Last week, Reuters reported that the Trudeau government is planning to introduce pharmacare in its next budget – but that it will be a limited, “gap-filling” program, rather than a taxpayer-financed, medicare-style plan.
Pharmacare comes in two flavours: a variety that looks like medicare, with the government displacing private insurers, and a variety that builds on the status quo, with most Canadians covered by their employer’s private drug plan. Each of these can satisfy Canada’s needs. But to work, each one must include a deeper reform of how Canada sets drug prices, negotiates purchases, limits or eliminates patient charges and, if Canada keeps a private insurance system, prevents premiums from spiraling upward.
What Ottawa must not do is to simply promise to throw an extra couple of billion dollars at the status quo. That won’t lower Canada’s high and rising drug bills. It might not even raise the number of Canadians with effective drug insurance.
The Liberal government has long been committed to the idea of national pharmacare. However, the term means different things to different people – and different Liberals.
For example, the last federal budget appointed former Ontario health minister Eric Hoskins, seen as an advocate for reorganizing drug coverage so it looks more like medicare – what we’ve called Big Bang pharmacare – to chair an advisory panel. A few weeks after Mr. Hoskins’ appointment, the Liberal-dominated House of Commons health committee endorsed the Big Bang approach.
But Finance Minister Bill Morneau was at the same time signalling he preferred something that “doesn’t throw out the system that we currently have,” built around private insurance, but instead “deals with the gaps” of Canadians without coverage. We’ve called this Small Change pharmacare.
Late last year, the Liberal-dominated Commons finance committee called for a “close-the-gap approach,” that would “build on existing drug coverage.”
The truth is that both Small Change and Big Bang pharmacare can deliver the goods – if they’re properly designed. What matters is the details.
If the Trudeau government is serious, it has to ensure that whatever it proposes under the banner of “pharmacare" is actually pharmacare.
Pharmacare means 100 per cent of Canadians covered by comprehensive drug insurance. It means zero per cent of Canadians unable to fill a prescription due to cost. And it means reining in Canada’s high drug bill through an improved system of regulation, negotiation and centralized buying.
That last item may be the most important reason to introduce pharmacare. Canada’s hodgepodge system of drug coverage has delivered the world’s third-highest drug prices. Those translate into high and rising insurance premiums, which are largely borne by Canadian businesses.
About 10 per cent of Canadians are believed to lack drug insurance. Another 10 per cent are believed to have inadequate insurance. And one in 10 Canadians sometimes fail to take a medicine for reasons of cost, with one-quarter of the population saying that’s true of someone in their household.
When national medicare was proposed in the 1960s, there were furious debates about the best way forward – particularly among Liberals. The conservative wing of the party, led by finance minister Mitchell Sharp, felt full-blown medicare was unaffordable. The progressive wing, led by health and welfare minister Allan MacEachen, wanted to press ahead.
The MacEachen wing won. On balance, that’s been a good thing. Medicare delivered universal health insurance, while giving governments levers to control costs. At 10.4 per cent of GDP, total Canadian health-care spending is comparable to our peer nations, but far below the United States, where it has exploded to 17.2 per cent of GDP.
The lesson is not that pharmacare must be built on a single-payer model, like medicare, with government as the only insurer. The lesson is that, to guarantee that coverage grows without costs exploding, as they have in the United States and in Quebec’s system of universal but largely private drug insurance, government must play a big role behind the scenes. That includes lowering the nation’s drug bill through a reinvigorated Patent Medicine Prices Review Board, pulling private insurers into the government system of bulk purchases, limiting drug co-pays and regulating premiums.
Big, behind-the-scenes reforms are critical – especially if the Liberals end up proposing Small Change pharmacare.