This spring, the Advisory Committee on the Implementation of National Pharmacare, led by former Ontario Health Minister Dr. Eric Hoskins, will release its much-anticipated report.
There is a lot at stake, especially for seniors, who are, by far, the biggest consumers of prescription drugs. While those over 65 make up 15 per cent of the population, they account for 57 per cent of prescription spending.
Implementing pharmacare — and, remember, Hoskins’ mandate is to produce a blueprint for implementation, not simply another earnest report saying it’s a good idea — would be the most significant change in medicare in more than half a century.
With a federal election slated for Oct. 21, the promise of pharmacare could also be a cornerstone of Prime Minister Justin Trudeau’s re-election bid.
The problem — and the reason Hoskins’ work is necessary — is that there are many definitions of pharmacare, ranging from creating a single, centralized program that provides first-dollar coverage of medications, through to a “fill in the gaps” approach that aims to provide prescription drug insurance for those who don’t have it now.
“If pharmacare is going to happen, the proposal will have to be big and bold, just like medicare was in the beginning,” says Fiona Clement, a health policy researcher at the University of Calgary.
There is a lot at stake, especially for seniors, who are, by far, the biggest consumers of prescription drugs.
But we shouldn’t pretend it’s going to be easy, she adds, because there are so many players with a stake in drug delivery now — Ottawa, the provinces and territories, private insurers, employers, unions and, of course, patients — that it will be difficult to find a point of consensus, let alone unanimity.
Pharmacare is often referred to as the unfinished business of medicare. So, it’s worth recalling medicare’s origin story, and why drugs were not publicly funded in the first place.
In the heady times after the Second World War there were many medical and technological advances that created new hope but made accessing health care increasingly unaffordable for Canadians.
The response from provincial governments was to create public insurance plans, first for hospital care, then physician care, but access varied wildly around the country.
The federal government appointed Justice Emmett Hall to study the issue and his landmark report was unequivocal: Public health insurance was a necessity.
Ottawa acted swiftly on the recommendations of Hall’s Royal Commission on Health Care Services. In 1965, the federal government agreed to fund 50 per cent of hospital and physician services, with two conditions — that access be universal (meaning no one be denied care based on ability to pay) and that there be no user fees.
Still, Justice Hall’s recommendations did not enthuse everyone. It took seven years before all the provinces agreed to the cost-sharing agreement. (Quebec was the last province to adopt medicare, in 1972.)
While creating medicare was a watershed moment, Ottawa only partially implemented the report’s recommendations. In addition to hospital and physician services, the Hall commission said medicare coverage should include prescription drugs, dental care, optical services, home care, and mental health and addiction services, but those services could be added gradually.
The proposed expansion of medicare never happened.
Drugs, for example, were not considered a priority because most were dispensed in hospital and covered. Another reason for the hesitation was that, after the implementation of medicare, health costs soared, with double-digit increases in costs year-after-year. Politicians got cold feet, and doubly so when Ottawa started to back away from its 50-50 funding pledge. (The federal government currently covers 21 per cent of public health spending.)
Instead of a cohesive medicare system, what developed was a patchwork of private and public insurance programs, especially for prescription drugs.
Today in Canada there are an astonishing 113,000 private drug plans and 102 different public drug plans that target demographic groups like seniors and people with specific health conditions.
All told, about 28 million Canadians have prescription drug coverage, but about four million have inadequate coverage and another 700,000 have no coverage.
“It’s a real mess,” says Mary Lou Robertson, a consultant and expert on drug access navigation. “It can be really difficult to navigate the system, especially for seniors.”
The common public perception is that all seniors have their drug costs covered. But the reality is quite different.
Four provinces automatically enroll seniors in public prescription drug insurance programs at age 65 — Ontario, Quebec, Prince Edward Island and Newfoundland and Labrador; in the other six provinces, enrollment is voluntary.
All told, about 28 million Canadians have prescription drug coverage, but about four million have inadequate coverage and another 700,000 have no coverage.
Many of the public plans are income based, and have an assortment of premiums, co-pays and deductibles, and the formularies (the list of drugs covered) can be limited.
Of course, many retirees also have private insurance, and there are misconceptions about those plans too.
“There is an impression out there that everyone in the public service is a fat cat, that we have gold-plated benefits,” says Jean-Guy Soulière, president of the National Association of Federal Retirees (Federal Retirees).
“But our plan is middle-of-the-road and we pay for it.” (The cost-sharing ratio is currently 50:50 for retirees. Retirees used to pay 25:75 until a unilateral change in 2013 was made by the Conservative government, which the Association is challenging in a lawsuit.)
Soulière said Federal Retirees believes there should be a universal pharmacare program. “Pharmacare should be part of medicare: Drugs should be accessible and affordable for everyone,” he says.
Right now they are not. Premiums, co-pays, deductibles all stretch budgets, especially for seniors on fixed budgets. (For example, the average pension for a federal retiree is less than $30,000, and many depend on social assistance to make ends meet.)
“Right now, there are people who have to make some difficult choices: Do they pay rent and buy food or buy their medication? That’s terrible. It shouldn’t happen in Canada,” says Dr. Rita McCracken, a Vancouver family physician and researcher.
“Having a more rational approach to getting medications to people who need them is essential. A national pharmacare program is probably the best way to do that,” she says.
In recent years, there has been a flurry of studies touting the benefits of a single national program to replace the current hodge-podge of programs. They have piqued the interest of politicians and policy-makers because of the promise of significant savings, ranging from $4 billion to $10.7 billion annually.
But what has garnered a lot less attention are the policy changes needed to achieve those savings, including joint buying by all the provinces, stricter regulation of drug prices, more aggressive use of generics and a strict formulary.
Even if overall drug spending comes down, the cost to government would go up and that means higher taxes. By some estimates, a national pharmacare program would necessitate a two per cent hike in income tax rates; alternately, there could be increases in corporate taxes, payroll deductions (Employment Insurance, Canada Pension Plan, etc.) or premiums for public coverage. But that’s a tough sell, especially in an election year.
Last year, Canadians spent $34 billion on out-of-hospital prescription drug costs. Of that total, $14.5 billion was covered by public insurance, $12.1 billion by private insurance and $7.4 billion was paid out-of-pocket.
If the policy goal is to ensure everyone has drug coverage, then a single national plan is not the only option.
In fact, there are a number of different definitions of pharmacare, which are wellexplained in a report done for the Conference Board of Canada. The researchers, led by Clement, outlined five options for creating a pharmacare system.
1) Comprehensive Public Coverage
Under this model, all Canadians would have public coverage from a comprehensive formulary. This option would improve access for Canadians who are currently underinsured, but would gut private insurance plans. There would be savings overall, but a substantial increase in public spending. A transition to this model would be complicated, but result in consistent and portable coverage for patients across the country.
2) Public Coverage of Essential Medicines
A more modest version of #1, public coverage would consist of a formulary of essential medications (potentially as few as the 125 medications on the World Health Organization’s essential medicines lists) for everyone in Canada. This option would ensure access to essential medicines for everyone. Private insurance would largely remain. And there would still be a lot of people with inadequate coverage.
3) Public Coverage with Income-based Deductibles
A targeted public coverage model that provides everyone with coverage, with costs varying based on household income. This type of plan design is currently in place in several provinces, including Ontario and B.C. If a significant number of people were exempted from paying the deductibles and co-pays, it could benefit those who are currently underinsured. However, it would likely not significantly reduce overall spending on drugs.
4) Individual Mandate
This approach would require every Canadian to have either public or private insurance that meets a specified standard. Mandatory insurance would improve access to medicines for those who currently don’t have sufficient coverage, but not those with private insurance. It would result in significant differences in the level of coverage. In theory, it should not result in much of an increase in public spending, though that wasn’t the experience in Quebec, which adopted the approach two decades ago.
5) Optional Public Coverage
The existing patchwork would remain but Canadians would be given the option of purchasing public coverage. This option would not likely have much of an impact on improving access to medicines or value for money, but it could be attractive to the self-employed. It would be relatively inexpensive for the government and would be the least disruptive option to implement.
While the idea of a single national pharmacare program has dominated the public discourse, a hybrid model is far more likely to emerge. That’s because the provinces — who, constitutionally, are responsible for the delivery of health care — now run public drug programs and have made it clear they want to retain control.
Ontario and Quebec, the two most populous provinces, have essentially said a national plan is a non-starter. But if Ottawa puts forward a significant amount of money, it could buy a fair bit of co-operation from the provinces and go a long way toward filling the gaps in coverage.
Robertson says her biggest worry is not what option governments choose to pursue, but the transition to a new way of doing business.
“Seniors are the population most at risk because they are the largest users of public programs,” Robertson says.
What matters to older Canadians, she says, is not who runs their insurance program but its affordability and simplicity.
Implementing pharmacare would be the most significant change in medicare in more than half a century.
“Ideally, a pharmacare plan should be as simple as showing up at the pharmacy with your health card. But I don’t think it’s going to be that simple,” Robertson says.
“My guess is that, when all is said and done, we’ll have some kind of blended system like we have now, but with fewer gaps.”
McCracken also worries that governments won’t be able to agree on a national program, but hopes they will at least shore up public programs, especially for seniors.
“B.C. Fair Pharmacare is a pretty good program so it’s a good place to start,” she says. “My patients — even the most vulnerable ones — have a good chance of getting the drugs they need and maintaining their dignity.”
Clement says it is imperative that politicians and policy-makers find a way to agree on the best pharmacare program possible, and not let the quest for perfection be the enemy of creating a good plan. “If this window closes, I don’t think it will open again for another 20 years.”
This article appeared in the Spring 2019 issue of our in-house magazine, Sage. Please download the full issue and peruse our back issues!