Tasha Kheiriddin: Pharmacare no panacea for health care costs; The NO side of the pharmacare argument

Posted on in General

National Post Sept 2012

Health care may have been off the political radar this summer, but this week the issue is back with a vengeance. On the same day that the federal and provincial health ministers convened for their annual meeting in St. John’s, the dependably left-wing Canadian Centre of Policy Alternatives (CCPA) released a report recommending the creation of a national universal pharmacare plan — not as a spending item, but as a means of cutting health care costs.

The CCPA report claims that such a plan would save taxpayers $10.7 billion a year — certainly music to the ears of cash-strapped politicians. However, these savings depend on several assumptions. The first is that changing Canada’s purchasing policy from its current “jumbled assortment” of private and public plans, to a centralized public bulk-buying system, would see drug prices drop by 37%. The second is that policies such as therapeutic and generic substitution automatically cut costs — and never impose them.

Even if our politicians swallow the first premise, the second should give them pause. Attempts to trim expenses through therapeutic substitution (the replacement of one drug with a cheaper equivalent) often have ended up costing taxpayers money.

This was the case in British Columbia, where in 2003 patients requiring proton pump inhibitors for acid-reflux disease were faced with a stark decision: switch to the government’s medication of choice “for free,” or shoulder the cost of their current drug themselves. A 2009 study co-authored by the Fraser Institute found that over a period of only two years, this switch actually cost the government over $43 million, due to increased drug use, doctor visits, and hospitalizations, because many patients experienced adverse effects and had to go back to their old prescriptions.

Generic substitution can pose similar problems. Recent studies have questioned the bio-equivalence of cheaper generic drugs used to treat a range of conditions, including thyroid deficiencies, depression and epilepsy, with some patients reporting increased side effects and poorer outcomes than with brand-name pharmaceuticals.

Quality control is a growing issue, as the production of generic drugs shifts from Europe and North America to China, India, and other emerging markets: In 2009, the U.S. FDA banned the import of generics from an Indian drug manufacturer due to falsified data.

Finally, when a government health plan depends on only one supplier, should that supplier encounter a production shortfall, patients will be out of medication — and out of luck.

These facts do not seem to deter provincial premiers from the lure of bulk buying power; this summer, they struck an agreement to establish a national public-sector purchasing alliance of common drugs, medical equipment and supplies, the first step to establishing a pharmacare system. The federal government’s reaction was supportive, with a spokesperson for federal Health Minister Leona Aglukkaq responding that Ottawa would be a “willing partner” in such an endeavour.

Stephen Harper and his Health Minister should tread cautiously. Canada has witnessed the results of a one-size-fits-all public health care system: rationed care, unacceptable wait times, and spiralling costs. A new bureaucracy for pharmaceuticals risks repeating this pattern. Instead of creating a state drug monopoly, the federal government should make choice a guiding principle in Canadian health care, and explore ways of cutting costs through competition, both in the public and private sector.

When it comes to their health, it’s not Big Pharma, but Big Brother, that Canadians have to fear.

National Post