Universal pharmacare would save Canadians $4.2B a year, Parliamentary Budget Officer says

Establishing a universal program for prescription medications would amount to about $4.2 billion in savings annually in Canada, the parliamentary budget officer says in a new report.

The report, requested by the House of Commons standing committee on health, was released Thursday.

It provides estimates of the cost to the federal government for a national pharmacare program based on the list of drugs publicly covered in Quebec.

The office estimates roughly $28.5 billion was spent on prescription drugs in 2015-16, and $24.6 billion of that total would have been eligible under a pharmacare program.

“After accounting for pricing and consumption changes, PBO estimates total drug spending under a national pharmacare program would amount to $20.4 billion, if implemented in 2015-16,” the report’s authors said. “This represents savings of roughly $4.2 billion.”

The report says the reduced totals would break down this way:

  • Government: $11.9 billion.
  • Private insurance plans: $9 billion.
  • Patients: $3.6 billion.

Canada is the only industrialized country with universal medicare that does not provide universal coverage for prescription medications.

Nearly 10 per cent of Canadians say they don’t take recommended medications because of cost, previous research suggests. 

Access to medications

Canadian Doctors for Medicare says the patchwork way medications are covered — government programs, drug coverage for public employees, workplace compensation programs and tax incentives for private insurance plans — fragments purchasing power and the ability to negotiate competitive prices for medications with drug companies.

Currently, only those who are old enough, poor enough or in Ontario young enough, without a workplace drug plan, are publicly covered, said Dr. Danyaal Raza, chair of Canadian Doctors for Medicare. 

“One in five Canadian families cannot afford to fill their prescriptions because of cost, so if you move forward with a national universal single-payer plan it means those families will be able to take their medication without having to worry how much to pay and they will have more money to pay for things like food and rent,” Raza said in an interview. 

“Not only will a national pharmacare plan cost less than Canadians are currently spending, it will ensure better coverage so that every Canadian has access to the medications they need,”

The Canadian Health Coalition said Quebec’s list of covered drugs doesn’t take advantage of the economies of scale by having the government purchase medicine on behalf of the whole population or national economies of scale, and that this model offers a worst-case scenario of savings. 

Steve Morgan is a professor in the School of Population and Public Health at the University of British Columbia. Last year, Morgan’s team came to similar conclusions as the Parliamentary Budget Officer using slightly different methods.

“Understandably, people would have this sense that somehow this is going to end up being a white elephant, it’ll blow out of control. All you really need to do is look to countries abroad in particular countries that have universal, single-payer health-care systems like Canadian Medicare,” Morgan said.

Morgan gives the examples of Scandinavian countries, Australia, New Zealand and the United Kingdom.

“They all spend dramatically less than Canada, not just on prescription drugs but also on over-the-counter drugs as well. Systems abroad show us that if you do this right, according to good practices in terms of deciding based on high- quality evidence [on] what drugs are worthy of universal coverage and … you sit down with manufacturers and hammer out an appropriate and fair pricing scheme for the drug, you end up finding there is savings available.”

Innovative Medicines Canada, a trade group that represents more than 50 pharma companies, said it supports any program that put patients first while ensuring they have fair, equitable and affordable access to the medicines they need, when they need them.

“Innovative Medicines Canada believes in closing the gaps in coverage to help those who are uninsured and underinsured, while maintaining the option for those with comprehensive drug coverage,” president Pamela Fralick said in a statement.

“Any solution needs to ensure that no one is worse off or has fewer options. We should also ensure the health system achieves best outcomes by providing access to a full range of medicines to meet each patient’s unique needs.”

The Liberal government previously said it is committed to lowering the cost of medications, but not to universal pharmacare. 

The House standing committee on health is studying the development of a national pharmacare program as an insured service for Canadians under the Canada Health Act.

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