Canada's 'dysfunctional' system of drug coverage not good enough, says study

by Leo Almazora19 Sep 2018

The current fragmented system of public drug coverage, which arose from the absence of out-of-hospital coverage provisions in the Canada Health Act (CHA), has access and cost issues that can only be solved through universal pharmacare.

“What has emerged [from the gap in the CHA] is a bewildering assortment of some 70 drug funding programs across the provinces, making Canadians’ access to public funding for essential medicines a lottery based on their age, income, medical condition and province of residence,” wrote the authors of Universal Pharmacare and Federalism: Policy Options for Canada, a new study from the Institute for Research on Public Policy.

According to the study, many provinces have some degree of coverage for their whole population, but such plans only kick in when a household’s pharmaceutical spending takes a significant bite out of its income. The presence of high deductibles has also been linked with problems stemming from patients doing without their prescriptions because of costs.

Quebec, the study noted, requires all residents to enlist with either their employer-based plan or a public option. While the system ensures “universal” coverage for all Quebecers, the province reportedly spends 35% more on drugs per capita than the average of all other provinces, and it has the highest household out-of-pocket prescription expenditures out of all the provinces.

“[T]he Quebec Minister of Health recently took the step of threatening to move to competitive tendering in the spirit of the New Zealand model, which prompted generic companies to agree at the last minute to price concessions totalling $1.5 billion over five years,” the report said.

Calling Canada’s current system “dysfunctional” and “fragmented,” the report cited numerous obstacles to comprehensive reform. Those include reported efforts by drug companies and private insurers that either say there’s no need for reform or push strongly for “incremental” reform, such as filling gaps in the present system’s drug coverage rather than creating blanket public coverage for all Canadians.

“But arguments to integrate the present patchwork of public and private schemes unfortunately often prove to be euphemisms for arrangements where profitable enrollees stream to the private sector, while the needs of high-risk patients are left to public drug programs,” the report said.

The federal government, it argued further, doesn’t appear to have properly balanced the need to incentivize drug research and development with the need to foster price competition. If the federal government were responsible for a larger cut of total pharmaceutical costs in the country, it may better balance the profit concerns of pharmaceutical manufacturers with the importance of accessible medicines.

Noting constitutional roadblocks that prevent the federal government from unilaterally implementing a universal pharmacare plan, the paper proposed two policy options. In one option, provinces would agree to have a federally funded agency to fund and administer a public pharmacare plan. Alternatively, the federal government could follow a Canada Health Act-like model, providing a transfer of funds to all provinces as long as they offer their residents drug coverage following principles like universality, accessibility, and portability.


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