In February 2024, the government of Canada introduced C-64, the Pharmacare Act, a plan for the first phase of national universal pharmacare in Canada, and described the strategy to work with provinces and territories to provide universal, single-payer coverage for diabetes medications and several contraceptives. While advocates claim the Pharmacare Act is a concrete step towards a national pharmacare program that will build a stronger health-care system, an examination of the implications of such a plan reveals concerning consequences for the health of Canadian patients.
Bill C-64 would admittedly benefit some Canadians, but at what cost? And to whom? Responsible policymaking must consider all tradeoffs to all stakeholders in determining the value of new programs. The Pharmacare Act does address a pressing problem of access—2.8 percent of Canadians, 1.1 million people, are not eligible for any kind of drug insurance. The Bill would remedy this providing universality in the provision of the program and enhancing equity. In addition, the plan seeks to contain the costs of medicines, making them more affordable. Arguably, this would increase patient adherence to medication regimes, reducing cost-related non-adherence.
These are worthy objectives, but they must be reconciled with the inevitable tradeoffs. An assessment of the realities of the Pharmacare Act suggests that the costs will be too high. Fundamentally, pharmacare, like all health-care programs, aims to balance access and affordability—timely access to breakthrough medicines at affordable prices. Unfortunately, within this program, Canadians may sacrifice both.
First, there is evidence that the Pharmacare Act will lead to longer launch times, delaying access to life-saving medicines. Shifting Canadians to a public option will restrict access since public plans require more than two years on average to cover new medicines, if they cover them at all, relative to just 226 days for private plans. In addition, patients will have fewer drugs to choose from as drugs are removed from the formulary, to the extent that 2 million Canadians may need to switch treatments. Since the federal plan will cover a mere fraction of the drugs currently available to Canadian patients, access to familiar treatments is in jeopardy, forcing patients to switch treatments.
Second, in addition to delayed access, some drugs may never be covered. In the years between 2018 and 2022, Canadian public plans covered an average of 18 percent of new medicines, compared to 64 percent for private plans.
The challenges of access may also translate into drug rationing. It is essential to recognize that such programs keep spending in check by rationing access to new drugs, rather than by being more efficient. Rationing is frequently required when drugs are in short supply and unavailable. Drug shortages are an increasingly prevalent problem in Canada, one that is likely to worsen with the adoption of a national pharmacare program. This would be especially true if a sole tendering process was put into place.
Cost-containment strategies—like those that will be implemented under a pharmacare program—generally limit patient (and physician) choice, restrict access, ration drugs and therapies, and reduce treatment effectiveness. The result is poorer health outcomes, sometimes due to a lack of substitutes. Incremental innovation and follow-on improvements to existing therapies provide physicians with the flexibility to tailor treatments to the individual needs of diverse patients with precision. Within the same drug class, therapeutic alternatives may differ in their metabolism, molecule, regimen, dosing schedules, speed of action, delivery system, adverse effects, therapeutic profile, and/or interactions.
In addition, “incremental innovation increases the number of available dosing options, uncovers new physiological interactions of known medicines, encourages children’s compliance through reformulations, increases the shelf-life or heat-stability of a given medicine to ensure effectiveness in diverse environments, expands the number of treatment options available, improves patient administration, allows for the elimination or treatment-limiting drug reactions or side effects, and offers significant options to patients with different physiologic and pathophysiologic status.”
Beyond concerns about access, the Pharmacare Act also raises concerns about affordability. Under such a program, the prices of generic drugs and incremental innovations are likely to rise to higher value-based pricing. An examination of cost considerations must also be broadened to encompass costs across the entire health-care system, since restricted access and reduced spending on biopharmaceuticals may also lead to increased costs in other areas of the health-care system, such as hospitalizations.
Minister of Health Mark Holland speaks about new national pharmacare legislation during a press conference in Ottawa on Thursday, Feb. 29, 2024. Patrick Doyle/The Canadian Press.
The pharmacare program may fail to provide the treatments patients need, resulting in higher costs in other health-care sectors. “For example, denying patients the benefits of newer, more effective drugs for cardiovascular diseases, diabetes and cancer could lead to an increased risk of hospitalization. In which case, the cost to the healthcare system would be much greater than the drug savings and the patient’s quality of life, and perhaps its extent, would be negatively impacted.”Rawson, Nigel S. B. (2016). How Might the Choice of Prescription Drugs in Provincial Public Insurance Plans be Impacted if a Cost-Control System Like New Zealand’s Was Adopted in Canada? Canadian Health Policy 26.
In addition, it is essential to acknowledge the cost burden to Canadian taxpayers. Although it is only a small fraction of Canadians who lack prescription drug coverage, all Canadians will foot the bill for pharmacare. That is, taxpayers will be expected to cover the extraordinary expense, estimated to be nearly $40 billion per year. Importantly, these increased taxes also generate deadweight losses that are not created by insurance premiums. Adding insult to injury, the 25 million Canadians who have private drug insurance will see their coverage dismantled.
Finally, consideration must be given to the Canadian biopharmaceutical industry. An examination of the experience of New Zealand reveals that their pharmacare tendering process cut so far into profits that some pharmaceutical companies left the country, while others downsized and some cut back the levels of medicines kept in stock, exacerbating shortages and rationing. These departures have subsequent consequences that ripple through the economy. First, the impact on the industry translates directly into the loss of Canadian jobs—skilled, well-compensated jobs. In addition, there will be a reduction in investment in biopharmaceutical innovation, resulting in the development of fewer treatments and cures, by and for Canadians.
No one can argue that people should not have to choose between paying for their medications and putting food on the table. For the small percentage of Canadians who are uninsured or underinsured this is a pressing problem. However, the Pharmacare Act is the wrong solution for this problem. Quite simply, to remedy a problem that impacts 2.8 percent of Canadians, the Pharmacare Act would dismantle prescription drug coverage programs that serve 97.2 percent of Canadians, programs that they are overwhelmingly satisfied with.
Better solutions are available: solutions that preserve choice, that preserve access, and result in lower costs for Canadian taxpayers. By targeting measures to the 2.8 percent of Canadians who lack coverage, the government could effectively and equitably address this problem. This would be an approach similar to that taken with dental care. The government should adopt a more pragmatic approach to ensure coverage for everyone while providing all Canadians with expedited access to a wider range of life-saving and life-enhancing treatments and therapies.
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