The Economic Case for Universal Pharmacare
Sep 16, 2010
A new report makes yet another call for Canada to introduce a public drug insurance plan. In “The Economic Case for Universal Pharmacare," Marc-Andre Gagnon of the Canadian Centre for Policy Alternatives (CCPA) demonstrates that, contrary to accepted wisdom, such a public program could save the federal government billions of dollars.
This is certainly not the only report to call for a universal Pharmacare program. As far back as 1964 the Royal Commission on Health Services recommended that a universal drug insurance plan be established for all Canadians. In 1997 the National Health Forum recommended universal drug coverage, and in 2002 the Romanow Commission recommended “catastrophic” drug coverage as a first step towards a universal program. However, none of these calls have been heeded. And the National Pharmaceuticals Strategy of 2004 has failed to achieve even catastrophic drug coverage for Canadians.
The lack of any real enthusiasm for a universal Pharmacare program can mainly be explained by fears of the escalating costs that any such program is expected to entail. This belief has somehow become common knowledge and has been eagerly adopted in the media as well. However, as Gagnon points out, it is completely lacking in substance.
The analysis undertaken in the report indicates that the implementation of universal Pharmacare (which would include coverage for all prescription drugs), would not only make access to medicine more equitable for Canadians and contribute to improved health outcomes, but also “generate savings for all Canadians of up to $10.7 billion in prescription drugs.” This is partly attributable to the inefficiencies of private insurance coverage and the fact that private plans receive tax subsidies of about 10 percent of their expenditures. Private plans also pay more for their drugs than public ones, particularly in the case of generics, because of the superior buying power of public plans. If savings of even a fraction of this amount can be realized, it goes without saying that Canada can’t afford not to have a universal program.
Drug costs are rising faster in Canada than anywhere else in the world. In fact, Canada spent over $25 billion on prescription drugs in 2008. The cost of drugs has risen at a rate greater than 10 percent since 1985. Obviously, this accounts for a significant portion of the increasing in health expenditures around the world.
Yet with all of this money spent on drugs, Statistics Canada says that about 24 percent of Canadians have no drug coverage at all, and eight percent of Canadians said they didn’t fill a prescription in the last year because of the prohibitive cost of drugs. In the words of Gagnon, “The current system has become a jumbled assortment of public and private plans in which individual coverage is no longer based on patients’ needs, but subject to where people live and work, as well as on each person’s and family’s financial needs.”
The report concludes by stating that, not surprisingly, Canada’s pharmaceutical situation is not a good one. Many Canadians do not have equitable access to medicines, and lack of drug coverage makes some medical treatments inefficient because of the way the system is set up. The entire system is unsustainable because of one factor – the inability to control the growth of drug costs.
To read the report in its entirety and to review the various proposed options for reform, click here.
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