National pharmacare not the answer to drug affordability: CLHIA head

by David Keelaghan02 Oct 2017
A national pharmacare plan is not the solution to Canadians’ drug cost woes, believes CLHIA head Stephen Frank.

Last week, a report from the Parliamentary Budget Officer (PBO) on universal coverage for prescription medication estimated annual savings of $4.2 billion.

Using Quebec’s current drug plan as a baseline, the PDO believes the additional cost to the federal government would be $19 billion annually.

According to Frank, there are a number of logical gaps in the report, especially the assumption that a provincial plan structure could work just as well for the entire country. 

“The PBO was given some very specific assumptions it needed to use,” he says. “It wasn’t asked to make the case for pharmacare, it was ‘assume these things and tell us how much it will cost.’ One of the assumptions going in was that you can just flip a switch and instantly you get all these savings from bulk purchasing of drugs. We know that’s simply impossible.”

The PBO analysis found that about $28.5 billion was spent on pharmaceuticals in Canada in 2015-16. Of that total, the provinces and federal government paid for $13.1 billion, insurance providers covered $10.7 billion and individual Canadians spent $4.7 billion.

Using the drugs covered by the Quebec formulary, the PBO estimates that $24.6 billion would be eligible for coverage under a national pharmacare program. The CLHIA points out the $3.9 billion gap in coverage, which it says would impact hundreds of thousands of Canadians if applied on a national scale. Despite the vast sums of money involved, Frank believes the solution for prescription medication affordability is relatively simple.

“The PBO assumed that we would bulk purchase drugs and that would lower the price,” he says. “We can do that in the current system today; all it needs is governments through the Pan Canadian Pharmaceutical Alliance (PCPA) to negotiate a lower price on the behalf of everybody.”

The CLHIA has advocated for greater collaboration between the various governments and Canada’s private insurers for years now. As Frank explains, unity between providers and the PCPA would ultimately lead to lower drug prices for the public, and significant savings for the public purse.

 “The savings assumed under the PBO’s model can be realized under the current system; all it takes a cooperative approach on drug prices,” he says. “You will get most of that $4 billion in savings over time just by having us all work together.”

Such an agreement isn’t something that requires a great deal of effort, in Frank’s view. Rather, there are numerous examples of effective public-private drug plans across the world.

“There are all kinds of countries that have a mixed model – The Netherlands, France, Germany, Australia, South Korea,” he says. “They all negotiate pricing on behalf of the entire population. When the government sits down they negotiate a price for everybody. That’s our vision for Canada.”

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