Health ministers on drugs

The Globe and Mail has coverage of a new report on the cost of a national pharmacare plan. I was not able to find a copy of the report cited on the National Pharmaceuticals Strategy website. Presumably it will be posted soon.

I take issue with how this has been framed in the Globe. It is reported as something that will be prohibitively expensive but it seems to me there is a lot of context missing. First of all, it should be noted that while drug costs are the fastest growing component of health care expenditures, as a share of total expenditures they are still rather small (about 16% of total public and private health care expenditures, though only about 9% of public expenditures).

Second, the best way of getting a handle on drug costs is to have more pharmaceutical drugs covered within the public system so that there are incentives for cost control. These include: creation of a national formulary (which drugs will be covered); use of compulsary licensing for production of generic equivalents; bulk purchasing; reference-based pricing (a BC policy that covers only the lowest cost drug for drugs deemed therapeutically equivalent); and, addressing over-prescription.

Third, the article contains no baseline information. The Canadian Institute for Health Information reports in its annual Drug Expenditures in Canada publication that in 2004 Canadians spent just under $18 billion on pharmaceutical drugs, of which $8.5 billion was paid through the public sector (provincial drug plans, which differ in coverage, thus being one of the reasons to have a national plan).

Without the report in hand, it is not clear what that $10 billion represents: a net increase in the public component of $1.5 billion to $10 billion; or coverage under the public plan of all current private spending, about $10 billion in new public money. Even if the latter, this represents merely a shift in who is doing the paying. And it would appear that only the notion of a national formulary (out of the cost-saving strategies specified above) has been suggested as part of the plan, presumably because of the political clout of the big brand-name drug companies.

National drug plan could cost up to $10-billion

Globe and Mail Update

OTTAWA — The long awaited report on a National Pharmaceuticals Strategy pegs the cost of a national program for catastrophic drug coverage — drugs that place undue financial hardship on families — at as much as $10.3-billion.

Previous estimates have been as low as $1-billion but some experts say the new figures are exceedingly modest.

The report was compiled by provincial health ministers and will be released Thursday in Toronto. It was presented to a meeting of first ministers in Newfoundland this summer.

The ministers suggest that a national program to cover those medications would cost between $6.6-billion and $10.3-billion, depending on whether the percentage of costs covered by governments would rise with income and whether private insurance would pay a portion of the bill. They recommend the variable percentage option with a private payer role.

Determining how the costs will be shared will be one of the more difficult aspects of establishing a national pharmaceutical strategy. The current federal Conservative government has been so far unwilling to add more money to health care than the amount contained in the 2004 accord signed between the provinces and the previous Liberal government.

Beyond the projections for the catastrophic drug plan, however, the report which was requested two years ago when the provinces hammered out a multi-billion-dollar health funding agreement with the federal Liberal government, provides little more than general suggestions for future study and evaluation.

…The report addresses five issues that complicate the safe and equitable distribution of pharmaceuticals in Canada: paying for drugs that create undue financial hardship for Canadian families, paying for expensive drugs for rare diseases, creating a national list of drugs approved for coverage, reducing drug costs, and achieving better methods of testing for safety and effectiveness.


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