High price of national drug coverage

As Canada embraced universal health care in the 1960s, a national pharmacare program was noticeably absent. When the Canada Health Act was passed in 1984, comprehensive drug coverage — outside of hospitals — was left out. More recently, the final report of the Commission on the Future of Health Care in Canada (the 2002 Romanow report) once again did not embrace a national publicly funded drug coverage strategy.  

And while it might seem puzzling to some, there’s no shortage of reasons why Canada prefers to tinker with rather than overhaul the country’s current patchwork system, which is comprised of 14 different (federal, provincial and territorial) drug plans, private health coverage and direct payment by individuals. The government-managed plans are funded out of a jurisdiction’s taxpayer-supported health-care budget. The most comprehensive coverage is directed to low-income seniors, social assistance recipients and, in some cases, Canadians whose prescription regime is financially ruinous.

Additionally, Canadians outside of those clusters – primarily those 65 and older, yet above the low-income threshold – can also access publicly fundeprescription drugs in all jurisdictions, albeit on a deductible or cost-shared basis. As eligibility under such plans is primarily age-based — and Canada’s population is getting older — increased utilization is likely to put upward pressure on these taxpayer-funded drug plans.

A costly idea
The number 1 argument against a national pharmacare program is cost. Of the almost $15 billion Canadians spend annually on prescription drugs, half is attributed to seniors. And prescription costs are rising (344 per cent between 1985 and 2000).

About 46 per cent of the total cost, or about $6.9 billion, is covered under public pharmacare plans. About 19 per cent of Canadians are covered by a government drug plan, and another seven per cent have their private plans supplemented by a public plan. The rest is paid for by private insurance plans or out of individuals’ pockets.

A publicly funded national pharmacare strategy would likely have the taxpayer absorb the portions currently paid under private drug plans and by individuals.

In the 2002 update study Cost Impact Study of a National Pharmacare Program for Canada conducted by Palmer D’Angelo Consulting Inc., it was estimated that at a public/private pharmacare model with co-payments (a user fee charged to the individual for each prescription) could cost around $12.4 billion per annum and a fully funded pharmacare program without co-payments around $13.8 billion. However, one insider said these estimates are at the high end.

“One of things that has to be addressed before drug coverage is expanded at the public level is cost… that’s the biggest impediment to a national pharmacare program,” says Jeff Connell, director of public affairs, Canadian Generic Drug Association.

Next page: Strengthen current system

Strengthen current system
Some argue that a strong commitment toward maintaining Canada’s current patchwork system drug coverage is the best approach. “If a national pharmacare plan is not in the works — and right now it doesn’t seem the provinces are willing to give up their fiefdoms — then we should work on strengthening the current system,” says Bill Gleberzon, CARP’s associate executive director.

As long as provinces stop cutting back their drug subsidy programs, the provincial approach, despite its flaws, can work. A Fraser Group/Tristat Resources study found that about 98 per cent of Canadians are covered by one or more public and/or private prescription drug plans causing many to argue that seniors and low-income Canadians have reasonable protection under the current checkerboard system. 

“In a broad sense, relatively few seniors are without coverage for drugs,” says Ken Fraser, president of the Toronto-based Fraser Group. “In many cases, the coverage they have is fairly good. Everything is in the eye of the beholder,”

On the other hand, the current system leaves 600,000 Canadians — many between the ages of 50 and 64 — with no prescription drug coverage. And a 2000 Health Canada study concluded that as many as 20 per cent of Canadians are either under or uninsured for drugs.  

More research is needed before any decision on national pharmacare is made. “We need to know more about both the number of people who need drug coverage and the best means of providing them with it,” said Canadian Medical Association president Sunil Patel in a November 2003 speech.

Furthermore, arguments that savings and economies of scale can be realized by collapsing the existing 14 drug programs into one national program might be overly optimistic.    

“The administrative savings may not be that large,” suggests a Romanow commission discussion paper. “Administrative costs in the Ontario and Quebec drug plans are low at two per cent, but they are higher in other provinces — up to 13 per cent in the smaller Atlantic provinces.”

No national consensus
If federal/provincial/territorial slugfests of the past are a precursor of what’s ahead in negotiating and implementing a national pharmacare strategy, getting all the provinces onside might prove impossible. Quebec, for example, often opts out of such national programs. And the other provinces might balk at moving to a national formulary if it “degrades” their current drug plans. Some argue that formularies are best determined by those who understand local and regional health trends.

Extra burden on provinces
In fact, Dr. Carolyn Bennett, MP, Minister of State (Public Health), understands some provinces might be reluctant to participate in a national pharmacare initiative if it places additional pressures on existing health-care delivery systems.

“There’s been a mantra [from the provinces and territories] of ‘You’re asking us to do more things. You’re asking us to do home care. You’re asking us to do pharmacare. We can barely do what we are doing now,’” says Bennett.