Why Canada should introduce universal drugs coverage
Canada spends more per capita on prescription drugs than most other OECD countries.
BY Katherine Boothe
June 27, 2017
Many Canadians who need drugs to maintain their quality of life are falling through the cracks.
Studies have found that 1 in 10 patients do not take their medicines as prescribed because of cost . A lack of coverage has life-threatening effects for vulnerable groups such as younger, low income people living with diabetes. Pharmacare – universal public coverage of an evidence-based list of necessary medications – could help solve the problem.
Canada is the only country with a broad public health system that does not include universal coverage for pharmaceuticals. Provinces generally provide some public coverage to seniors and people receiving social assistance: public plans account for 42 per cent of drug spending in Canada. Private employer-based plans cover 36 per cent of drug spending, and 22 per cent is paid out of patients’ pockets. The result is that many Canadians struggle to afford the drugs they need.
Too high a price?
Drug prices in Canada are among the highest of Organization for Economic Co-operation and Development (OECD) member countries. Other than the United States, we spend more per capita on drugs than most OECD counterparts.
The issue is that many Canadian politicians and members of the public believe pharmacare would be too expensive, or indeed unaffordable.
Pharmacare is not mentioned in the mandate of the current federal minister of health. In 2016, the minister told the CBC that it would be “irresponsible” to move on pharmacare now given the high price of drugs in Canada.
A 2015 Angus Reid survey found that a large majority of Canadians supported the idea of pharmacare, but many had concerns about cost. Some 61 per cent reported agreeing that “no matter what the research says, a national pharmacare plan will end up costing taxpayers lots of money.”
The notion of pharmacare as unaffordable is not new. My research finds that Canadian politicians were concerned about the cost of pharmacare as early as 1950, when similar countries like Australia and the U.K. were adopting their own universal public drug insurance programs. This concern has persisted though good economic times and bad, and has blocked both radical and more modest expansions of public coverage.
Savings for drug plans and patients
Many experts disagree with the political consensus that pharmacare is too expensive.
Evidence from international comparisons and from recent economic models that estimate the cost of various policy scenarios in Canada challenges the idea of pharmacare as unaffordable.
Countries with single-payer systems for pharmaceuticals (like Canada has for hospital and medical services) spend less on prescription drugs than countries with multi-payer systems (Canada’s current patchwork of public and private drug insurance). In the past, Canada’s rate of growth in per capita drug spending has been second only to the United States among OCED comparator countries. So countries that have some form of pharmacare appear to do better at controlling costs than Canada.
A recent study used comparisons to other countries and to public programs in Canada to estimate how much universal pharmacare would cost in Canada, and found that total spending on pharmaceuticals would decrease significantly.
A combination of lower prices and changes in the volume of prescriptions and mix of products would result in a relatively modest increase in government spending, and savings of more than $8 billion for private drug plans and patients who pay out-of-pocket for drugs.
Single purchaser advantage
Why would universal pharmacare cost less overall than the current combination of public and private sources? Canadian drug prices are high by international comparison. One of the most effective ways to lower drug prices is to have a single purchaser of drugs. This gives the buyer leverage to negotiate better prices with pharmaceutical manufacturers.
A larger population covered means greater savings on price. It means that negotiated discounts benefit all Canadians, rather than just the minority covered by public plans currently. A single public plan also leads to lower administrative costs than Canadian plans currently pay. Finally, a single public plan could reduce costs by improving the mix of medicines prescribed by only covering drugs of proven effectiveness.
Universal public drug coverage would increase costs to governments but research suggests that the total cost of pharmaceuticals would decrease as a result of significant private savings. Canadians are paying for drugs in the end, either through their taxes, payroll contributions, or directly at the pharmacy counter. The question is, should we agree to pay collectively and provide access to pharmaceuticals based on need? Or should we continue to pay more for access based on age, employment, and ability to pay?