Pharmacare monopoly will hurt more than it helps, says policy expert

by Leo Almazora09 Oct 2019

While expanding Canadians’ access to medicine is a noble endeavour, a policy expert is arguing that creating a pharmacare monopoly is not the right path forward.

“At the moment, various governments in Canada fund 43 per cent of total out-of-hospital prescription drug expenses,” wrote Michel Kelly-Gagnon, president and CEO of the Montreal Economic Institute, in a piece for the Financial Post. The rest, he said, is split between private insurance plans (36%) and individual out-of-pocket expenses.

Under the current mixed system, the vast majority of public drug spending occurs at the provincial and territorial level. Citing a report by the government’s Advisory Council, replacing the mixed system with a monopolistic government-run program would result in a net cost increase of $15.3 billion by 2027, which would translate into around $1,000 in additional taxes per year for every Canadian household.

“[T]here is simply no way that this new burden could be borne solely by “the rich,” no matter how you define them,” he contended.

Another problem is reduced access to drugs for many. Kelly-Gagnon noted that government generally controls health-care costs by rationing access to new drugs, and it will likely continue to do so under a national, government-only pharmacare regime. Employer-sponsored plans in Canada typically offer reimbursements for between 10,000 and 12,000 drugs, compared to just 4,000 by most provincial government plans.

He also pointed at the U.K. and New Zealand, where patients waited for years to access a myriad of drugs that were already approved and recognized as effective elsewhere.

A national pharmacare system purely under government control, he continued, would force the country to accept a “one-size-fits-all” solution to a problem that affects relatively few people. In particular, he noted the Commonwealth Fund 2016 survey finding that 10% of Canadians had not filled a prescription or had skipped doses in the previous year because of a cited inability to pay.

“But why not simply offer targeted help to this slice of the population?” he said, adding that a blanket insurance scheme would “end up giving more power to federal bureaucrats to make decisions and trade-offs on behalf of the insured.”

Finally, Kelly-Gagnon criticised the widely held view that private-sector employers would be able to fully offload the costs of insurance plans, which they typically co-pay with their employees, to taxpayers. Other costs will likely rise in the long run, he said, including corporate taxes, health premiums that some provinces charge over and above corporate taxes, and wages paid to employees.

“Improving access to drugs for the less fortunate is a worthwhile endeavour,” he said, “but a national government-run pharmacare monopoly is simply the wrong prescription.”