Fix drug plans, or start over?

Now there’s a splitting headache

Nothing obliges a Liberal government to act on any resolution of a Liberal convention. Party policies in Canada are not determined by party members, but by the party leader. That goes double for the Liberal party as it has evolved under Justin Trudeau, which is essentially a free-floating personality cult.

So whether or not the Liberals move to implement a “single-payer” universal prescription drug plan, as demanded by last week’s convention — it was the topranked resolution — and as recommended the same week by the Liberal majority on the Commons Health committee, is entirely up to the prime minister. And whether he does so, or on what timetable, will be decided by the usual calculations of politics.

Certainly it is not self-evident that free drugs for all is the best use to which billions of scarce federal dollars could be put — ahead of, say, eliminating poverty or providing clean drinking water on reserves or cutting tax rates to competitive levels — or why it should have become the Liberals’ top priority at this exact moment.

“Pharmacare Now” was the title of the health committee report. Would it have been if the NDP had not lately indicated it would be part of its platform in 2019, and if Liberal election strategy did not depend on keeping NDP-leaners in the big red tent?

The idea, of course, has been somewhere on the Liberal wish list for decades. But if past Liberal prime ministers have declined to implement it — and if this one hesitates before committing to it — it may be because it is also fraught with political risk.

That there is a genuine problem to be solved should not be in doubt, as the committee’s report ably summarizes. Canada spends more on prescription drugs, through a chaotic mix of public, private and individual payers, than nearly every other country on earth: $34 billion annually, or roughly $1,000 per capita — a third higher than the OECD average, and twice what countries like Denmark and the Netherlands pay.

Yet an estimated 10 per cent of our people have no drug insurance — two to three times the rate in comparable countries — while another 10 per cent are classed as under-insured, meaning their drug costs exceed the limits of their plans, forcing them to pay out of pocket.

The problem is especially acute for the working poor, the self-employed, and those in part-time or short-term employment, without access either to the public plans available to those on social assistance or employer-provided insurance.

The poorest one-fifth of households spend more than one per cent of their incomes on drugs, on average; those with chronic illnesses can pay more than five or even 10 per cent. Unsurprisingly, many are forced to skimp on their drug purchases, often with consequences for their health, and subsequent higher costs to the health care system: as much as $9 billion annually, according to one study.

With so many plans (there are more than 70 public plans, and thousands of private ones) and such wide differences in the range of drugs they cover, it is easy to see how some people, and some drugs, might fall into the cracks. And with less than 43 per cent of the market, the collective purchasing initiative among the provinces, lately joined by the federal government, known as the pan-Canadian Pharmaceutical Alliance, has achieved only limited success in negotiating price reductions with manufacturers.

The system, in short, resembles the deeply flawed U.S. health care system in many ways, particularly in its emphasis on employers as the delivery vehicle. We are indeed one of the few countries with a universal medical insurance plan that does not cover prescription drugs. Or rather, as with most things to do with Canadian health care, it does cover drugs — so long as they are purchased in-hospital. Given the importance now attached to getting patients out of high-cost hospitals, this is especially silly.

In a perfect world, consolidating the lot, private and public, under a single federal plan, with a common formulary, universal coverage, and massive bargaining power, would make a lot of sense. The committee cites a study by the Parliamentary Budget Officer estimating total savings in the neighbourhood of $4 billion, albeit at the cost of raising public spending by a net $7 billion. In the world as it is, however, an Obamacare-style kludge, closing the gaps in the existing plan might be more feasible — as the finance minister, among others, has suggested.

As in the U.S., single-payer advocates will find it is not an easy matter to shutter a $10-billion private industry, particularly as the private plans tend to be superior in coverage to the public plans: current beneficiaries may not be keen to have that taken away from them.

Likewise, while it would be reasonable for the provinces to hand off responsibility to the feds, the provinces are not known for their reasonableness when it comes to defending their turf. Even the more limited model the committee envisages, with the feds bribing the provinces to expand their plans, would likely have to exclude Quebec.

It’s not clear that substantial savings could not be realized under the existing system: by including private insurers in the public bulk-purchase initiative; by making greater use of generic or over-the-counter drugs; by setting pharmaceutical prices based on their actual therapeutic benefit, rather than what manufacturers ask for.

Perhaps these would be more likely under a singlepayer plan, federal or provincial, but you will excuse me if I am concerned the people who brought you the e-Health and Phoenix fiascos might find managing 36 million prescription drug histories a little beyond them.