PDF Version: Pharmacare…Long Overdue
Matter Commented On: Interim report from the Advisory Council on the Implementation of National Pharmacare
Canadian Medicare has traditionally focused on hospital and physician services due, in large part, to the fact that the Canada Health Act, RSC 1985, c C-6, provides for federal/provincial cost-sharing for these services. The exclusion of pharmaceuticals made sense at the inception of Medicare in the 1950s, as there were few effective drugs at the time. However, the ensuing decades have seen a proliferation of new drugs that significantly reduced morbidity and mortality. For example, statins, which lower cholesterol and decrease the risk of heart attack by approximately 25%, came into clinical use in the late 1980s. They are now taken by millions of Canadians and represent the second largest category of pharmaceutical spending (after certain types of cancer drugs). The increasing prevalence and efficacy of pharmaceuticals and their growing costs have led to calls for universal pharmaceutical insurance (referred to as pharmacare).
On Wednesday, the federally-appointed Advisory Council on the Implementation of National Pharmacare released their initial recommendations. Notably, they recommended that “Canadian residents have access to prescription drugs based on medical need, without financial or other barriers to access.” Universal pharmacare would make Canada’s health care system more equitable and prevent needless morbidity and mortality. It would also bring Canada in line with other countries. According to a recent report, “every developed country with a universal health care system provides universal coverage of prescription drugs—except Canada.”
Pharmaceuticals are currently funded through a patchwork of out-of-pocket payments, private insurance, and government programs. For example, in Alberta, the primary payers of non-hospital drugs were as follows in 2015-2016: out-of-pocket payments 15%, private insurance 45%, and public funding 39%. With regard to public funding, Alberta has programs that cover individuals from low-income households and those with high drug costs. The province also has a program to supplement the cost of drugs for individuals over the age of 65. In addition, drugs that are provided to hospital in-patients are publicly insured. Alberta spends approximately $221 million per year on drugs provided in hospitals. Apart from Quebec, other Canadian provinces have broadly similar public drug benefit programs.
Although these public programs provide access to drugs for many people who would otherwise go without, many people still struggle with the costs of necessary medications. For example, in Alberta, a single adult’s annual income must fall below $16,580 before he or she can access the Alberta Adult Health Benefit. The Advisory Council on the Implementation of National Pharmacare heard from families with seriously ill children who had moved across Canada solely to access another province’s public drug plan, and employees who remained in undesirable workplaces due to reliance on their employer’s drug benefits program.
There is a sizeable body of evidence showing high rates of medicine non-adherence due to drug costs. Non-adherence can take several forms, including not filling a prescription, not renewing a prescription, or making an existing prescription last longer (i.e. by skipping doses or breaking pills in half). For example, according to one study, approximately one in ten Canadians who received a prescription reported cost-related non-adherence. Unsurprisingly, people in poor health, those with lower incomes, and those without insurance were more likely to report cost-related non-adherence. Recent data confirm that while 10% of Canadians report cost-related non-adherence, this figure is 17% for individuals with below-average incomes.
Canadian studies have linked patient cost-sharing for pharmaceuticals, which results in lower rates of adherence, to increased adverse events and greater use of other, more expensive, health care services like emergency room visits (see e.g. here and here). Medication non-adherence is also costly. Although Canadian data is sparse, estimates of the cost of non-adherence (for cost or other reasons) are as high as $9 billion per year.
In short, proposals to increase public funding for pharmaceuticals would be expected to reduce morbidity and mortality and their associated costs. Although some worry that universal pharmacare could be expensive for taxpayers, several economic analyses suggest that the program would actually result in cost savings. For example, the Parliamentary Budget Office estimated that although expanded coverage would lead to an 11% increase in prescriptions, this would be associated with an annual savings of $4.2 billion. While Canadians currently pay some of the highest prices for pharmaceuticals in the world, it is expected that the federal government could negotiate lower prices if it were purchasing drugs in bulk on behalf of the entire population. A single payer system would likely lead to lower administrative costs and greater use of cheaper generic drugs.
Although there would certainly be challenges in getting pharmacare off the ground, as it would require cooperation and coordination between different levels of government, the evidence indicates that the health-related and cost-related trade-offs are worth it. In the 1964 report of the Royal Commission on Health Services, Justice Emmett Hall wrote that “in view of the high cost of many of the new life-saving, life-sustaining, pain-killing, and disease-preventing medicines, prescribed drugs should be introduced as a benefit of the public health services program.” This recommendation has been repeated many times since 1964 (for example, in the 2002 Romanow Report) and is now long overdue. It is time that the federal government revisit the Canada Health Act and its focus on physician and hospital services. Instead of focusing on who delivers care or where it is delivered, governments should determine which services attract public funding through transparent and evidence-based criteria such as cost-effectiveness, which would certainly include public funding for pharmacare.
This post may be cited as: Lorian Hardcastle, “Pharmacare…Long Overdue” (March 11, 2019), online: ABlawg, http://ablawg.ca/wp-content/uploads/2019/03/Blog_LH_Pharmacare_Long_Overdue_Mar2019.pdf
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Rita Aggarwala
Thank you for gathering this information. I am guessing there are similar issues with dental care not being covered – perhaps an advisory council exploring this subject is also in order – do you know if the federal government is looking into this gap as well?
Lorian Hardcastle
Hi Rita,
There are definitely similar issues with dental care. I actually blogged about it last year: https://ablawg.ca/2017/09/05/squabble-over-alberta-dental-fees-highlights-broader-need-to-rethink-what-is-publicly-insured/. Unfortunately, increased funding doesn’t seem to be on the radar of either provincial or federal governments, despite the fact that many Canadians (about six million) go without dental care. This can send them to the emergency department, where their care is much more costly, or result in more serious health problems. As with pharmaceuticals, many other countries provide greater public funding for dental care than Canada. For example, in Canada, 94% of dental spending is private rather than public, whereas other countries have much lower rates of private spending (Germany is 43% private, Austria is 52%, Sweden is 62%, etc.): http://www.iedm.org/files/chapt3-cahier0115_en.pdf.
Dennis Buchanan
When I was a law student working for an Ontario legal aid clinic, I did a significant amount of appellate work under the Ontario Disability Support Program Act. If you meet the statutory definition of disability, and you meet the financial eligibility criteria, you’re entitled to income support – including other benefits such as pharmacare.
I was struck by the absurdity of the scenario – and it’s a real scenario, which I actually came across – where an individual with a chronic medical condition might be ‘disabled’ only if left untreated, but where expensive medical treatments are capable of managing symptoms to the point that the individual would no longer meet the statutory definition of disability.
In theory, it’s a catch-22: The individual is untreated, so he’s unable to work, so he gets disability coverage, including medical treatment…at which point he’s no longer disabled, and no longer entitled to disability benefits, with the result that he’s left untreated.
In practice, the impact will be that he simply won’t get a job, even though he is capable of working, because the income would kill his income support eligibility (even though, in many scenarios, it would have no chance of providing him with the ability to pay for the medication), and he’d lose access to the necessary medical treatment. Until the next time his disabled status is reviewed (which happens fairly infrequently, if ever), he has nothing to worry about, as long as he doesn’t get a job.
So, instead of just paying for this person’s medical expenses, while he goes to work and pays taxes, the government pays his medical expenses *plus* the rest of the disability package – income support and all. He gets less money than he would working; the government pays more than it should need to; the economy is denied the benefit of his labour; and his taxable income is artificially suppressed.
Universal pharmacare would be expensive, without a doubt, but actually getting people the drugs they need would generate offsetting spinoff cost reductions in any number of other areas, from criminal justice/public safety, to emergency/hospital care costs, to social assistance, to leveraging downward the costs of existing pharmaceutical programs that the government pays for anyways. (Not to mention the *direct* benefits of such a program – such as people not dying for the inability to afford treatment.)
Zane
This is really important that you pointed out “every developed country with a universal health care system provides universal coverage of prescription drugs—except Canada.”. Also one more thing to pay attention over here is, there is a huge gap between the annual medical expenses and annual earning of people in Canada. It is high time that federal government revisit the Canada Health Act and take strong actions!