National Pharmacare Program: The Pros and Cons

September 29, 2020 Updated: September 29, 2020

The federal government wants to establish a national formulary and reduce drug costs for those facing rare conditions as it moves toward universal pharmacare. While there is wider agreement on these initial steps, a national pharmacare program remains a hotly contested idea.

The Sept. 23 speech from the throne stated that the government “remains committed to a national, universal pharmacare program,” with first steps to include “a rare-disease strategy to help Canadian families save money on high-cost drugs” and “[e]stablishing a national formulary to keep drug prices low.”

Julie White is a member of the Congress of Union Retirees Canada and sits on the board of the Canadian Health Coalition, two groups that welcome the announcement.

“In the U.K., in most European countries, in Australia and New Zealand, [they have] a public medical plan that includes the cost of drugs so that people are covered from wall to wall. Some of those plans are completely free. A lot of them have a small fee,” White told The Epoch Times.

“The whole population is really covered in a way that we are just not covered in Canada,” she said, adding that the lack of such coverage “leads to a lot of ill health, it leads to people showing up in emergency rooms, and it leads to much worse than that … death because of a lack of access to drugs.”

Canadian Health Coalition board member Keith Newman notes there are “at least 400 deaths a year in Canada because people are not able to afford their diabetes drugs.”

In 2019, a Health Canada advisory panel chaired by Dr. Eric Hoskins said that Canada was third, behind the United States and Switzerland, in its per capita cost for medicines, and that three million Canadians do not fill their prescriptions because of the cost.

Hoskins, chair of the Advisory Council on the Implementation of National Pharmacare, reported that Canadians spent $34 billion on prescription medicines in 2018, and that universal pharmacare would save an estimated $5 billion annually. The federal government as one buyer could demand a lower price than could Canada’s 110,000 public and private drug plans, according to the Canadian Health Coalition.

The Canadian Health Policy Institute (CHPI) opposes the idea. Last September, CHPI reported, “The research shows that national pharmacare is unnecessary, bad for privately insured people, and costly for taxpayers.” It said two-thirds of Canadians had drug coverage through a private drug plan and that public plans covered the rest, and “out-of-pocket costs are capped at affordable levels across all income deciles.”

Dr. Herb Emery, Vaughn Chair in Regional Economics at the University of New Brunswick, says paying for expensive drugs, the first step the government has proposed, meets more of a need than national pharmacare.

“The big biologics that are coming online are expected to be really expensive. You’ve got orphan conditions, and so when you have what you would call catastrophic large costs for an individual, that annual cost can be insured and pooled across the population because the risk is fairly low for any one individual,” Emery says.

“The problem you have is when you try to make what you call sensible decisions around prescribing these big, expensive drugs. Then people go to the media and you get forced into paying for them anyway, and you don’t have the capacity to pay.”

Public pressure forced Ontario to expand a funding program for the use of expensive cancer drugs, including Avastin and Herceptin. Many new cancer drug therapies cost US$60,000 to US$100,000 per patient per year.

“Everyone’s terrified of these big, expensive drugs because we don’t know where the top of the mountain is. We just know that if you start funding it, it may cause more people to come forward,” Emery says.

The federal government would face many obstacles before it could implement national pharmacare, Emery says, not just because of provincial jurisdiction, but also the “impact on a widespread and entrenched insurance industry, which for most of us is doing quite well.”

The Parliamentary Budget Officer estimated that if a national pharmacare program had been implemented in 2016, it would have meant having the federal government pick up $19.3 billion of the provincial cost annually, burdening taxpayers with $7.3 billion per year in additional costs. CHPI said “a more realistic set of assumptions” would have bumped those figures to $26.2 billion and $12.3 billion respectively, according to its estimates.