Universal drug plan could cut more than $4 billion

OTTAWA — A national, universal pharmacare program that all but eliminates all out-of-pocket expenses for Canadians who need to fill their prescriptions could slash the overall price tag for drugs in this country by more than $4 billion a year.

The parliamentary budget officer came up with that number Thursday in an analysis of the potential impact of a universal pharmacare program.

The savings would come largely from the impact of bulk purchases of drugs, allowing Health Canada to negotiate better prices for most pharmaceuticals, as well as an increase in the use of generic drugs.

However, the plan — which would replace all provincial and private drug plans — would still carry a price tag of more than $19 billion, and the federal government isn’t exactly jumping up and down with excitement to do it.

The government will analyze the report, but the current system needs work as it is before anything can be done about moving to a universal program, Bill Blair, the parliamentary secretary to the minister of health, said Thursday in question period.

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NDP health critic Don Davies said Canada is the only country that has a universal health care program without an accompanying universal pharmacare system.

Canada has some of the highest prescription drug costs in the world, outstripped among industrialized countries only by the United States and Mexico.

“The high cost of pharmaceuticals is forcing too many Canadians to choose between filling their fridge and filling their prescriptions,” Davies said in the House of Commons.

In 2015, an Angus Reid poll found almost one in four Canadians chose not to fill or renew prescriptions, or skipped doses, because of the high cost of buying medicine.

The PBO analysis found in 2015-16, about $28.5 billion was spent on pharmaceuticals in Canada, not including medicines provided to patients in hospitals. Provinces and the federal government paid for $13.1 billion of that, private insurance companies covered $10.7 billion and individual Canadians were on the hook for $4.7 billion.

Using lists of drugs covered by provincial health plans, the PBO decided about $24.6 billion would be eligible for coverage by a national pharmacare program. The rest was spent on drugs that are not currently covered.

Every province has its own list of drugs which are covered by provincial pharmacare programs and the PBO used Quebec’s list for this analysis.

Looking at the various options for cost savings, the PBO believes a national pharmacare program could have cut the annual costs of those drugs to $20.4 billion.

Under the universal pharmacare program, Ottawa would be on the hook for $20 billion of that, while individual Canadians would pay about $400 million.

The PBO says Ottawa already spent about $645 million in 2015-16 on drugs for people it has responsibility for, including First Nations, veterans, RCMP officers, members of the military, refugees and federal prisoners. So the net increased cost to Ottawa would have been $19.3 billion.

By 2021, that net increased cost would rise to $22.6 billion.

The PBO looked at the costs of a plan that would be universal for all Canadians, replace provincial and private drug plans, and significantly cut out-of-pocket drug expenses. Under such a plan, seniors, kids, pregnant women, people with disabilities and those receiving employment insurance or welfare would have no out-of-pocket expenses. Everyone else would pay a maximum of $5 for a prescription of a brand name drug. Generic drugs would be free for everyone.

Provinces, for whom prescriptions have become the second most costly part of the health budget, have been pushing Ottawa for a national pharmacare program. Prime Minister Justin Trudeau has not committed to the idea.

He has directed his health minister only to work with the provinces to increase bulk buying of drugs in order to cut costs.

“Let me make it clear,” Blair said. 

“We need to make sure Canada’s existing prescription drug system is more efficient and responsive before we can begin to discuss universal drug coverage.”

— Follow @mrabson on Twitter

Mia Rabson, The Canadian Press