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REACTION: Federal pharmacare legislation is a slippery slope to lower quality coverage, says MEI

Montreal, February 29, 2024 – The pharmacare bill tabled by the Trudeau government today could lead to worse prescription drug insurance coverage for millions of Canadians, according to a Montreal Economic Institute researcher.

“The New Democrats have been very clear about their intent with this legislation: they see it as a Trojan horse to implement a federal monopoly on drug insurance,” deplores Emmanuelle B. Faubert, economist at the MEI. “Unfortunately, as can be seen in every province, government-run prescription insurance plans cover only a fraction of what private plans do.

“There’s a very decent chance that this federal pharmacare plan could lower coverage quality for the millions of Canadians who rely on private insurance plans for their prescription medication.”

If the legislation goes through, it will create a federal monopoly on insurance coverage for birth control and diabetes medication. A newly created Canadian Drug Agency would be in charge of creating a national bulk-purchase strategy for said drugs, and creating a national list of reimbursed medication.

The leader of the NDP, Jagmeet Singh, has already indicated his party intends to try and add more categories of drugs to this legislation over time.

Between 2018 and 2021, private drug insurance plans covered 51 per cent more drugs on average than public plans. In Quebec, the province with the most generous public coverage, this difference was 59.6 per cent.

Even if a public plan as generous as Quebec’s was extended across the country, 21.5 million Canadians would risk seeing the quality of their insurance coverage fall, according to an MEI study published last week.

The study also points out that the Act risks delaying Canadians’ access to new drugs. The average approval delay for the coverage of a new drug by private insurers is 226 days after approval by Health Canada. For the public plans, this delay is 732 days.

Alberta and Quebec have already signalled their intention to opt out of a federal pharmacare program. They point out that health care is not an area of federal responsibility, but a provincial matter.

It is unclear at this point whether provinces will have the ability to opt out or not.

“Ottawa needs to start trusting provincial governments to take care of their own responsibilities, rather than repeatedly overstepping into their jurisdiction,” concludes Faubert.

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The MEI is an independent public policy think tank with offices in Montreal and Calgary. Through its publications, media appearances, and advisory services to policy-makers, the MEI stimulates public policy debate and reforms based on sound economics and entrepreneurship. 

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