National pharmacare discussion paper released
On June 20, 2018, the Advisory Council on the Implementation of National Pharmacare (the “Advisory Council”) released a discussion paper on options for a national pharmacare model. The Advisory Council is seeking input from Canadians to be used in preparing a report for the Minister of Finance and Minister of Health in 2019.
The 2018 federal budget announced the creation of the Advisory Council and appointed Dr. Eric Hoskins as chair. Dr. Hoskins is the former Ontario provincial Minister of Health and Long Term Care and was involved in the creation of that province’s OHIP+ program covering all individuals up to the age of 25.
Pharmacare is defined as a system of health insurance that provides people with access to necessary prescription drugs. Only prescription drugs administered in hospital are part of basic medicare coverage. Accordingly, there are gaps in coverage or high costs for many Canadians, particularly the self-employed, part-time employees and those with low incomes. It is also argued that a national pharmacare program would provide cost savings through lower prescription drug prices.
The report discusses three main issues for which public input is requested, summarized below.
Who will be covered and under what circumstances?
There are several potential models for a national pharmacare program:
- Comprehensive universal coverage for all individuals, including those covered by private drug plans today;
- Providing a basic safety net so that individuals do not need to go into debt or sell their house to cover the cost of drugs. Public coverage would be provided for drug costs above a certain threshold, such as 3% of household income; or
- Leaving the existing structure of public and private drug plans intact, but putting more rules and public funding in place to close the gaps. This could involve requiring employers above a certain size to provide coverage to employees, or requiring all Canadians to obtain private or public coverage.
Deciding what drugs get covered
Public and private plans currently each have their own lists of drugs that are eligible for coverage. The decision to cover a drug is based on a wide range of factors include the objective of the plan, needs of the plan members, drug efficacy and cost relative to other treatment options.
Options for a national pharmacare program would include the following:
- Covering essential medicines only, with private and public top-ups for additional medicines. Essential medicines are defined by the World Health Organization as a few hundred drugs that meet the priority health care needs of the population. This approach would not cover the full complement of drugs normally used in the health care system, or newer, high cost drugs;
- Covering the most frequently prescribed drugs across a broad range of common medical conditions, with public and private top ups available. This approach would also not address higher cost prescription drugs; or
- Provide a comprehensive approach to cover a large list of drugs equivalent to some of the more generous provincial formularies, but not an open formulary where all drugs for sale are included.
Figuring out who pays
The discussion paper suggests that Canadians could receive better value for money, but a national pharmacare model would shift significant costs from individuals and employers to governments. In addition to government funding, a national pharmacare model could require contributions from individual patients, for example through deductibles, co-payments or annual premiums. It could also require employers to contribute, either through contributions to a private plan or to a public plan.
At this time, there is no clarity as to the details of a future pharmacare program nor an expected timeline. While there is significant public interest in the idea of pharmacare, it is difficult to assess the ability of various governments to find and implement a manageable program.
The complexity of creating a national pharmacare model cannot be understated. Challenges include finding a sufficient, equitable and sustainable funding model, the potential shift of costs from the private to public sector, cooperation between the federal and provincial governments, managing the interests of a wide range of stakeholders and the difficulty of administering such a large plan.
As the cost of extended health care and prescription drugs in particular have risen significantly over the last number of years, plan sponsors have had to wrestle with managing costs and make difficult decisions about the coverage they provide. Assuming pharmacare does not end up covering all drugs for all Canadians, private plans could continue to exist in something similar to their current form, or be modified to address shortcomings or gaps in a public program. Employers may also be required to contribute to a public program. However, it is possible that a national pharmacare program could reduce costs compared to what private plans have borne in recent years.