A busi­nesslike ap­proach is needed for sus­tain­able phar­ma­care


The On­tario Lib­er­als have just an­nounced a phar­ma­care plan tar­geted at youths aged 25 and un­der, which will pro­vide full cov­er­age for a wide range of pre­scrip­tion drugs.

This is wel­come news, to be sure. One hopes that the youth plan will be the first step to­ward pub­lic drug cov­er­age for On­tar­i­ans of all ages.

The pol­icy case for univer­sal phar­ma­care is over­whelm­ing.

It is scan­dalous that in 2017, many Cana­di­ans die for lack of af­ford­able ac­cess to ba­sic drugs like in­sulin. In­creas­ingly, even those of us with pri­vate health in­sur­ance cov­er­age are fac­ing lim­its on what we can claim, so that when we need it the most, our in­sur­ance does not pro­tect us. Even those cov­ered by other pub­licly funded drug pro­grams, such as the el­derly, are fac­ing in­creas­ing co-pay­ments in many prov­inces.

A well-de­signed phar­ma­care scheme can de­liver huge sav­ings by lever­ag­ing the bar­gain­ing power of an en­tire pop­u­la­tion.

Cana­di­ans pay some of the high­est drug prices in the world un­der our ex­ist­ing patch­work scheme of drug cov­er­age — em­ploy­ment-based pri­vate in­sur­ance for the ma­jor­ity of Cana­di­ans, com­bined with pub­lic cov­er­age for seniors and low-in­come peo­ple.

As a point of com­par­i­son, New Zealand has tasked an agency at arms-length from gov­ern­ment, PHAR­MAS, with pur­chas­ing drugs for its en­tire pop­u­la­tion. The cost sav­ings are stag­ger­ing. An an­nual pre­scrip­tion for the com­mon blood pres­sure drug Am­lodip­ine costs New Zealan­ders about $10 a year, as com­pared to about $130 for pa­tients in Canada.

The ag­gre­gate sav­ings are sig­nif­i­cant, with New Zealand spend­ing only US$297 per capita on drugs an­nu­ally, to Canada’s $771, ac­cord­ing to the most re­cent OECD data. With pre­scrip­tion drug costs now nearly match­ing spend­ing on physi­cians in Canada, this is a low-hang­ing fruit for achiev­ing sig­nif­i­cant cost sav­ings for our strained health care bud­gets.

But if, in im­ple­ment­ing its re­cently an­nounced plan, the On­tario gov­ern­ment per­mits spend­ing to gal­lop out of con­trol, this will un­der­mine ef­forts to ex­am­ine cov­er­age to all those in On­tario and across Canada.

Out-of-con­trol spend­ing on drugs could mean there are pre­cious fewer dol­lars to spend on other im­por­tant things, like re­duc­ing wait times or long-term care beds.

The key to suc­cess here is to adopt a busi­nesslike, hard-nosed ap­proach to price ne­go­ti­a­tions with drug com­pa­nies, sim­i­lar to that seen in New Zealand. To achieve this, we first need to move re­spon­si­bil­ity for buy­ing drugs away from the On­tario Min­istry of Health to an arms-length agency. Such an agency would not be swayed as much by short-term pol­i­tics, re­quests and pe­ti­tions by drug com­pa­nies.

It is also im­por­tant that the leg­is­la­tion set­ting up this agency re­quire it to work within a fixed bud­get. The bud­get should be al­lo­cated to it each year by the gov­ern­ment af­ter cal­i­brat­ing the money it has for dif­fer­ent de­mands within health care. If it doesn’t op­er­ate within a fixed bud­get, our pub­lic buyer can­not cred­i­bly threaten to walk away from drug com­pa­nies’ de­mands for in­flated prices, which would be to the detri­ment of us all.

A fixed bud­get each year will im­prove de­ci­sion-mak­ing about which drugs to fund or not fund. It would also nec­es­sar­ily re­quire an as­sess­ment about the rel­a­tive ben­e­fits of one drug over an­other in im­prov­ing our over­all health.

The pub­lic plan must cover the most im­por­tant and cost-ef­fec­tive drugs for the en­tire pop­u­la­tion.

The ar­chi­tects of Cana­dian medi­care stressed from the be­gin­ning that pub­lic health in­sur­ance must grow to in­clude phar­ma­ceu­ti­cals. Over the in­ter­ven­ing half­cen­tury, drugs have come to rep­re­sent a much larger com­po­nent of health care spend­ing, yet lit­tle progress has been made to­ward univer­sal cov­er­age.

If his­tory is any guide, it will be the prov­inces that break this sta­sis.

We cel­e­brate On­tario’s move to mean­ing­fully deal with in­equitable gaps in ac­cess to phar­ma­ceu­ti­cals. But a hard-headed busi­ness ap­proach is now re­quired to make it work.

Colleen M. Flood is pro­fes­sor and di­rec­tor of the Uni­ver­sity of Ot­tawa, Cen­tre for Health Law Pol­icy & Ethics. Bryan Thomas is an ad­junct pro­fes­sor and se­nior re­search fel­low at the Uni­ver­sity of Ot­tawa Cen­tre for Health Law, Pol­icy & Ethics

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