Pharmacare is in the news again. The CD Howe Institute—an important neoliberal think tank—has just released a report based on a conference it hosted on the subject. Unsurprisingly, the report advocates for a “fill-in-the-gaps” approach to prescription drug coverage. In other words, to keep our present private-public mix of drug coverage but make it a bit better.
You might have thought that organizations like CD Howe would get tired of repeating the same old myths about a fully publicly funded system. But put together a free-market institute with a bunch of conference-goers, many of them coming from the pharmaceutical and insurance industries, and this is what you get. The CD Howe Institute also doesn’t appear to have invited any of the well-known defenders of a universal public system to attend the conference that generated the report.
According to the report, a public system is “ideologically driven” whereas what the report advocates is just “a strategic focus on addressing genuine access gaps”. Every country that has universal public coverage for doctor and hospital services also provides the same type of coverage for prescription drugs—except Canada. Are the healthcare systems in countries as diverse as those in Western and Central Europe, Japan and Korea all ideologically driven?
The first of the many myths that the report perpetuates is that only 2.8 per cent of Canadians don’t have access to prescription drug coverage. That’s theoretically true, but doesn’t reflect what happens in the real world. In Nova Scotia if you pay anything less than 25 per cent of your gross family income, there’s no public coverage. In Manitoba, if your gross family income is above $75,000 annually you need to pay 7.59 per cent of your income before you qualify for coverage. Earn $75,000 and pay under $5,693 there’s no coverage.
The hoariest of myths comes near the start of the report that maintains “that private plans typically offer significantly broader formularies and faster access to innovative treatments than public programs.” As with all myths, there is a nugget of truth—but it’s a distorted truth. Private plans do cover more drugs but that’s primarily because they cover new drugs that offer little to no therapeutic benefits compared to existing treatments (but cost more).
Numerous studies, including one by me, consistently show that, at most, only about 20 per cent of new drugs offer a major therapeutic improvement. Some of these drugs are covered sooner by private plans, but one of the reasons is that drug companies delay submitting applications for recommendations for public coverage by 5.5 months more than they have to.
It’s also important to remember that relatively little is known about the safety of new drugs when they enter the market. It takes Health Canada at least two years to issue warnings about safety problems with new drugs. One of the maxims in medicine is that unless every other treatment option has failed, doctors should wait at least three years before prescribing a new medicine. Faster access doesn’t always mean better health.
One of the presentations at the CD Howe conference “emphasized superior private sector performance in program administration, citing faster listing procedures for novel medications, streamlined prior authorization processes, and enhanced customer service capabilities compared to government programs.” No evidence was cited in the report for those statements. But the presentation forgot to mention that overhead for private insurance plans is about 13 per cent compared to between two and three per cent for public plans.
The Institute describes OHIP+ (the Ontario plan that covered prescription drugs for people under 25) as having “administrative complexities during the initial rollout, including frontline provider confusion, patient coverage disruptions, and inadequate engagement with healthcare delivery stakeholders.” While there were teething problems when it was implemented, the use of IUDs and oral contraceptives increased dramatically. When the newly elected Conservatives rolled it back and opted for a fill-in-the-gaps model, the use of those types of birth control dropped for low-income women aged 15-24. There was no mention of these findings in the CD Howe report.
The Quebec model came in for considerable praise. Since 1997 Quebec has mandated that private employers who provide health benefits have to include drug coverage. Those without private coverage are insured through the public system but that includes paying premiums, monthly deductibles and coinsurance. According to the report the Quebec model “preserves universality without eliminating private coverage, allowing individuals with employer-sponsored benefits to maintain their existing arrangements while providing public coverage for those without private access.”
On some measures, such as cost-related nonadherence, Quebec does better than other provinces—but given the relatively poor coverage in other provinces that is not the right comparison. The right comparison is with countries that provide universal public coverage, and on that measure Quebec lags behind countries such as Australia, Germany, Netherlands and the United Kingdom.
Similarly, a greater percentage of people in Quebec report spending more than $1000 out-of-pocket on drugs than in any other province and total per capita spending on drugs in Quebec ($1087) is substantially higher than the average in the rest of Canada ($912) and countries with universal coverage ($826).
Finally, the report ignores two other significant benefits of a universal, public pharmacare system. First, buying for the entire population can lower the price for brand-name drugs. There are a number of reasons why Australia pays 30 per cent less for patented drugs than Canada does, but one of the main reasons is bulk buying.
In fact, a pharmacare system could improve access to drugs as federal/provincial/territorial governments take advantage of their buying power to increase access at lower prices, while at the same time giving pharmaceutical companies a guaranteed market for the life of the contract. This is how Australia significantly increased the number of people getting access to medicines to treat the hepatitis C virus at a price that was estimated to be 40 per cent lower than it otherwise would have been. The existence of the agreement between the Australian government and the companies making the drugs strongly suggests that the companies found it attractive.
The other major advantage of a pharmacare system is that it can lead to better prescribing and better drug use by patients. The more money that governments invest in paying for prescription drugs, the more likely they are to want to ensure that the public money is being used in the best possible way. That can lead them to fund programs to improve prescribing and to improve the way that patients use the drugs that they are prescribed.
Some years ago, the great Canadian health economist Bob Evans wrote “every dollar of health care expenditure is equal to a dollar of someone’s income.” There is a debate about how much a public universal pharmacare system will save, but the overwhelming consensus is that it’s less expensive than the fill-in-the-gaps approach advocated in the CD Howe Institute report.
Where does the extra cost end up? Hello pharmaceutical and insurance companies.
