National pharmacare plan not the answer

Many of those calling for a pan-Canadian pharmacare monopoly undoubtedly have the best of intentions. They want all Canadians to have access to the drugs they need, regardless of ability to pay, and they want to control costs. But good intentions do not guarantee good results — and in this particular case, international experience has much to teach us about the dangers of monopolistic drug insurance plans.

Under Canada’s current mixed public-private system, administered by the provinces, 42 per cent of prescription drug spending in the country is paid for by public insurance plans. The rest is funded privately, either out-of-pocket by patients themselves (22 per cent), or through private insurance plans (36 per cent). In every province, low-income seniors and children, welfare recipients, and people suffering from certain serious illnesses enjoy complete or nearly complete coverage. In all, about 98 per cent of the Canadian population has private or public drug insurance coverage.

It’s true that some people report having to forgo requesting a prescription or skip a dose for reasons of cost. In a recent Commonwealth Fund study, 8 per cent of Canadians with below-average incomes said they had not taken a drug because of cost. But this phenomenon is hardly unique to Canada. Indeed, the same study found that this percentage was 11 per cent in France, 14 per cent in Australia, and 18 per cent in New Zealand.

What explains these findings is the fact that the public insurance plans in place in other OECD countries, even those that are universal, don’t cover pharmaceutical expenses in their entirety. A sensible portion of costs are paid by the insured — and generally a larger portion than in Canada.

A national plan, it is argued, would provide the public insurer with greater negotiating power, allowing it to obtain price concessions from pharmaceutical companies. But the savings would largely come from increased rationing rather than from greater efficiency.

In the United Kingdom, there has been one policy after another since the 1990s aimed at controlling spending. Patients continue to suffer the consequences of a lack of access to many proven drugs. Likely as a result of such restrictions, despite screening rates that are among the highest in the world, English patients have lower survival rates for various cancers than most other industrialized countries.

In New Zealand, another country frequently held up as a model, patients’ access to innovative drugs is just as restricted, if not more so. Of all the drugs approved in the country from 2009 to 2014, barely 13 per cent were reimbursable by the public insurance plan, the worst result among 20 countries evaluated.

Rather than moving toward a countrywide public monopoly, Canada’s provinces should follow the lead of Quebec, which in 1997 implemented a reform that made drug insurance coverage in the province universal, but that relies on a range of insurers, public and private.

The costs of the Quebec system have risen since its implementation, but this is largely because Quebec has resisted the temptation to ration access to innovative drugs. Indeed, among Canadian provinces, Quebec provides the most generous coverage by far. Whereas on average 23 per cent of all drugs approved by Health Canada between 2004 and 2012 were reimbursable by Canada’s provincial public plans as of December 2013, the proportion in Quebec was 38 per cent.

It is also important to note that while Quebec spends more on drugs, this goes hand in hand with lower overall costs in the public health care system compared to other provinces, as more accessible pharmaceutical therapies have likely replaced other kinds of more expensive medical care, like hospital surgeries.

Quebec’s mixed universal plan is not perfect, but it does provide coverage to all residents. And only 4.4 per cent of Quebecers say they had to forgo taking their medicines or skip a dose for financial reasons — less than the residents of all other Canadian provinces, and less than the residents of many other countries, too. If one is concerned with universal access to the latest drugs, that’s a far better model to follow.

Yanick Labrie is an Economist at the Montreal Economic Institute and the author of "Do We Need a Public Drug Insurance Monopoly in Canada?" The views reflected in this op-ed are his own.

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