Skip to content

The Monitor Progressive news, views and ideas

Budget 2019: A small step on the long road to national pharmacare

March 21, 2019

3-minute read

For many observers,  incremental change has come to define the federal government’s approach to policy change. With the release of this week’s federal budget, it is clear that national drug coverage is no exception to this rule.

One year ago, as part of Budget 2018, Bill Morneau heralded the creation of an Advisory Council on the Implementation of National Pharmacare. Led by former Ontario Minister of Health, Eric Hoskins, the Council was tasked to advise the Minister of Health and the Minister of Finance on just how to implement national pharmacare. Earlier this month, an interim report was released by the council, laying out some preliminary steps towards such an implementation. Budget 2019 has largely backed those early recommendations with funding.

In the interim report, the Council called for the creation of a national drug agency; the development of a comprehensive, evidence-based national formulary; and an investment in drug data and information technology systems. These three recommendations were offered as the foundational elements of a national pharmacare plan.

Budget 2019 includes a $35 million investment in the creation of the Canadian Drug Agency, which will be tasked to a create an evidence-based list or formulary of prescribed drugs, as well as negotiate prescription drug prices on behalf of the public. Given the scope of the budget, the investment is relatively modest, likely because much of the infrastructure to do this currently exists.

For example, the heavy lifting on evidence-based evaluations of new drugs is largely done by the Canadian Agency for Drugs and Technologies in Health (CADTH). CADTH is an independent not-for-profit organization jointly funded by federal and provincial governments.  As a part of their mandate, CADTH evaluates clinical, economic, and patient-oriented evidence on drugs. These evaluations are used by public drug plans across the country to determine what drugs are worth paying for, and which aren’t. Notably, there is little pick-up of these recommendations by drug plans administered through private insurance companies.

On the issue of pooled negotiations with pharma, the Canadian Drug Agency will likely build on the foundation established by the Pan-Canadian Pharmaceutical Alliance (PCPA).  Founded in 2010, the PCPA already conducts joint provincial/territorial/federal negotiations for brand name and generic drugs on behalf of publicly funded drug programs. Created in-part to help level the playing field with pharma, the PCPA began joint negotiations for a limited list of 6 medications. Today, that list is 60. With the hundreds of drugs currently being paid for by public drug plans, this is still certainly modest.

We don’t yet know when the Canadian Drug Agency will be created, or what it will look like, but it may be able to catalyze the work of CADTH and the PCPA as it aligns evidence-based decision making with drug purchasing decisions and negotiations.

It is important to note that though this announcement is promising,  it does not increase access to prescription drugs for people in Canada. At best, it can be seen as the beginning of a much broader wave of health care reforms. The big question of whether Canada’s approach to national pharmacare will be a single-payer or multi-payer system remains unanswered. We won’t hear more from the federal government’s Advisory Council on this question until it presents its final report in June of 2019.

What we do know from both peer-reviewed medical literature and the Parliamentary Budget Office (PBO),  is the superiority of a universal public plan over a “fill the gaps” approach. According to the PBO, universal public pharmacare would improve access to live-saving prescription drugs, while also reducing spending by 4 billion dollars. Other research has found that adopting the best practices from around the world would result in savings of 4 billion to 7 billion dollars. In contrast, in 1997, Quebec adopted a mixed public-private ‘fill-the-gaps’ approach to drug coverage. Now, Quebecers have amongst the highest per-capita drug spending in the country.

While we wait for the big question of a single vs multi-payer program to be answered, we can expect plenty of backlash from insurance companies and the pharma industry. They will continue to fight back against any measures that reduce their market share, their prices, or their profits.

Health care reformers will need to hold the government’s feet to the fire. In this journey of incremental reform, they have backed off on price reforms before. Budget 2019’s commitment to fair and affordable drug access for all, regardless of region or income, should not suffer the same fate.

Dr. Danyaal Raza is an Assistant Professor with the Department of Family & Community Medicine at the University of Toronto. He is also the Chair of Canadian Doctors for Medicare. You can follow him on twitter at @DanyaalRaza

Topics addressed in this article

Related Articles

Canada’s fight against inflation: Bank of Canada could induce a recession

History tells us that the Bank of Canada has a 0% success rate in fighting inflation by quickly raising interest rates. If a pilot told me that they’d only ever attempted a particular landing three times in the past 60 years with a 0% success rate, that’s not a plane I’d want to be on. Unfortunately, that looks likes the plane all Canadians are on now.

Non-viable businesses need an"off-ramp"

Throughout the pandemic, many small- and medium-sized businesses have weathered the storm, thanks to federal government help. In his deputation to Canada's federal Industry Committee, David Macdonald says it's time to give those businesses an "off-ramp".

Truth bomb: Corporate sector winning the economic recovery lottery; workers falling behind

This isn’t a workers’ wage-led recovery; in fact, inflation is eating into workers’ wages, diminishing their ability to recover from the pandemic recession. Corporate profits are capturing more economic growth than in any previous recession recovery period over the past 50 years.