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National pharmacare? Not a chance!

Canada is the only Western nation with universal health insurance that does not cover prescription drugs for all. It's widely believed that pharmacare would mean a big tax increase, but a study just published says otherwise. Just don't bet on pharmacare anytime soon.

Some politicians say pharmacare is a boondoggle the country can't afford. Now, a study just published in the Canadian Medical Association Journal proves that the government can set up a universal drug plan while not having to raise a dime in new taxes. 

The study - by researchers at UBC, Harvard and the University of Toronto - concluded (contrary to widespread belief) that over time, a universal prescription drug program would not cost us more money than we're paying now.  The result would be quite the opposite.  The study used existing data to estimate that Canadians pay roughly $22 billion a year worth of retail prescription drugs.  If Canada put all of that spending under one program with one payer, a universal drug plan would cost $7.3 billion less per year for a 32% saving in overall drug costs. A model showing the worst-case scenario showed a total saving of $4.2 billion or 19%.

The hard dollar savings would occur because of decreased costs for both brand name and generic prescription drugs through greater purchasing power and greater negotiating power of one single payer. The study assumes that Canada achieves similar pricing for prescription drugs as found in several countries that are comparable to Canada. The authors say that savings on the order of $7.3 billion or 32% would put per capita in Canada on a par with Switzerland, Austria, Spain, and Italy.  However, we would still be paying significantly more than the UK, Sweden, Finland, the Netherlands, Norway, New Zealand and Denmark. 

The authors took employee and other private drug plans into account. According to the study, the private sector in Canada - mainly employees and unions that pay for work-related drug plans - could save $8.2 billion under a universal drug plan.  Private corporations would also save the administrative cost of running a drug plan.  Tax subsidies offered to encourage companies to set up drug plans would be phased out - saving the government money.  There are spin-off health benefits that could result in even more cost savings. Studies have shown that patients with drug coverage need fewer health services. 

Still, taxpayers pay for the majority of prescriptions written in Canada.  Nine point seven billion pays for provincial drug plans, and $2.4 billion is spent on private drug plans for public sector employees.  Surprisingly, the authors say the costs savings for private coverage could be achieved with comparatively small increases in pubic sector spending.

Critics say the study is based on a simulation computer model that makes assumptions on changing patterns of drug use, product selection and prices.  If those assumptions are incorrect, it could throw the calculations off.  The authors tried to account for that by using best- and worst-case scenarios.  There is no question that universal coverage would mean that more Canadians take prescription medications than under the current patchwork system.  It's expected that greater coverage will result in a healthier population and savings in other health care costs, but that may not happen.

The book Overdiagnosed argues many people take prescription drugs they don't need (for instance - frail seniors who take cholesterol lowering drugs) and which cause them harm.  The cost of that harm needs to be factored in as well.

The study makes a strong case that Canada can and should afford a national pharmacare program.  But if you think we'll see one anytime soon, you're dreaming in HD.  The paper in CMAJ uses sound economic arguments based on credible research to conclude that Canada can save money by introducing a national pharmacare program.  But science and research won't decide; Canadians will.  In our current political climate, right or wrong, all anyone has to say is that pharmacare is a boondoggle that will be paid for with higher taxes, and most Canadians will say 'no, thanks.'

Until that changes, you can forget about pharmacare.


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