National Post | July 6, 2011 7:30 AM ET
By Mark Rovere
There has been much discussion in the past 10 years about whether Canada needs a national Pharmacare plan. Unfortunately, the plan is driven by ideology as opposed to common sense. While reform of provincial drug plans is necessary, a national government plan will only exacerbate the current situation, where millions of Canadians cannot access the medicines they need.
Merging Canada’s provincial drug programs into one mega Ottawa-run program will only increase the politicization of drug availability. Existing budget constraints and arbitrary decisions about which drugs are made available will multiply. Consequently, Canadians will have less, not more, access to the latest ground-breaking drugs.
If Canadians want quick access to the newest prescription drugs approved by Health Canada, the optimal solution is to get governments out of the drug insurance business and allow the private sector to provide this service. This could be achieved by replacing existing government drug plans with a regulated, competitive, private-sector market, in which universal access to catastrophic drug insurance is facilitated through means-tested subsidies for people with low incomes.
The Fraser Institute’s most recent study on access to new drugs in Canada shows that compared to private insurance plans, provincial public drug plans refuse to pay for most new drugs certified by Health Canada. Of the new drugs approved by Health Canada each year from 2004 to 2009, the average coverage rate across provincial public drug programs was less than 23 per cent as of June 9, 2011. That compares to almost 83 per cent under private drug plans over the same period.
Furthermore, when drug coverage between public and private drug plans was compared, private plans cover new drugs far more rapidly. As of early June this year, averaged across all provinces, public drug plans took 488 days to approve 26 of the 50 new drugs that were certified by Health Canada in 2006. By comparison, over the same period, private plans took about half that time — 247 days on average — to cover the same drugs.
Under these circumstances, it is clear that private drug plans in Canada are far more generous than public plans. This should come as no surprise since provinces are faced with political pressures and budget constraints due to unsustainable health care costs. Cost containment policies such as denying coverage for the newest prescription drugs are common among all provincial drug plans. Importantly, there is no reason to assume that a national drug plan administered by the federal government would be any different.
Another false assumption that cannot be overlooked is the fact that most people do not require public assistance to pay for their prescription drugs. Research shows that between 1997 and 2002, only three per cent of Canadian households spent more than five per cent of their annual income on prescription drugs.
There is also a common misconception that all seniors require financial assistance to help pay for their medicine. However, most seniors spend only a small amount of their after-tax income on drugs costs. It is therefore unreasonable to provide public drug coverage based on age alone, which is common among a number of provincial plans. Instead, government subsidies should be provided to those with catastrophic drug costs relative to their income regardless of age. It makes no sense to subsidize seniors with several million dollars in assets, while low-income families struggle to pay for their prescription drugs.
Most Canadians likely agree that our public drug plans are in need of serious reform. But instead of wasting time and money trying to improve them, it’s time for governments to re-think their role: get out of the business of drug insurance, target subsidies to those who need help to pay their drug costs, and allow a competitive private sector to quickly introduce new drugs and rapidly respond to patient need.
Mark Rovere is associate director of health policy studies at the Fraser Institute.