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Budget takes small steps toward pharmacare, but path littered with financial, political land mines

Canadian politicians have been talking about pharmacare – extending publicly funded health insurance to prescription drugs – since the early days of medicare, 1964 to be more precise.

In Tuesday's federal budget, there was more talk and finally, if not action, an inkling of the possibility of action.

In his budget speech, Finance Minister Bill Morneau announced the creation of the Advisory Council on the Implementation of National Pharmacare (ACINP), with a "mandate to study, evaluate and ultimately recommend options on a path forward on pharmacare that puts Canadians first."

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Note that the only promise here is to study an issue that has been studied to death. There is no money and no firm commitment to do anything.

What we do know is that ACINP will be headed by Eric Hoskins, who stepped down as Ontario's minister of health and long-term care on Monday to take on the new federal role. He will need to make his recommendations in 2019.

Both that deadline and the choice of Dr. Hoskins are telling.

2019 is an election year; the Liberals must go to the polls no later than Oct. 21.

Pharmacare is the kind of feel-good program that could appeal to middle-class voters.

Currently, most Canadians over the age of 65, as well as those on social assistance, have public drug coverage. But the bulk of the population depends largely on employer-sponsored plans.

Having a concrete proposal would put pressure on other parties to do the same. In particular, the move is aimed at hanging onto the left flank of the party because the NDP has made pharmacare central to its platform.

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Dr. Hoskins is a big name so, presumably, he obtained some assurances that he's not going to produce a report that sits on the shelves. He also has a passion for pharmacare, and experience implementing OHIP+, which extended drug coverage to everyone in Ontario under the age of 25. The OHIP+ experience so far (it's only been in place since Jan. 1) is a bit of a cautionary tale.

Ontario extended public drug coverage to millions, which is quite remarkable. But most of the media coverage of the program has been about the cost and a small number of disgruntled patients whose drug reimbursement has been refused.

This is a reminder that the key discussion that needs to be had is defining what we mean by pharmacare.

It won't mean that all drugs will be covered for all people at all times. To control costs, there has to be a formulary of drugs that are covered and policies like generic substitution (not covering brand-name drugs if similar, lower-cost generics are available.)

Then there is the deal-breaker, money.

Sure, pharmacare could save money, at least theoretically. The Parliamentary Budget Officer estimated that pharmacare could save $4.2-billion in drug costs annually – if bulk buying can bring down prices 25 per cent, if use doesn't increase notably, and if there is a strict formulary.

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Lots of ifs.

There is no question something needs to be done to ensure that Canadians with no drug coverage (about 700,000) and those with inadequate coverage (3.6 million) get help.

We also need to get some order in the existing, inefficient structure, which includes a dizzying 102 public drug-subsidy programs, not to mention private insurers.

In 2015, $13.1-billion in public money was spent on prescription drugs (46 per cent of the total), $10.7-billion by private insurers (37 per cent) and $4.7-billion out of pocket.

Creating a national program would allow savings on the price of drugs, but it would also mean shifting a massive amount of spending away from the private sector (mostly employer-based insurance) to the public sector.

According to the PBO, it would mean an additional $7.3-billion in public spending. It would mean more taxes.

That's not necessarily a bad thing, but we have to be up-front about it.

Finally, the thorniest question of all is who would pay those public dollars? Right now, the bulk of drug spending is by the provinces and territories.

There is little evidence they could agree on a national program that they fund jointly. And Ottawa is not simply going to pick up the full tab, which is in the range of about $20-billion a year and growing.

In other words, Dr. Hoskins has his work cut out for him because the "path forward on pharmacare that puts Canadians first" that he is supposed to find is littered with financial and political land mines.

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