Leave the patchwork for the quilts: The case for national pharmacare

February 2, 2015

The Canadian Health Coalition (CHC) was founded in 1979 as a public advocacy organization dedicated to the preservation and improvement of medicare. It brings together organizations representing nurses, health care workers, seniors, churches, trade unions, anti-poverty groups and women, as well as affiliated coalitions in nine provinces and two territories. The CHC has supported a universal public pharmacare plan since its inception, because prescription drugs are an essential part of health care and should be provided, like doctors and hospitals, to all Canadians as part of our public health care system.

The problems

Currently, prescription drugs are provided in a partial and unfair manner, to the detriment of our health and at enormous cost. With prescription drugs left out of our national medicare plan, we have a patchwork of provincial and territorial plans that cover less than half the population. Sometimes these plans cover only seniors, those on social assistance, and certain illnesses. In a few cases, people pay for drugs based on an income assessment.

More than half the population is outside any public arrangement and must rely on private insurance, usually through a wide variety of workplace plans. Commonly workers contribute to the cost of these private plans, by paying towards the insurance premiums and by paying co-pays at the pharmacy counter. Since these plans are attached to the workplace, they are unreliable; if you change jobs, get laid off or retire, your drug plan usually disappears. The federal government pays a mere 2% of total drug costs, covering only specific groups such as the military, veterans and First Nations.

This patchwork approach means that access to prescription drugs varies widely. What you pay depends on where you live and where you work, not medical need. Many people have inadequate drug coverage or none at all. In 2013, a poll by EKOS found that over a five-year period, 23% of Canadians were unable to afford a prescribed drug, rising to 49% for those with incomes of $20,000 or less.

This chaotic and unfair drug coverage comes at a high price. Among the 32 nations of the Organization for Economic Co-operation and Development, Canada spends more per capita on drugs than all except the United States.

In other countries, national public drug plans negotiate reduced prices with pharmaceutical companies with the strength that comes from bulk purchasing for the whole population. When our limited public plans have tried to negotiate reduced prices or rebates, drug companies have shifted costs by charging more for drugs provided under private insurance plans. These plans are not large enough to negotiate reduced prices, so the burden of high prices is just shifted from public plans to employers and workers.

We also waste money in Canada on private for-profit insurance plans, because a remarkable 23% of their cost is for administration and profits compared to just 1.8% for the administration of public drug plans. In 2012, prescription drugs from all sources cost $27.7 billion. It is reliably estimated that a national pharmacare plan to cover all Canadians would reduce our current expenditures by a massive 41%, saving $11.4 billion.

Our patchwork approach is also not as safe as it should be. Through Health Canada, the federal government is responsible for reviewing the safety of new drugs and approving their sale and use. This process is not independent of the pharmaceutical companies, which pay half the cost of the drug approval process, undermining its independence.

The Canadian Medical Association Journal has stated that Health Canada is biased towards approving drugs too quickly and without adequate proof of safety. Company-financed research trials for new drugs have been found to be biased in favour of the product that the company makes. This research is not made available to either the public or to medical professionals and researchers, further limiting the opportunity to independently assess the relative effectiveness and safety of drugs.

Once on the market, drug companies sell their drugs by influencing doctors to prescribe them. It is estimated that drug companies spend $60,000 per doctor per year on drug promotion. This involves sales representatives visiting doctors’ offices, providing wall charts, pens and free samples, plus paying for doctors to attend conferences and give papers. It also involves advertising drugs in medical journals and to the public at large.

Nothing about this process is objective. Indeed, studies have found that pharmaceutical company sales reps fail to provide information to doctors about the side effects of drugs, and that doctors are indeed influenced by sales reps in what they prescribe.

The solutions

The CHC supports a pharmacare plan for Canada that is public, national and universal, and that would cover all drug costs. In other words, the plan should mirror the current provision of care by doctors and hospitals under medicare. Our principles are that prescription drugs should be provided in a manner that is fair, cost-effective and safe.

  • Fairness: Pharmacare should be fair and equal for all Canadians, regardless of where they live or work, their income, age, or type of illness. This means that the federal government needs to fund a significant portion of this expansion of health care in order to ensure equal services across the country, as it does now for doctors and hospitals. We know that charging individuals for drugs means that a significant number of patients cannot afford to obtain their prescriptions. As a result, their health is compromised, leading to more visits to doctors and admissions to hospitals.
  • Cost-effectiveness: A national and universal system would allow us to negotiate drug prices for the whole population and so join the large majority of developed countries that benefit from lower prices. Research has demonstrated that pharmaceutical companies are adept at shifting costs from one part of the current patchwork to another in order to maintain overall high prices and profits. Only a national plan would effectively control costs. The federal government is responsible for approving new drugs, patent protection, setting the prices of new brand name drugs, and drug advertising. Current policies in these areas significantly increase the cost of drugs, but it is the provincial governments that pay for the resulting high prices. If the federal government shouldered a more reasonable proportion of the costs than the current negligible 2%, it would create an incentive for cost-effectiveness in its dealings with pharmaceutical companies. 
  • Safety: We need improved federal government policies to ensure the safety of prescription drugs across the country. This means an approval process that is independent from the influence of pharmaceutical companies and that analyses new drugs in relation to effectiveness over existing drugs. It means transparency in sharing the research results of drug trials so that they can be assessed by experts in the field. We also need to get independent information to doctors concerning drug safety and effectiveness, and a more robust national database for adverse drug reactions.

Making the right changes 

There is increasing recognition that Canada’s prescription drug policies are a national failure and that reform is long overdue. This has lead to a renewed interest in appropriate policy changes among some federal and provincial politicians. The vast majority of the population agrees that change is necessary. In 2013, asked whether prescription drugs should be covered in a national public plan (as doctors and hospital are), 78% of Canadians said yes. And 86% of respondents to the same EKOS poll supported the concept of negotiating for lower drug prices with pharmaceutical companies.

In today’s environment, where cost concerns often trump good social policy and necessary reforms, some would argue that we cannot afford full coverage in a new nationwide drug plan. While such a plan offers huge savings, there would be initial costs to establishing the structures required to implement it, particularly at the federal level where the current contribution to drug costs is negligible.

In this context we should understand what a country of Canada’s wealth is able to afford. Canada is an oddity on the international scene, because it is the only country with a national public health care plan that fails to include prescription drugs. Canada is one of only three OECD countries that cover less than half the population with public drug plans (the other two being the United States and Mexico).

Let’s consider the 29 OECD countries that are already providing a national public drug plan. The list includes the U.K., France, Germany, Switzerland and Australia, but also many countries that are far less wealthy than Canada, including South Korea, Slovenia and Turkey. The main reason that other OECD countries are able to provide better drug coverage is that their public plans allow them to control expenditures on prescription drugs much better than we do. Between 2000 and 2010 the annual average growth in per capita prescription drug expenditures in Canada was 4%—nearly double the OECD average.

“Canadians pay more for their medications when compared to countries that offer a public and universal plan,” said Marc-André Gagnon, a pharmaceutical and health policy expert at Carleton University, in a 2014 paper. “Canadians’ access to medications is not as good as in other countries, and the annual cost increase makes the Canadian regime unsustainable in the long run.”

By implementing a national public drug plan, we can reap the benefits of reduced drug prices and better health while saving $11.4 billion that governments, employers and individuals are now paying for overpriced drugs. There is no reason for further delay.