The state of prescription drug coverage in Canada
Prescription medicines allow millions of Canadians to prevent and fight disease, manage chronic illness, ease pain, breathe better—in other words, to live healthier and more productive lives. And yet the way Canada manages and pays for this vital part of 21st century health care is critically flawed.
Canada is the only country in the world with universal health care that does not provide universal coverage for prescription drugs. Instead, we rely on a confusing patchwork of more than 100 government-run drug insurance programs and more than 100,000 private drug insurance plans. Despite everyone’s best efforts, the system is fragmented, uneven, unequal and unfair. The result is a non-system where too many people fall through the cracks.
Not only does this lead to ill health, it also costs the health system billions of dollars in extra visits to physicians and hospitals when people’s health fails as a result of lack of access to medicines. Prescription drugs, more than ever before, offer great hope and promise. But their escalating cost is threatening the sustainability of drug programs. It’s time to take another look at how best to ensure that Canadians can have access to the full array of life-saving and life-changing drugs prescribed to them by their health care providers.
Gaps in prescription drug coverage
Despite the vast number of drug insurance plans, about 7.5 million citizens—one in five Canadians—either don’t have prescription drug insurance or have inadequate insurance to cover their medication needs. Here’s what else we’ve learned:
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Cost barriers can result in people not taking their medicine properly and poor health outcomes. A recent study found that removing out of pocket costs for medications used to treat just three diseases—diabetes, cardiovascular disease and chronic respiratory conditions—would result in 220,000 fewer visits to emergency departments and 90,000 fewer hospitalizations annually, representing potential savings of up to $1.2 billion a year.
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While about 60% of Canadians are enrolled in private drug plans, these plans cover only 36% of total system-wide spending on prescription drugs. This is partly because working Canadians are younger and healthier, requiring fewer drugs. But we are also seeing an increasing trend of private plans offloading expensive drugs onto public plans, as well as requiring employees to bear a greater share of the cost through annual and lifetime dollar limits to drug coverage.
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The nature of work is changing, with more people working part-time, contract or self-employed jobs, often without benefits. This situation disproportionately affects women, people with low incomes and young people, leaving them without drug coverage, simply because of the type of work they do.
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Patients often have to pay a portion of the cost of each prescription through copayments or coinsurance. Canadian and international research shows that direct charges to patients can result in them not taking the medication they need.
The current fragmented system of drug coverage in Canada is not only unfair, it is also inefficient and costly. Having thousands of public and private drug plans dilutes bargaining power, resulting in Canadians paying some of the highest prices for prescription drugs in the world. Prescription drug spending has been steadily climbing, from $2.6 billion in 1985 to $34 billion in 2018. This is unsustainable for governments, employers, and individual Canadians.
Implementing national pharmacare
The council’s research showed that universal pharmacare in other countries generally follows one of two approaches:
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Universal public insurance, paid by government: Australia, New Zealand and the United Kingdom all fund universal public insurance to cover the cost of prescription drugs for their citizens, without deductibles and with limited or no copayments for eligible prescription drugs.
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Statutory multi-payer insurance: In France, Germany and the Netherlands, the law requires residents to buy health insurance, including drug coverage, from insurers that are primarily not-for-profit; it must meet standards set by the government.
The council believes that Canada should implement a universal, single-payer, public pharmacare system, consistent with the principles of the Canada Health Act:
- Public administration: The program must be publicly administered, not-for-profit.
- Comprehensiveness: The program must cover all medically necessary prescription drugs.
- Universality: The program must cover all Canadian residents.
- Portability: Coverage must be portable between provinces and territories.
- Accessibility: There must be no financial or other barriers to accessing necessary prescription drugs.
Building the foundation for national pharmacare
To implement this vision, the council recommends the federal government work with provinces, territories and other partners to:
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Establish a Canadian drug agency: This arms-length organization, governed collaboratively by federal, provincial and territorial governments, would manage the national pharmacare program. Its responsibilities would include:
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Creating and managing the national formulary of covered drugs
- Negotiating prices and supply arrangements with drug manufacturers
- Providing guidance on appropriate prescribing
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Monitoring drug safety and effectiveness
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Develop a national formulary in stages: Starting in 2022, national pharmacare would cover an initial list of essential medicines, expanding to a comprehensive formulary by 2027. The formulary would be evidence-based, favoring drugs that maximize health benefits and offer good value.
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Implement a distinct process for expensive drugs for rare diseases: These high-cost, specialized drugs would have a separate assessment and funding pathway, to ensure timely and appropriate access.
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Limit patient costs through copayments: Patients would pay $2 copayments for essential medicines and $5 for other drugs, with an annual household cap of $100. Those on social assistance or disability benefits would be exempt from copayments.
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Provide transition funding for provinces and territories: To support the move to national pharmacare, the federal government should provide funding to help jurisdictions upgrade IT systems and other resources.
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Enact legislation to enshrine national pharmacare: New legislation, inspired by the Canada Health Act, would formalize the national standards, governance and funding arrangements.
The benefits of national pharmacare
The implementation of national pharmacare will deliver significant benefits for Canadians:
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Improved access to necessary medications: By removing financial barriers, everyone in Canada will be able to access the prescription drugs they need, based on their medical requirements, not their ability to pay.
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Savings for families and businesses: Canadian households will save an average of $350 per year, and businesses will save over $750 per employee annually on drug plan premiums.
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Reduced strain on the health care system: Better access to medications will lead to fewer emergency room visits and hospitalizations, saving the health care system up to $1.2 billion per year.
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Greater negotiating power and lower drug prices: As a single national purchaser, the Canadian drug agency will have the leverage to negotiate lower prices for prescription drugs.
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More consistent and evidence-based prescribing: The agency will develop national strategies to promote appropriate and consistent prescribing practices.
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Better data and monitoring: Comprehensive data on drug use and outcomes will allow for improved safety monitoring and policy decisions.
The council’s plan for national pharmacare is a bold and transformative step that will improve health outcomes, manage costs, and ensure all Canadians can access the medications they need. It’s time for Canada to join other advanced countries in providing universal public coverage for prescription drugs.
Conclusion
The implementation of national pharmacare in Canada is long overdue. The council’s proposal for a universal, single-payer, public pharmacare system, consistent with the principles of the Canada Health Act, will replace the current fragmented and inequitable system. By establishing a Canadian drug agency to manage the national program, developing an evidence-based formulary, and limiting patient costs, national pharmacare will deliver significant benefits for individual Canadians, businesses, and the health care system as a whole.
This is a national project that will change Canada for the better. It’s time to complete the unfinished business of universal health care and ensure that no Canadian goes without the medicine they need. Pharmacare for all: that’s the council’s prescription for a healthier, more equitable Canada.
