Pharmacare will shift $25.5 billion off the provinces and the private sector onto the federal budget, including $13.2 billion in new costs for taxpayers, while forcing 24 million Canadians with private drug plans to accept the inferior coverage provided by public drug plans

TORONTO, Sept. 28, 2015 /CNW/ - New research suggests that a national single-payer Pharmacare program is unnecessary and will be costly for Canadian patients and taxpayers. The study was published at Canadian Health Policy the online journal of Canadian Health Policy Institute (CHPI).

Since 2013, several academics, activist groups and unions have been vigorously advocating for the establishment of Pharmacare. Several papers have been published that advocate for Pharmacare. Most recently, the Canadian Medical Association Journal published a study (Morgan et al 2015) that estimated the cost of establishing Pharmacare.  

Pharmacare is proposed as a national universal publicly-funded single-payer system that would entirely replace Canada's current pluralistic system of federal-provincial-territorial publicly-funded drug plans, and employment-based private drug plans. Pharmacare advocates infer that this will be either a federal program or a federal-provincial-territorial intergovernmental cooperative program in order to achieve national scale and standards.

"Pharmacare advocates propose to establish a government-run monopoly over drug insurance," said Dr. Brett J Skinner lead author of the report. "Our study examined what that will mean for patients and taxpayers."

According to co-author Kimberley Tran, "We asked several important questions about Pharmacare that have not been adequately addressed by its advocates like, how many Canadians are insured, uninsured and under-insured for their prescription drugs? How will access to prescription drugs be affected and what are the health implications for patients? Under realistic assumptions, how much cost will be shifted from private plans onto taxpayers? What are the indirect economic costs from a government take-over of private insurance? How do other countries achieve universal drug insurance coverage?"

The CHPI study examined the evidence and concluded that there are at least four reasons why Canadians should be skeptical about Pharmacare.

Fist, according to the study, Canada's actual experience with public drug plans strongly suggests that Pharmacare will reduce access to the most innovative medicines for the 24 million Canadians who currently have employment based private drug plans, without improving benefits for the 11 million Canadians who are currently eligible for public drug plans.

"Forcing 24 million Canadians with private drug plans to accept the inferior coverage provided by public drug plans could have profound health and economic implications," said Dr. Skinner.

Second, assuming realistic prices and no changes to the drug benefits currently enjoyed by Canadians, the study calculated that Pharmacare will shift $13.2 billion in direct prescription drugs related costs onto taxpayers. If implemented entirely as a centralized federal program, Pharmacare would shift $25.5 billion off the provinces and the private sector onto the federal budget. In both cases, additional indirect economic costs resulting from the government take-over of the private drug insurance industry could total at least $4.1 billion in the first year.

Third, the study argues that a government monopoly is not needed to achieve universal drug insurance coverage: under the current pluralistic public-private system, Canada already has universal drug insurance coverage for catastrophic expenses, and near universal insurance coverage for ordinary prescription drug costs. Neither is a centralized national program needed:  provincial/territorial/federal governments already have the authority to autonomously implement any kind of drug insurance system they wish within their respective jurisdictions.

Fourth, the study suggests that international experience proves there are other ways to achieve universal drug insurance coverage. Several advanced countries have mandatory universal private drug insurance systems supported by means tested public subsidies. Some aspects of Quebec's drug insurance system are similar to these countries and Quebec has consistently provided the best access to innovative prescription drugs among all of Canada's publicly funded drug plans.

According to Dr. Skinner, "The evidence suggests that the real problem with drug insurance in Canada is that existing public drug plans are grossly under-insuring patients compared to the coverage provided by private insurance plans. Public drug plans simply provide much fewer treatment options for patients, leaving 11 million Canadians with uninsured drug costs whenever their prescribed and preferred treatments are not covered under the public plan."

Ms. Tran summed up the study's recommendations by saying, "drug insurance reforms should focus on helping more Canadians gain the health advantages of the better coverage offered by private drug plans. We can learn a lot from mandatory universal private health insurance systems in other countries. In the meantime, governments should work to improve coverage for new medicines across existing public drug plans in Canada to match the patient health options provided by private drug insurance plans."

Get the Study
The study, Pharmacare: what are the costs for patients and taxpayers? It was authored by Brett J Skinner (Ph.D.), Mark Rovere (Ph.D. candidate), Neil Mohindra (M.B.A.), and Kimberley Tran (M.A.). It is available online at: www.canadianhealthpolicy.com or www.chpi.ca.  

About CHPI
CHPI is a crowd-funded, consumer-driven, independent think-tank dedicated to conducting, publishing and communicating evidence-based research on the health system performance and health policy issues that are important to Canadians. 

SOURCE Canadian Health Policy Institute

Kimberley Tran, Economist and Media Spokesperson, CHPI. Email: [email protected], Managing Editor, CHPI. Email: [email protected]