The idea of establishing a national, publicly funded, universal pharmacare program has been considered as early as the 1940s where discussions on national health insurance included coverage for pharmaceuticals. Today, proponents of a national pharmacare program point to two main drivers for such a change: to ensure all Canadians have access to medications, and to reduce the overall cost of medications.
The world is changing fast. Pharmaceutical development is no different. As a company founded on the principles of innovation and collaboration, we believe that any form of national pharmacare should ensure fair and equitable access to innovative medicines for patients who desperately need them.
What are Canadians saying?
An overwhelming number of Canadians support the concept of a national pharmacare program. However, there is little alignment on what such a program would look like and which level of government would lead its development, administration and funding. In the current context, each Canadian province, as well as the federal government, has its own form of drug coverage — each providing different forms of coverage to different groups of Canadians. In addition, there are over 100,000 private coverage plans across the country that are sponsored by employers, unions, universities, or purchased by individual Canadians.
It is clear that Canadians with private insurance are satisfied with their drug coverage and don’t see value in government spending taxpayer money to fund drugs for those already covered. Based on a recent survey, 75% of Canadians believe it is either quite or very important that “government shouldn’t spend on those who already have prescription drug coverage.” The vast majority of Canadians with private coverage are very satisfied or satisfied with the affordability of their medicines and the range of medicines covered. Although 85% have a co-payment, 91% of those people feel it is affordable or affordable enough.
Our Position on a Pharmacare Plan for the Future
As an organization, we know our mission to advance science depends on the long-term sustainability of our healthcare system, which ultimately provides patients with access to our innovations. We support a proposed pharmacare plan that maintains a public-private insurance model, while offering a form of coverage to all Canadians in a sustainable and value-based manner.
We believe that a national pharmacare program must consider the following four pillars:
1. Access for All
A pharmacare program must address the current gaps in coverage and ensure all Canadians have some form of coverage for prescription medications and that cost is not a barrier to access, particularly for those who are uninsured or underinsured. We believe that no Canadian should go without coverage for necessary medications and support a model that ensures equitable coverage for all regardless of income, age or postal code.
As part of the work undertaken by the Standing Committee on Health (HESA), the Parliamentary Budget Office (PBO) estimates that, excluding hospital expenditures, roughly $28.5 billion was spent on prescription medicines in 2015. Of this, just under half ($13.1 billion) was paid for by public insurance plans, followed by private insurance plans ($10.7 billion) and individuals ($4.7 billion). Providing coverage for all Canadians through a fully public plan would shift significant costs on to taxpayers. We believe that addressing the gaps in the system and leveraging private insurance, is the better approach to take.
2. Public-Private Model
The cost of eliminating private sector coverage will have a significant impact on taxpayers. They are also likely to receive less coverage, have fewer medicines covered and be subject to longer wait times to access drugs. The PBO report estimates the net cost to the federal government would be $19.3 billion, accounting for the $645 million the federal government already spends in direct drug spending for certain populations, as well as the $398 million in net revenues from co-payments. It is believed this cost would grow to $23.7 billion by 2020-2021.
Maintaining a public-private insurance model incentivizes competition and efficiency, while ensuring that 22.5 million Canadians with private insurance will not see a change in their coverage. Most private plans cover approximately 12,000-14,000 products, whereas most public plans cover approximately 4,000-8,000 products. Additionally, private plans typically cover newly approved medicines faster than any public plans in Canada, which benefits not only the citizen, but the public health system as a whole.
3. Innovative Medicines
Canadians should have access to new medicines as quickly as possible to help address their medical needs. A fully public pharmacare program could result in slower launch times for innovative products in Canada.
New Zealand, a country that pays notoriously low prices for pharmaceuticals and is often cited as a potential model for Canadian pharmacare, is ranked 20th out of 20 OECD countries in terms of new medicines and innovative biologics registered and launched, whereas Canada is sixth. As well, New Zealand ranks 19th in the time it takes to fund new medicines after they are approved.
Advances in treatment are tackling some of the world’s greatest public health challenges, which provide critical savings for healthcare systems by reducing the need for most costly services. A pharmacare program must not come at the expense of access to the most innovative medicines.
4. System Sustainability
Pharmaceuticals are an essential aspect of a patient’s healthcare journey and will only continue to grow in their importance to enabling sustainable healthcare. Healthcare is the single largest budget item for every province in Canada, ranging from 34.3% of total program spending in Quebec to 43.2% in Ontario in 2016. It is important to note that the cost of brand name medications in Canada is approximately 6.7% of the overall healthcare budget. This means that even if medications were free, 93.5% of healthcare budgets will still rise.
When the costs of newer, more innovative medicines are being considered, the value and overall benefit (cost-effectiveness) to the health system is considered. For example, if a new medication will cost $1 million per year, but the use of this medication will offset hospital costs by $750,000, then the ‘true’ cost to the overall system is $250,000. When looking at a long-term view of pharmaceutical funding, we must examine how costs in one area of the overall system budget will positively or negatively affect other areas of the budget.
Additionally, through public-private partnerships, industry could be a major contributor to building the necessary data infrastructure to facilitate product listing agreements, leveraging real world evidence to ensure the availability of the most appropriate treatment options for patients. By working together to build this infrastructure, we could mitigate risk for payers and provide savings to the system while getting innovative medicines to patients faster.
Our company strongly supports the implementation of a pharmacare program that addresses the significant gaps in coverage, in particular for the most vulnerable individuals in Canada – the uninsured and underinsured. As we look to the future, collaboration between governments and private industry is essential. We hope that any future model will allow Canada to maintain its position as a leading jurisdiction for access to our most innovative medicines and support continued investment and innovation across the country.
May 14, 2019