In last spring’s federal budget, Dr. Eric Hoskins, Ontario’s former health minister, was named to head the Advisory Council on the Implementation of National Pharmacare. His brief isn’t to consider the possibility of pharmacare – it’s to figure out how to implement it. He is to report back in the coming months.
That means that, later this year, the Liberal government is almost certainly going to have a plan for national pharmacare. And in the run-up to a fall election, it is almost certainly going to be pursuing a deal with the provinces and territories to bring pharmacare into being.
But “pharmacare” is a thing that comes in many different flavours. The question is which one Canada should choose. The government has to put forward a plan that can fulfill three key objectives.
First, it has to ensure that all Canadians have drug insurance. Second, it has to control drug costs – which are far higher in Canada than elsewhere in the developed world. Third, it has to be politically appealing to the provinces and to Canadians. That last item will be the most challenging.
Pharmacare is the unfinished business of medicare. Drugs are now the second-largest cost in Canadian health care, ahead of physician services. And Canada is the only country with universal health insurance that doesn’t include drugs.
However, most Canadians have drug insurance. Only around one in 10 Canadians are entirely without it. Most working Canadians receive coverage from their employer; others, such as seniors, are covered by provincial plans – which is basically pharmacare, but only available to certain groups and not all citizens.
This hodgepodge has three major downsides, which pharmacare can address. But the current system has one upside – and it will be a tough hurdle for pharmacare to clear.
The first downside of the current system is that, while most people get coverage through their workplace, coverage depends on where you work, and on keeping your job. Medicare, in contrast, is tied to your status as a citizen.
The second problem is that even those with drug insurance often face significant co-pays or annual limits. Many Canadians have trouble paying their drug bills, so they try to save money by doing things such as not filling prescriptions or taking half dosages to stretch prescriptions. A recent Angus Reid survey found that nearly one-quarter of Canadians said that was true of someone in their household. Other studies have suggested that around 10 per cent of Canadians don’t take their medicine for reasons of cost.
The third problem is that the current regime is expensive. Canada does a poor job of keeping a lid on drug prices. That has spelled higher costs for taxpayers, patients and businesses. In 2015, Canada’s per capita spending on drugs was 43 per cent above the OECD average, 62 per cent higher than Britain and 136 per cent higher than Denmark.
A number of studies, including one from the Parliamentary Budget Officer, have suggested that national pharmacare could deliver real savings. Ottawa would have to up its spending, but that would be more than counterbalanced by lower costs for provinces, businesses and Canadians.
For all that, Canada’s dysfunctional non-system of non-universal drug insurance goes into the ring with one big advantage: It’s the status quo. It exists, through hundreds of government programs and thousands of workplace arrangements and collective agreements. Canadians will have to be persuaded that reform will improve their existing coverage, or at least leave it unchanged.
Two decades ago, Quebec wanted to figure out how to cover everyone in the province. But it didn’t want to upset settled arrangements or spend taxpayer dollars. So, instead of creating a pharmacare program, it hit on the solution of basically ordering everyone in the province to carry insurance. If your employer offered coverage, you kept it. If you couldn’t get workplace coverage, you had to pay premiums into the new provincial plan. Presto: Everyone was insured. Problem solved?
But while the Quebec plan had no up-front political costs, its economic and financial price has never stopped growing. Quebec has high drug prices, high insurance premiums and high co-pays. The average Quebecker pays $1,495 a year for drugs – nearly twice as much as the average Ontarian.
So, if the Quebec model isn’t the right one for pharmacare, what is? More on this next week.