmaceuticals in Canada.

Consolidating these activities under one agency would be an effective way to reduce duplication of work and allow for parallel evaluations and negotiations, which should reduce the time between Health Canada’s approval of a new medicine and it being available to Canadians. Indeed, the proposed changes to the PMPRB regulations suggest it will increase the role of cost-effectiveness evaluations in the regulation of prices; currently, maximum prices are determined by comparing Canadian prices to prices of drugs in the same therapeutic class, as well as prices of the same drug in select other countries.

But what remains unsettled even after the budget and the interim report is what exactly a “comprehensive, evidence-based national formulary” actually means. The interim report suggests that this national list would “serve as a baseline for harmonizing coverage across Canada,” but whether it will just comprise a list of essential medicines or truly “comprehensive” and all-inclusive – or something in between – remains unclear. It is also unclear whether provincial health insurance plans would be required to list all drugs that would wind up in the formulary.

Currently, the pCPA negotiations are non-binding and provinces can choose whether or not to list individual drugs on their formularies. If the lists were binding on provincial plans, it would harmonize access across the country, but would severely limit provincial governments’ abilities to manage their pharmaceutical budgets with listing decisions. It would, however, increase the negotiating power of the pCPA or the new national drug agency, since the potential market size for a drug would be more certain during negotiations.

The lack of clarity in the scope of a national formulary and associated listing requirements for public insurance also implies that the future role for private insurance companies is left largely undefined. If the formulary is comprehensive and the listing agreements are binding, then there may be only a minor role for private drug-insurance firms. If, however, the list of medications covers only essential medicines and provinces retain autonomy in listing decisions, the role of private insurance would remain largely unchanged. This depends, too, on who will be covered by the public plans, another major unaddressed issue: In countries with universal drug insurance, private insurance coverage ranges from none to all citizens.

It is also unclear what role the federal government intends to take in the administration and funding of a new national agency and drug formulary. There is a strong case for limiting the role of the federal government in financing drugs. The federal government is not directly responsible for paying for most other health care (physicians and hospitals). If it were to directly fund and manage drug coverage, there would be less integration in the management of overall health care costs and provinces would have less incentive for cost-effective choices between drugs and other inputs to health care.

One hopes that the final report on the Implementation of National Pharmacare will go beyond some sensible general recommendations – that it will clarify the intended scope of public drug coverage and Ottawa’s intended role in a new national pharmacare system. Provinces, too, should maintain a leading role in administering and funding of public pharmacare, as they do in other areas of health care. But right now, the federal budget has taken the first steps toward National Pharmacare – but has backed up that ambitious goal with a minor investment.

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The federal budget includes new spending in a range of areas including support for first-time homebuyers, ensuring seniors are enrolled in CPP and the further advancement of reconciliation.
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