Cut waste, not patients

GOVERNMENTS REFUSE TO APPLY THE SAME RIGOROUS SCRUTINY TO NON-MEDICAL COSTS IN THE HEALTH SYSTEM.

In the recently tabled federal budget, the government announced plans to move toward a national pharmacare program “to make prescription drugs more affordable.” It was already in the process of amending the patented medicines regulations to “protect Canadians from excessive drug prices,” according to Health Canada’s consultation paper.

Both policies reflect a general misguided focus on the cost of medical technologies and health professionals in Canada. Governments rabidly try to control the cost and use of medical devices and drugs — even though they are the tools used to treat patient health. Meanwhile, they refuse to apply the same rigorous scrutiny to nonmedical costs in the health system.

Health Canada regulates the safety and therapeutic effectiveness of devices and drugs, and cost-effectiveness is assessed by the Canadian Agency for Drugs and Technologies in Health (CADTH). Maximum prices for new drugs are set by the Patented Medicine Prices Review Board (PMPRB). Final prices for public drug plans are negotiated collectively by the federal-provincial government-run pan-Canadian Pharmaceutical Alliance (pCPA). And device prices are negotiated with group purchasing organizations for hospitals and health authorities.

Governments also burn a lot of political energy trying to control the costs associated with physicians and nurses, despite the fact that these health professionals deliver medical care directly to patients. Ontario’s 2016 public battle over doctors’ fees servesasarecentexample.

But to get some more perspective, consider the $159 billion spent on health care in 2016 by federal, provincial and territorial governments, more than $33 billion of that went to non-medical stuff — things other than health professionals, medical devices and pharmaceuticals. Yet, there is a serious lack of political attention given to non-medical costs, and as a result, billions of dollars are potentially being squandered without any direct health benefits for patients.

A 2017 study by the Canadian Health Policy Institute (CHPI) identified several examples of non-medical costs lacking public accountability on value for money.

For instance, the Ontario government spends almost $500 million annually on an agency known as eHealth, which is tasked with developing a standardized electronic medical record (EMR) for patients in the provincial health system. With a total cost approaching $5 billion since the program was launched in 2002, there is still little concrete evidence of a working EMR that is compatible across all providers in the health system. Over the same period, the federal government has funded Canada Health Infoway to facilitate EMRs, with a total cost nearing $2 billion and with similarly underwhelming results.

Health Canada annually spends more than $334 million on “Canadian Health System Policy” to provide “strategic policy advice, research, and analysis to support decision-making on healthcare system issues.” And Ontario’s Ministry of Health annually spends more than $810 million on a parallel provincial “Health Policy and Research Program” and almost $37 million on its own health policy think-tank known as Health Quality Ontario.

Excluding biomedical and clinical science, the federally funded Canadian Institutes of Health Research spent $5.2 billion from 2000–01 until 2016-17 for studies on health systems and services, social and cultural health issues and other non-medical topics.

In total, more than $150 million in federal costs are incurred annually from agencies like PMPRB, pCPA, CADTH, and the Canadian Institute for Health Information. And Ontario spends more than $750 million annually to support its own health related agencies, boards and commissions. However, it is not obvious how these organizations provide any direct benefit to the health of Canadians.

CHPI also identified millions in regulatory compliance costs and supply-chain services imposed on manufacturers of medical technologies. Such administrative charges are potential toll-gating opportunities that add no clear benefit to patients. They act as a kind of tariff extracted for access to the market, or as a tax on pathways to procurement. These costs eventually flow through to the health system in the form of higher prices for medical technologies and are ultimately paid by taxpayers.

This is not to say that there is no value associated with these expenditures. However, CHPI’s study shows that there are significant opportunities for improving health-system efficiency through better scrutiny of non-medical costs. Governments could save enormous sums of money that could fund better access to medical goods and services that directly benefit patients.