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Martin Singh cares about health care

Politicians have been speaking actively about a national pharmacare plan since the 1960s. After 50 years of talk, it is most certainly time for action.

I have grown up in the pharmacy industry since I was five years old. Too often I have seen people choose to do without necessary medications due to cost. In a country as well off as Canada, it is unacceptable that people would go without the medications they need particularly given that it results in their health declining and other health care costs increasing.

Restructuring Healthcare - click to download PDF version.

The pharmacy industry has a responsibility to participate in finding a plan that produces a sustainable pharmacy industry where drug costs are contained. This is all the more true given that a significant part of the compensation received by the many players in the pharmacy industry comes from the taxpayer. From my experience working in the pharmacy industry for many years, I know it is possible to contain costs, delivery the health care Canadians expect, and stabilise the revenue stream of the pharmacy industry.

This policy document outlines the components of a national pharmacare program that will provide coverage for prescription medications to all Canadians irrespective of their health, social, geographic and financial circumstances. The document also details how Canadians will save $5.455 billion as a result of the implementation of the national pharmacare program. Companies that currently provide private plan coverage to their employees stand to save $560 million.

For a national pharmacare plan to be considered a suitable and viable alternative to the current patchwork of private and public plans, it must be the case that the newly created national pharmacare plan has within it a strategy designed to contain the rising costs of medications. In addition, the national pharmacare plan must improve the health care of Canadians and meet the principles of public administration, comprehensiveness, universality, portability and accessibility that Canadians have come to expect from their health care system. Finally, the national pharmacare plan must be created in a way that does not destabilize the various parts of the pharmaceutical industry in the private sector that are responsible for getting medications from the factory to the retail pharmacy.

Given that health care is under provincial jurisdiction, the implementation of the plan will require leadership shown on the behalf of both the federal and provincial governments in working together for the benefit of all Canadians.

Commitments

The following measures will ensure that all Canadians have access to the medications that
they need:

  • Develop a national pharmacare coverage plan including catastrophic drug coverage available to all Canadians irrespective of health, social, geographic and financial circumstances
  • Establish a tendering process at the national level to get the best possible price for medications
  • Reduce the cost of brand name drugs to bring Canada more in line with the OECD average
  • Move from the patchwork of private and public plans to a single, federally administered, medication payment plan
  • Create a national drug formulary that would provide equal access to the medications that Canadians need irrespective of the province or territory in which they live.
  • Establish a cost-benefit assessment program that works to ensure any medications covered by the national pharmacare plan provide a health benefit to Canadians at the lowest possible cost. In addition, the cost-benefit assessment program will work to develop treatment guidelines based on evidence-based medicine and work with physicians to disseminate information and establish prescribing practices in line with the treatment guidelines
  • Work with the provinces to ensure that the best possible plan is created within the confines of the federal and provincial jurisdictions
  • Eliminate the extended patent protection on brand name drugs in the province of Quebec.
  • Ensure that the private sector in the pharmaceutical industry is not destabilized by the process of creating a national pharmacare plan

 

Restructuring Health Care Step 1: A National Pharmacare Program

Canada’s health care system is one of the best and most cost effective in the world. Despite this, some changes are going to have to occur in the near future in order to effectively contain raising costs. This process should be viewed as a necessary evolution of the health care system rather than trying to fix something that is incorrectly described as being broken.

The restructuring process has to speak to Canadians’ innate sense of fairness and understanding that access to public health care is one of the core values of the Canadian identity. For fairness to be assured, those parts of the health care system that are publicly run must continue to be so. For-profit hospitals and doctor care leads to unequal access to health care services.

To begin the process of addressing the significant challenges within Canada’s health care system, it is important that we start with elements of the health care system where change can be most easily managed and significant savings can ensue. The most obvious choice that meets the above two criteria is to address the rising cost of prescription drugs in Canada through a national pharmacare program. It is possible to develop a cheaper system for delivering medications that meets the health care needs of Canadians while at the same time providing the necessary stability to the private sector that delivers this part of our health care.

The pharmacy industry has an interest in working with government to development a national pharmacare program because the current system is unsustainable and, as a result, the industry at some point will become unstable. An unstable or unsustainable pharmacy industry will impact not only the health care of Canadians, but also negatively impact the long-term profitability of the industry.

The purpose of this document is not simply to restate a commitment to a national pharmacare program, but to begin to lay out a road map for implementation. Each of the topic areas will address the cost savings options as have been done in many studies in the past. The second part of each topic area will address the potential impact on the delivery of health care and the sustainability of the private sector. The third part of each topic area will look at potential issues around implementation. Addressing the impact on the delivery of health care, the sustainability of the private sector as it transitions to a national pharmacare plan, and the issues around implementation are not found in many of the studies that have investigated the cost savings potentially associated with a national pharmacare program.

Purchasing at a National Level and the Tendering Process

One area of savings for a national pharmacare plan will be through bulk purchasing of medications at the national level. The principle being followed here is that through a tendering process, the cost of prescription medications will be reduced. At this point, we must differentiate between brand name and generic drugs. The greatest area for savings will be in the area of generic drugs where there is more than one supplier. For brand name drugs, negotiation of drug prices will still occur, but the process applied will be different than the tendering process that will be applied to generic drugs produced by more than one manufacturer. It is important to note that while tendering offers a significant opportunity to create savings for Canadians, the tendering process also has within it the possibility of destabilizing the pharmaceutical industry more than any other recommendation in this policy document. It is this very real threat to the viability of the pharmaceutical industry that is often overlooked in the studies performed to evaluate the savings created by a national pharmacare program. Thus, the approach to the tendering process must be thoughtful and balanced.

Much of the impetus for wanting a tendering process for generic drugs comes from the fact that the cost of generic drugs in Canada is significantly higher than in other countries. One part of the reason for this is the generic rebate that exists within the cost of the medications that are sold to medication wholesalers and retail pharmacies. This generic rebate is viewed by many people as a source of extra revenue for the pharmacy. The use of the word extra is purposeful because many outside the retail pharmacy industry believe that pharmacies could be viable without it. While it may be true that a number of pharmacies could survive in an environment devoid of generic rebates, many others would not. Thus, the approach to reducing the generic rebate to generate cost savings for Canadians must be balanced with the need to ensure that retail pharmacies do not shut down for lack of profitability.

Some of the provinces across Canada have limited retail pharmacies in the areas where they can spend their generic rebate dollars. For the purpose of this policy document, the use of any remaining generic rebate money post the tendering process would be at the discretion of the retail pharmacies.

The approach to the tendering process must also be thoughtful when considering the economic viability of the generic drug manufacturers. For each of the generic drugs, the original brand name companies would also be permitted to submit bids for the brand name product and would be accepted as the winning bid so long as their offer was the best. The tendering process as presented would not appear to have an impact on profitability because the generic manufacturers already pay the rebate to the retail pharmacies. The awarding of the contract does, however, have the potential to destabilize the pharmacy industry. This particular challenge is another area that is often overlooked when studies are performed on the viability of a national pharmacare program. The awarding of the contract for any one particular drug will be done on a first supplier/second supplier basis. For example, if a 70/30 basis were implemented, the primary supplier would be contracted to provide 70% of the medication needs of Canadians for that particular drug and a second company would be contracted to provide the remaining 30%. This method would ensure that the number of generic drug suppliers in Canada remained stable over the term of the contract thereby ensuring a competitive bidding environment when the tendering process and contracts came up for renewal. The implementation of this method also means that realizing the full savings depicted in studies for the tendering process will not be possible.

The next step to consider is the creation of the necessary steps to implement the tendering process. The process of having the federal government putting out contracts for the supply of medications is not new. A process is already in place for use by the Canadian Armed Forces for the medications that get supplied to the pharmacies located at Canadian Forces Bases throughout Canada. The supply chain that currently exists for retail pharmacies would effectively remain unchanged as the wholesalers that supply retail pharmacies throughout Canada are some of the same wholesalers that supply the Canadian Armed Forces bases.

In a recent study by the Canadian Centre for Policy Alternatives (CCPA), their projected savings generated as a result of an aggressive purchasing method resulted in savings of approximately $10.7 billion. The generic rebate portion of this figure is $1.3 billion. As mentioned previously, the CCPA study among others does not take into consideration the financial viability of the retail pharmacy sector in their calculations or considerations. Without recognizing that pharmacies are for-profit businesses, there is substantial risk that, if applied incorrectly, the tendering process would effectively have Canadians trade accessibility for affordability. By that I mean pharmacies would close as a result of the tendering process if implemented in an unbalanced manner. This would not be as much of an issue for urban Canada as it would be for rural Canada simply because the number of options available in rural Canada are fewer and losing the community pharmacy would have a greater impact. Thus, the expected savings that could occur from the generic rebate negotiation through the plan presented in this document would be in the order of $1 billion rather than the $1.3 billion presented in the CCPA study.

The $10.7 billion savings figure in the CCPA study also included savings from a review of the price setting mechanism for brand name drugs compared to other Organisation for Economic Co-Operation and Development (OECD) countries and the reduction in expenditures from the implementation of the equivalent of the cost-benefit analysis program both described later in this policy document. If we back out these savings along with the savings realized from the generic rebate reduction detailed above to ensure that no double counting of savings occur, the remaining savings possible through the aggressive price reduction strategy suggested by the CCPA study is approximately $5.97 billion. Frankly speaking, it will not be possible to realize all of this possible savings. The CCPA study itself mentions that if all countries were to adopt this method then drug development would effectively grind to a halt. I estimate that we would be able to realistically save under less than half of this amount (i.e. $2 billion) to ensure that Canadians have proper cost containment of their prescription medications while ensuring that the pharmaceutical industry has the profits it needs to continue to function.

Purchasing of Brand Name Drugs

Currently, Canada has a policy of capping the price of brand name drugs at the median of seven comparator countries. When analyzing this process from a cost perspective, we see that this approach results in Canada having the third or fourth most expensive brand name drugs because the comparator countries are the seven most expensive countries in the world. As per the study performed by the Canadian Centre for Policy Alternatives, Canada should make the decision to place the cost of drugs paid by Canadians closer to the OECD average. Moving Canada from either the third or fourth most expensive country to the seventh most expensive country will result in a savings of approximately $1.43 billion. As is the case with all of the recommendations provided in this policy document, the impact on the private sector and the private sector’s ability to provide medications will also be investigated.

This particular policy decision will not impact the delivery of care to clients. The reason for this is that retail pharmacy and the supporting industries (e.g. medication wholesalers) do not earn substantial profit from the sale of brand name medications. Clearly, the manufacturers of brand name drugs will be affected as their profits will be cut as a result of the decision to reduce the amount paid for these medications. One of the most common reasons cited for having higher drug prices is to support research into new medications. Switzerland is an example of a country that has very high drug costs for this very reason.

Detail prices for the same volume of medicines in OECD countries, 2005
(US$, Market exchange rate, including branded and generics)

Detail Prices = Ex-manufacturer price + wholesaler markup + pharmacy markup + Prescription fees + tax

SOURCE OECD 2008 - Eurostat OECD PPP Program, 2007

For Canada, the difficulty with this line of reasoning that encourages high brand name drug prices to support R&D is that while Switzerland enjoys a ratio of pharmaceutical R&D to sales of 113%, Canada only records a ratio of 7.5%. In addition, there are already very generous tax rebates for research in Canada. Thus, the higher drug prices paid for by Canadians and the various private and public coverage plans for brand name drugs do not produce a noticeable positive effect on the Canadian economy or the health care of Canadians. The fact is that if Canadians were interested in promoting innovative pharmaceutical R&D, supporting R&D in a cost effective manner using the savings realized from the reduction in brand name drug costs is a far better way of achieving positive results.

Now that we have determined that the delivery of health care and the strength of the economy will not be affected, we must investigate the work involved in implementing this particular policy idea. Of all of the ideas presented in this document, this policy idea has the least amount of work involved in making the change. Given that the current pricing regime is simply a decision of government, the new pricing regime will similarly be a decision of government and thus will not involve much work to implement.

The Move to a Single, Federally Administered, Medication Payment Plan

Moving from an environment where there are many private and public plans to a single, federally administered, medication payment plan will result in cost savings both for the private sector and for Canadians as a whole. For Canadians, there will be a cost savings of $933 million from the elimination of tax subsidies.

For companies, the cost savings that can be realized through the move to a single, federally administered, medication payment plan will be $560 million from the extra administration costs. Companies will also experience other savings due to work efficiencies that will be detailed in one of the following sections.

Neither the health care of Canadians, nor the pharmaceutical industry will be negatively affected by the change to a single, federally administered, medication payment plan. On the contrary, Canadians who currently do not have medication coverage will now be covered and will therefore experience improved health outcomes. The pharmaceutical industry does not earn its profits from operating private plans, thus its profit margins will not be affected.

The implementation of a single, federally administered, payment plan will involve a substantial amount of work, but the base structure is effectively already in place. Each province and territory has public plans that provide coverage for seniors and others who have difficulty paying for their medications. In addition, the federal government already provides medication coverage to aboriginal Canadians, veterans and current members of the Armed Forces, the RCMP, inmates in federal correctional institutions, and refugees. Thus, while there would be a substantial amount of work involved, the
job of implementing a single, federally administered, medication payment plan does not involve having to create anything new, rather it involves expanding upon systems already in place.

National Formulary

The creation of a national formulary will be an essential component of the national pharmacare plan. The national formulary is effectively a list of all approved medications that would be available to Canadians through the national pharmacare plan. Currently, coverage for medications differs from province to province. One of the goals for the national pharmacare plan will be to provide Canadians across the country with equal access to medications.

The creation of a national formulary will result in improved health care for Canadians because the desired list for the national formulary will be designed to include medications not currently covered through catastrophic drug coverage. The creation of the national formulary will not have an impact on the private sector either positive or negative. The work involved in putting together the national formulary is not significant as the tools required effectively already exist.

In terms of cost savings, the creation of a national formulary is not often associated, by itself, with a reduction in costs. However, delays in drug approval for provincial formularies once a medication has been approved at the national level currently results in unnecessary expenses of millions of dollars. These unnecessary expenses occur primarily when Health Canada approves a generic alternative for a brand name drug and then the adoption of the generic drug by each of the respective provinces is delayed. This particular area of expense is often not considered in studies that research the cost savings of a national pharmacare plan. The savings are not regular in that they are dependent upon brand name drugs going off patent which does not happen on a scheduled basis, but it does occur and the savings would be in the tens of millions of dollars across Canada for each medication affected. Given the difficulty in determining the total savings possible and the fact that the savings are realized on an irregular basis, we will not provide an estimate for the value.

Cost-Benefit Assessment Program

Any pharmacare plan interested in ensuring costs are managed while safeguarding the health of Canadians must include a cost-benefit assessment program. The purpose of a cost-benefit assessment program is to evaluate the therapeutic benefit of any new medications that come on the market and determine appropriate use of medications already available. The outcome of the program will be to both improve the quality of health care received by Canadians and to save on the cost of medications. The improvement in the quality of health care received by Canadians and the cost savings results from the application of evidence-based medicine to the prescribing practices of physicians and to the decision to list or not list certain medications on the national formulary.

The necessity of a cost-benefit assessment program comes from the fact that many medications listed on the drug formularies of the provinces include medications that are more expensive than others, but do not provide any additional medical benefit. Thus, a program must be created to independently determine which medications are listed and when then are allowed to be prescribed. As an example of the fact that many approved products do not provide any additional health benefit to Canadians, the Patented Medicine Prices Review Board found that of the 81 drugs in year 2000 that received their patent protection, 36 were simply line extensions and 42 were a new form of an existing medicine. Only 3 of the 81 provided a substantial improvement in medication. (Canadian Institute of Actuaries Perspectives. Last paragraph on page two.) Clearly, there needs to be some program that performs a cost-benefit analysis. The province of British Columbia has been the leader in this area. Their cost-benefit assessment program is called the Therapeutics Initiative. For the national pharmacare plan, the Therapeutics Initiative would be the model on which the cost-benefit assessment program would be based.

The effect of the cost-benefit assessment program would not negatively impact the health care received by Canadians. The Therapeutics Initiative mentioned above has been in effect for approximately 17 years and the health status of the residents of British Columbia do not rank less than Canadians living in other parts of the country. In 2007, British Columbia saved $701 million as compared to the Canadian average while having their residents experience an average lifespan of 81.2 years that is greater than the Canadian average.

The retail pharmacy industry and the wholesalers who supply them would not be significantly affected by the creation of a cost-benefit assessment program. The reason for this is that the number of prescriptions written and filled along with the volume of medication dispensed would not decrease. Rather, the type of medications being dispensed would undergo some change. Again, we can look at the British Columbia Therapeutics Initiative as the example that should be followed. Since its creation in 1994, the Therapeutics Initiative has performed cost-benefit analyses and the various sectors of the pharmaceutical industry in British Columbia from retail pharmacies all the way to the pharmaceutical manufacturers have continued to be profitable and experience growth.

Now that we have determined that the health care of Canadians and the sector of the pharmaceutical industry responsible for delivering medications to Canadians will not be adversely effected, we must now look at the challenges involved in implementation. The implementation of the cost-benefit assessment program of the national pharmacare program has the potential to be the most difficult of all the various parts presented in this policy document. One source of difficulty will come from significant resistance on the part of the pharmaceutical manufacturers industry. Certainly the pharmaceutical manufacturers will resist the other cost cutting measures outlined in the national pharmacare plan, but the cost-benefit assessment program would have the ability to disallow a new medication from the market completely if it was determined after careful study that the medication was not of any medical benefit over other cheaper medications that were already available. Clearly, this is going to impact the bottom line of the pharmaceutical manufacturing industry. In addition, cheaper generic alternatives would be encouraged over brand name drugs when developing the clinical guidelines planned for use by physicians when prescribing medications.

As difficult as the above-mentioned challenge would be, the potentially more difficult challenge would be the work needed to change the prescribing practices of physicians. Dissemination of information produced as a result of the recommendations coming from the cost-benefit assessment program is essential. Ideally, there would be a forum through which the medical profession could be engaged as partners to universally apply the principles of evidence-based medicine when prescribing medications. Changing the prescribing practices will also require changes in the education of physicians either while in medical school or through continuing education completed post graduation.

Some of the changes in prescribing practices can also be accomplished through delisting medications determined to be of no medical benefit from the national formulary. Other incentives can be implemented through the computerized adjudication of medications. Computerized adjudication happens at the retail pharmacy level when a coverage plan (either private or public) is determining whether or not they are going to pay for the medication prescribed by the physician. This computerized adjudication is performed electronically, thereby giving a quick response to the medication being requested by the doctor. The computerized adjudication would require the attempted use of a particular medication that is deemed to be the most appropriate for a particular medical condition prior to the use of a more expensive option that would not produce an additional medical benefit over the cheaper medication option.

Despite the difficulties in implementation presented above, it is possible to create a successful cost-benefit assessment program. British Columbia has been successful in this regard and the newly created national pharmacare plan would look to emulate their success. The savings expected from the implementation of the cost-benefit assessment program is approximately $2 billion. This number was determined from the expectation that the cost-benefit assessment program will realize a savings of approximately 8% of the total cost of prescription medications dispensed in Canada. This 8% is the amount of savings realized in British Columbia with the implementation of their Therapeutics Initiative and there is no reason to believe that the savings would be any less on a national level.

Volume Effect of a National Pharmacare Program

Up to this point, each of the sections presented as part of this policy document were sections that detailed various aspects of the national pharmacare plan. This section is different in that the volume effect of a national pharmacare program is not something that is created as part of the national pharmacare program, but occurs as a result of it. The volume effect speaks to the reality that with decreased costs and improved drug coverage being available to all Canadians, the use of prescription medications will increase and the costs of providing that medication will correspondingly increase. The exact increase in cost for the medication is difficult to determine as it depends on the payment plan chosen for Canadians. That is to say, if there is 100% coverage, the usage will be at the highest possible level. If there is a dispensing fee that has to be paid, then usage will be lower. If Canadians are requested to pay a percentage of the total cost of the medication along with the dispensing fee, the usage will be lower again. The options for how government is going to pay for the national pharmacare plan will be addressed in a later section along with the potential increases in medication and medication-related costs. Suffice to say the lower the cost to individual Canadians, the greater the medication usage and medication-related costs.

The Federal/Provincial Jurisdiction Question

While not a part of the national pharmacare plan, the question of federal/provincial jurisdiction must be addressed. The provision of health care to Canadians lies within provincial jurisdiction. Thus, any discussion around the creation of a national pharmacare plan must be performed in cooperation with the provinces. In the past, the provinces have been cooperative with the federal government in discussing options around having a national pharmacare program that is funded and administered by the federal government.

Patent Review

The patent review process as it applies to this policy document refers specifically to the province of Quebec’s 15-year patent protection for brand name drugs that the other provinces do not provide. While studies have shown that this extra patent protection does not produce a net benefit to Quebec, the fact that they choose to retain it means that it is an issue that will have to be addressed. The potential savings realized through the elimination of this extended patent protection is approximately $102 million.

Dispensing Fees and the First Dollar Pay Principle

The next area to consider is dispensing fees and how much of the total cost of a prescription we are going to expect Canadians to pay. There are a number of different options available to consider. Those who would like to have the national pharmacare plan mimic the other areas of health care (e.g. hospital and doctor visits) may be expecting the total cost (i.e. drug cost and dispensing fee) of prescriptions to be covered. Other options currently in place in both public and private plans throughout the provinces include the payment of dispensing fees and other co-payments.

Providing first dollar coverage on drug costs will be part of the national pharmacare plan. Providing first dollar coverage means that the total drug cost (including costs associated with catastrophic drug coverage) will be covered. Dispensing fees will require a greater level of flexibility. Currently, the provinces set dispensing fees. There would be some impetus to have dispensing fees covered or have a similar dispensing fee across Canada in order to ensure equality of payment for all Canadians. This would be particularly true if the federal government were providing first dollar payment on dispensing fees. The difficulty with this plan is that a fixed dispensing fee across the country does not provide the flexibility required to accommodate pharmacies operating in very different business environments. It is for these reasons that the setting of the dispensing fee will remain with the provincial government to ensure that they can meet the challenges of the economy particular to their respective region. The decision to have Canadians be responsible for paying the dispensing fee will impact the volume effect mentioned above. The dispensing/volume effect cost interaction will result in an estimated increase in medication consumption and costs of about 8% over the current level. In terms of dollars using data from 2008 as a reference, the increase in cost to Canadians will be approximately $2.01 billion.

Despite the decision to place the responsibility of setting dispensing fees with the provinces, it is necessary to address the issue of the dispensing fees themselves. In most studies that address cost savings in a national pharmacare plan, reducing dispensing fees is often mentioned as an area for potential savings. The difficulty with this proposal is that if you cut back on dispensing fees and also the generic rebate mentioned above, retail pharmacy both on an individual store level and as an industry becomes unprofitable and unsustainable. I believe that having to pay a dispensing fee will be acceptable to Canadians so long as the bulk of the costs associated with prescription medication are covered.

The Savings for Companies

Given the change that the national pharmacare plan will bring to the pharmacy industry and other companies that make use of private coverage plans, it is important that we work to assist the private sector to realize savings where they can be found.

Private companies and retail pharmacies currently carry unnecessary costs as a result of the patchwork coverage offered by public and private plans throughout Canada. For retail pharmacies, savings will be realized as a result of the fact that employee time that is currently directed towards dealing with the many different payment plans will now be streamlined to one single plan. For those not familiar with the retail pharmacy industry, it may be difficult to know that this is a significant savings for retail pharmacies. A significant portion of a pharmacist’s time can be occupied dealing with payment plans. This savings is important because it will help offset the loss of revenue that results from the decrease in the generic rebate mentioned previously in this document. As retail pharmacies are not uniform in their interaction with drug plans, it is difficult to estimate the total potential savings, but the value will be in the millions of dollars. Given that these pharmacies will be likely to retain their pharmacists, we will not assign a value to this savings for the purpose of the overall savings calculations performed as part of this policy document.

Larger companies that offer drug coverage as part of their compensation package often also have staff dedicated to the application of the private plan. As was the case with the savings in the retail pharmacy sector, the calculation of the total savings is difficult to determine. In addition, we would expect these employees to be retained thereby eliminating the need to assign a dollar value to the savings.

The administration costs incurred by companies that employ private plans to provide drug coverage are significant. For companies that employ private plans to provide drug coverage for their employees, a prudent estimate of the savings would be 6% of the total cost of private plans. This 6% savings translates into $560 million.

The Savings for Canadians

This section serves to compile the savings and expenses indicated in each of the sections provided above. For a national pharmacare plan to be considered a suitable and viable alternative to the current patchwork of private and public plans, it must be the case that the newly created national pharmacare plan have within it a strategy designed to contain the rising costs of medications. The summary of costs and expenses is provided below:

  • The dispensing/volume effect cost interaction will result in an estimated increase in cost to Canadians of approximately $2.01 billion.
  • The expected savings that result from the generic rebate negotiation through the plan presented in this document would be in the order of $1 billion.
  • Expected savings as a result of a tendering process for drug purchasing at a national level is approximately $2 billion.
  • The savings expected from the implementation of the cost-benefit assessment program is about $2 billion.
  • The potential savings realized through the elimination of the Quebec extended patent protection is approximately $102 million.
  • The elimination of tax subsidies will produce a cost savings of $933 million in the move to a single, federally administered, medication payment plan.
  • Moving Canada to the seventh most expensive country for brand name medications will result in a savings of approximately $1.43 billion.
  • Thus, the total net savings to Canadians that will result from the creation of a national
  • pharmacare plan will be $5.455 billion.

 

Commitments

The following measures will ensure that all Canadians have access to the medications
that they need:

  • Develop a national pharmacare coverage plan including catastrophic drug coverage available to all Canadians irrespective of health, social, geographic and financial circumstances
  • Establish a tendering process at the national level to get the best possible price for medications
  • Reduce the cost of brand name drugs to bring Canada more in line with the OECD average
  • Move from the patchwork of private and public plans to a single, federally administered, medication payment plan
  • Create a national drug formulary that would provide equal access to the medications that Canadians need irrespective of the province or territory in which they live.
  • Establish a cost-benefit assessment program that works to ensure any medications covered by the national pharmacare plan provide a health benefit to Canadians at the lowest possible cost. In addition, the cost-benefit assessment program will work to develop treatment guidelines based on evidence-based medicine and work with physicians to disseminate information and establish prescribing practices in line with the treatment guidelines
  • Work with the provinces to ensure that the best possible plan is created within the confines of the federal and provincial jurisdictions
  • Eliminate the extended patent protection on brand name drugs in the province of Quebec.
  • Ensure that the private sector in the pharmaceutical industry is not destabilized by the process of creating a national pharmacare plan

 

Conclusion

For a national pharmacare plan to be considered a suitable and viable alternative to the current patchwork of private and public plans, it must be the case that the newly created national pharmacare plan has within it a strategy designed to contain the rising costs of medications. In addition, the national pharmacare plan must improve the health care of Canadians and meet the principles of public administration, comprehensiveness, universality, portability and accessibility that Canadians have come to expect from their health care system. Finally, the national pharmacare plan must be created in a way that does not destabilize the various parts of the pharmaceutical industry in the private sector that are responsible for getting medications from the factory to the retail pharmacy.

This policy document outlines the components of a national pharmacare program that will provide coverage for prescription medications to all Canadians irrespective of their health, social, geographic and financial circumstances. The document also details how Canadians will save $5.455 billion as a result of the implementation of the national pharmacare program. Companies that currently provide private plan coverage to their employees stand to save $560 million. Given that health care is under provincial jurisdiction, the implementation of the plan will require leadership shown on the behalf of both the federal and provincial governments in working together for the benefit of all Canadians.

Politicians have been speaking actively about a national pharmacare plan since the 1960s. After 50 years of talk, it is most certainly time for action.

End Notes

  1. National Union of Public and General Workers, “Ten Steps to Faster Care: Step #3 Pharmacare”, available at www.nupge.ca
  2. Dr. Gordon Guyatt, “Time to act on National Pharmacare Program”, Hamilton Spectator and Straight Goods, June 28, 2002.
  3. Palmer D’Angelo Consulting Inc., “Cost Impact Study of a National Pharmacare Program for Canada”, Sept. 4, 2002.  Available at www.pdcl.ca
  4. Aslam H. Anis, “National Pharmacare: a dog’s tale”, Canadian Medical Association Journal, Sept. 14, 2004, 171(6).
  5. Tom McIntosh, “National Pharmacre Proposals”, Health Policy Monitor, 12/10/2004; available at www.hpm.org/survey/ca/a4/1
  6. Brad MacIntosh, M.Sc., “National Pharmacare: A New Way to Fight a Growing Healthcare Demon?”, University of Toronto Medical Journal, vol.82, number 1, December, 2004
  7. Joel Lexchin, “A National Pharmacre Plan: Combining Efficiency and Equity”, Canadian Centre for Policy Alternatives.

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