The case for pharmacare

Medicare and pharmacare

Tommy Douglas, founder of Canada’s universal Medicare system, didn’t intend health insurance to cover only hospitals and doctors. They were supposed to be just the beginning, with coverage of drugs and other services to follow. But despite repeated proposals and pledges, Canada remains one of the few industrialized countries without a national drug plan.

When we call for pharmacare, we mean a national publicly funded and administered insurance plan for medication. It would cover essential drug costs the way Medicare covers hospitals and physicians, providing universal access to safe and appropriate care. Pharmacare has many advantages. It would provide equal access to prescription drugs for all Canadians, replacing our uneven patchwork of provincial programs and private insurance at work. It would also control costs by allowing providers to negotiate good prices and reducing administrative costs.

Improving access to prescription drugs

Because there is no national pharmacare plan, there are over three million Canadians who are uninsured or under-insured for prescription drugs. Our patchwork of provincial programs and work-based plans means that access to drugs depends on where you live and where you work. For example, a couple aged over 65 with an income of $35,000 who need $1,000 of drugs per year would pay the entire cost in New Brunswick and Newfoundland, two-thirds of the cost in Quebec, one-third in Ontario and B.C., but nothing in the Yukon or Northwest Territories.

Almost eight million Canadian workers and their spouses and dependents are covered by private drug insurance plans through their jobs. These plans vary enormously and are lost if the worker quits or is laid off, and sometimes even when he or she retires. Not only do work-based drug plans provide limited benefits and little security, administering thousands of different plans is expensive and inefficient. At the same time, almost 42 per cent of Canadian workers don’t get drug coverage through their jobs.

Controlling drug costs

Our current patchwork of plans does nothing to restrain drug costs. Spending on drugs is increasing by a remarkable 8 per cent a year above inflation, a rate we can’t sustain.

By far the major driver of rising costs is the use of new and more expensive drugs instead of existing, less-expensive products. Those increased costs might be acceptable if the newer drugs were better, but the vast majority are not. Figures from the federal Patented Medicine Prices Review Board show that only 15 per cent of new drugs are significantly better than existing medications. In fact, the latest drug is sometimes less safe than older ones, which have been tried and tested for years.

The problem is, when a drug is newly released onto the market, there is intense promotion by drug companies to both the public and to doctors, encouraging them to request and prescribe the latest expensive brand name. As a result, drug costs escalate, threatening both provincial and work-based drug plans.

In addition to saving administrative costs and choosing safer, less-expensive older drugs, national drug-insurance plan could bargain with the pharmaceutical companies to pay lower prices for drugs. In Australia, where there is a national drug plan, prices are 9 per cent lower than in Canada. New Zealand has cuts its national drug budget by almost 50 per cent using measures such as tendering for generic products and requiring companies to cut prices for drugs already on a government formulary if they want to get new drugs listed. More control over drug advertising and promotion and making sure multinational drug companies can’t extend their patents to delay generics would also reduce costs.

Safe and appropriate use of drugs

A national pharmacare program could improve drug safety and improve prescribing practices as well. Currently, pharmaceutical companies pay half the operating costs of the agency that approves new drugs. Research used to choose which drugs should be offered to Canadians is compromised by funding from drug companies and is often unavailable to either medical professionals or the public. Furthermore, the Canadian Medical Association Journal has criticized Health Canada for approving drugs too quickly and without adequate proof of safety. We need a drug-approval agency free of conflict of interest, with no funding from drug companies, one that would approve drugs only when they are an improvement over existing medications.

A national drug plan would also be able to work with the medical profession to improve prescribing practices by giving doctors independent information on the value and benefits of the treatments they’re considering. It could also limit use of the most expensive drugs where others are just as effective. In Australia, the federal government funds an independent National Prescribing Service, whose mission is to improve drug prescribing by doctors and drug use by consumers.

We can afford it and we need it

Like so many other industrialized countries, Canada can afford a national drug plan. We already pay for our drugs — but pharmacare would let us do so more effectively, more economically and more fairly. Pharmacare will let us do more for less.

pdf_icon_largeThe Case for Pharmacare [308 kb]

For more information, read the Policy Paper
More for Less: A National Pharmacare Strategy

More for Less [185 kb]