Na­tional phar­ma­care is not the slam dunk its pro­po­nents claim

Waterloo Region Record - - Insight - AARON WUDRICK Aaron Wudrick is fed­eral di­rec­tor for the Cana­dian Tax­pay­ers Fed­er­a­tion. This col­umn orig­i­nal ap­peared at CBC Opin­ion

Back in Fe­bru­ary, the Trudeau gov­ern­ment an­nounced the ap­point­ment of for­mer On­tario Health Min­is­ter Eric Hoskins as chair of its “Ad­vi­sory Coun­cil on the Im­ple­men­ta­tion of Na­tional Phar­ma­care.” As the coun­cil’s name sug­gests, the mis­sion is to come up with a pro­posal for a na­tion­wide pro­gram that will address the cost of pre­scrip­tion drugs.

Con­sul­ta­tions wrapped up last month, and Hoskins is ex­pected to re­port his find­ings some­time in spring 2019.

For a gov­ern­ment fac­ing re-elec­tion next year, the tim­ing is for­tu­itous, and it’s widely an­tic­i­pated that his rec­om­men­da­tions will form the ba­sis for a ma­jor plank in the Lib­er­als’ 2019 elec­tion plat­form.

Of course, ma­jor planks usu­ally cost ma­jor dol­lars, so it’s worth dig­ging into the num­bers when it comes to pre­scrip­tion drugs.

The Par­lia­men­tary Bud­get Of­fice (PBO) es­ti­mates that in 2015-16, Cana­di­ans spent $28.5 bil­lion on pre­scrip­tion drugs, of which the vast ma­jor­ity — $24.6 bil­lion — would be cov­ered un­der a hy­po­thet­i­cal gov­ern­ment plan.

The PBO then con­cluded that, had this hy­po­thet­i­cal plan been in place for 2015-16, it would have cost the fed­eral gov­ern­ment $20.4 bil­lion, for a sav­ings of $4.2 bil­lion.

This es­ti­mate as­sumes that the fed­eral gov­ern­ment, as the sole buy­ers of cov­ered drugs for the en­tire coun­try, would have the clout to ne­go­ti­ate lower drug prices.

It’s a tan­ta­liz­ing nar­ra­tive: gov­ern­ment in­tro­duces big new im­por­tant so­cial pro­gram that ben­e­fits ev­ery­one — and even saves money do­ing it. Maybe free lunches do ex­ist af­ter all.

Or not. Un­for­tu­nately for phar­ma­care pro­po­nents, the more you drill down into the de­tails and ex­am­ine the PBO’s as­sump­tions, the clearer it be­comes that gov­ern­ment phar­ma­care isn’t quite the slam dunk they in­sist it is.

For starters, mod­el­ling any new big so­cial pro­gram on our creak­ing health care sys­tem should set off alarm bells. Pro­vin­cial gov­ern­ments al­ready spend be­tween 34 and 43 per cent of their en­tire bud­gets on a health care sys­tem that, what­ever its mer­its, has con­sis­tently led to in­creas­ing wait times and ris­ing costs.

Throw an ag­ing pop­u­la­tion into the mix and it’s not even clear our ex­ist­ing health care sys­tem is sus­tain­able in the long-run. Tack­ing a mas­sive new drug plan onto a sys­tem al­ready un­der tremen­dous strain would be un­wise.

There’s also the im­por­tant mat­ter of de­cid­ing pre­cisely which drugs would be cov­ered un­der a na­tional plan. As it stands, pri­vate drug plans tend to cover far more drugs than ex­ist­ing gov­ern­ment drug plans, and also tend to ap­prove new drugs much more quickly. It would make no sense to down­grade the 23 mil­lion Cana­di­ans al­ready cov­ered by var­i­ous pri­vate plans to a less-com­pre­hen­sive na­tional plan.

The as­sump­tion that su­pe­rior bar­gain­ing power will lead to lower drug prices seems rea­son­able un­til you con­sider that many prospec­tive dis­counts have likely al­ready been achieved thanks to the panCana­dian Phar­ma­ceu­ti­cal Al­liance, a group formed in 2010 by the fed­eral and pro­vin­cial gov­ern­ments ex­plic­itly for the pur­pose of band­ing to­gether to se­cure lower drug prices.

It’s also likely that the PBO is un­der­es­ti­mat­ing the cost in­creases re­sult­ing from a na­tional plan, pre­dict­ing that greater ac­cess and lower prices would only lead to a 12.5 per cent jump in drug uti­liza­tion.

In fact, there is ev­i­dence from Que­bec (which al­ready has a manda­tory pub­lic plan for those not cov­ered by a pri­vate plan) that shows a uti­liza­tion rate that is fully 35 per cent higher than the rest of Canada.

In short, hid­ing the “sticker price” of drugs may in­duce Cana­di­ans to use far more of them, lead­ing to a much big­ger bill for Cana­dian tax­pay­ers.

With the Trudeau gov­ern­ment’s deficits stretch­ing larger and longer than planned, there’s no spare cash left in the cup­board to pay for such a big new pro­gram.

Phar­ma­care will nec­es­sar­ily mean higher taxes or even big­ger deficits.

The Trudeau gov­ern­ment should tread care­fully. Re­cent polling by Aba­cus Data re­vealed that fully 94 per cent of Cana­di­ans believe that keep­ing costs low for tax­pay­ers should be an im­por­tant fac­tor in the im­ple­men­ta­tion of any na­tional phar­ma­care plan.

They may want to think twice about dream­ing big on phar­ma­care — es­pe­cially when there’s no pain­less an­swer on how they’re go­ing to pay for it.

While it’s cer­tainly true that there are gaps in the cur­rent sys­tem — es­pe­cially with re­spect to ex­pen­sive, cat­a­strophic drug cov­er­age — and that lower-in­come Cana­di­ans are more likely to suf­fer as a re­sult, it doesn’t mean wip­ing out the en­tire mar­ket of pri­vate sec­tor drug cov­er­age is the best so­lu­tion.

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