The Ontario Liberals have just announced a pharmacare plan targeted at youths aged 25 and under which will provide full coverage for a wide range of prescription drugs. This is welcome news, to be sure. One hopes that the youth plan will be the first step towards public drug coverage for Ontarians of all ages.
The policy case for universal pharmacare is overwhelming.
(Photo: Stevecoleimages via Getty Images)
It is scandalous that in 2017 many Canadians die for lack of affordable access to basic drugs like insulin. Increasingly, even those of us with private health insurance coverage are facing limits on what we can claim, so that our insurance does not protect us when we need it the most. Even those covered by other publicly funded drug programs, such as the elderly, are facing increasing co-payments in many provinces.
A well-designed pharmacare scheme can deliver huge savings by leveraging the bargaining power of an entire population. Canadians pay some of the highest drug prices in the world under our existing patchwork scheme of drug coverage -- employment-based private insurance for the majority of Canadians, combined with public coverage for seniors and low-income people.
As a point of comparison, New Zealand has tasked an agency at arm's length from government, PHARMAC, with purchasing drugs for its entire population. The cost savings are staggering. An annual prescription for the common blood-pressure drug Amlodipine costs New Zealanders about $10 a year, as compared to about $130 for patients in Canada.
Such an agency would not be swayed as much by short-term politics, not to mention requests and petitions by drug companies.
The aggregate savings are significant, with New Zealand spending only US$297 per capita on drugs annually, to Canada's CA$771, according to the most recent OECD data. With prescription drug costs now nearly matching spending on physicians in Canada, this is a low-hanging fruit for achieving significant cost savings for our strained health-care budgets.
But if, in implementing its recently announced plan, the Ontario government permits spending to gallop out of control, this will undermine efforts to examine coverage to all those in Ontario and across Canada. Out-of-control spending on drugs could mean there are precious fewer dollars to spend on other important things, like reducing wait times or long-term care beds.
The key to success here is to adopt a business-like, hard-nosed approach to price negotiations with drug companies, similar to that seen in New Zealand. To achieve this, we first need to move responsibility for buying drugs away from the Ontario Ministry of Health to an arm's-length agency. Such an agency would not be swayed as much by short-term politics, not to mention requests and petitions by drug companies.
It is also important that the legislation setting up this agency require it to work within a fixed budget. The budget should be allocated to it each year by the government after calibrating the money it has for different demands within health care. If it doesn't operate within a fixed budget, our public buyer cannot credibly threaten to walk away from drug companies' demands for inflated prices, which would be to the detriment of us all.
A fixed budget each year will improve decision-making about which drugs to fund or not fund. It would also necessarily require an assessment about the relative benefits of one drug over another in improving our overall health. Such an assessment of the evidence would benefit us all.
People will, of course, complain that this means all drugs are not covered. But there would be nothing to prevent those who wish to buy drugs not included in the public plan to do so -- as is currently the case -- either with private health insurance or out-of-pocket payments.
The public plan must cover the most important and cost-effective drugs for the entire population.
We must ensure that policies enacted today carry forward to the longer-term goal.
Drug companies may complain that their industry will lose out if government drives a hard bargain on prices. But if drug companies need subsidies to exist, then this should be considered on the same footing with other industries (e.g., car, aircraft, farming) who seek public assistance. Hidden subsidies should not happen in the form of excessive prices levied on Ontarians when they are sick.
The architects of Canadian medicare stressed from the beginning that public health insurance must grow to include pharmaceuticals. Over the intervening half-century, drugs have come to represent a much larger component of health-care spending, yet little progress has been made towards universal coverage.
If history is any guide, it will be the provinces that break this stasis.
We celebrate Ontario's move to meaningfully deal with inequitable gaps in access to pharmaceuticals. But we must ensure that policies enacted today carry forward to the longer-term goal of equitable and cost-effective health care for all. A hard-headed business approach is now required.
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Former President Theodore Roosevelt champions national health insurance as he unsuccessfully tries to ride his progressive Bull Moose Party back to the White House. (Photo by Topical Press Agency/Getty Images)
President Franklin D. Roosevelt favors creating national health insurance amid the Great Depression but decides to push for Social Security first. (Photo by Keystone/Getty Images)
Roosevelt establishes wage and price controls during World War II. Businesses can't attract workers with higher pay so they compete through added benefits, including health insurance, which grows into a workplace perk. (Photo by Hulton Archive/Getty Images)
President Harry Truman calls on Congress to create a national insurance program for those who pay voluntary fees. The American Medical Association denounces the idea as "socialized medicine" and it goes nowhere. (Photo by Keystone/Getty Images)
John F. Kennedy makes health care a major campaign issue but as president can't get a plan for the elderly through Congress. (Photo by Keystone/Getty Images)
President Lyndon B. Johnson's legendary arm-twisting and a Congress dominated by his fellow Democrats lead to creation of two landmark government health programs: Medicare for the elderly and Medicaid for the poor. (AFP/AFP/Getty Images)
President Richard Nixon wants to require employers to cover their workers and create federal subsidies to help everyone else buy private insurance. The Watergate scandal intervenes. (Photo by Keystone/Getty Images)
President Jimmy Carter pushes a mandatory national health plan, but economic recession helps push it aside. (Photo by Central Press/Getty Images)
President Ronald Reagan signs COBRA, a requirement that employers let former workers stay on the company health plan for 18 months after leaving a job, with workers bearing the cost. (MIKE SARGENT/AFP/Getty Images)
Congress expands Medicare by adding a prescription drug benefit and catastrophic care coverage. It doesn't last long. Barraged by protests from older Americans upset about paying a tax to finance the additional coverage, Congress repeals the law the next year. (TIM SLOAN/AFP/Getty Images)
President Bill Clinton puts first lady Hillary Rodham Clinton in charge of developing what becomes a 1,300-page plan for universal coverage. It requires businesses to cover their workers and mandates that everyone have health insurance. The plan meets Republican opposition, divides Democrats and comes under a firestorm of lobbying from businesses and the health care industry. It dies in the Senate. (PAUL J. RICHARDS/AFP/Getty Images)
Clinton signs bipartisan legislation creating a state-federal program to provide coverage for millions of children in families of modest means whose incomes are too high to qualify for Medicaid. (JAMAL A. WILSON/AFP/Getty Images)
President George W. Bush persuades Congress to add prescription drug coverage to Medicare in a major expansion of the program for older people. (STEPHEN JAFFE/AFP/Getty Images)
Hillary Rodham Clinton promotes a sweeping health care plan in her bid for the Democratic presidential nomination. She loses to Obama, who has a less comprehensive plan. (PAUL RICHARDS/AFP/Getty Images)
President Barack Obama and the Democratic-controlled Congress spend an intense year ironing out legislation to require most companies to cover their workers; mandate that everyone have coverage or pay a fine; require insurance companies to accept all comers, regardless of any pre-existing conditions; and assist people who can't afford insurance. (Alex Wong/Getty Images)
With no Republican support, Congress passes the measure, designed to extend health care coverage to more than 30 million uninsured people. Republican opponents scorned the law as "Obamacare." (Mark Wilson/Getty Images)
On a campaign tour in the Midwest, Obama himself embraces the term "Obamacare" and says the law shows "I do care." (BRENDAN SMIALOWSKI/AFP/Getty Images)
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