Preliminary Report Released Examines Pharmacare Models

Single-payer universal model underestimates costs to taxpayers by billions

January 19, 2016 (Ottawa): As Ministers of Health from across the country prepare to gather for their pan-Canadian meeting, the Canadian Pharmacists Association (CPhA) has released the preliminary results of a study – one that delves deeper into the costs and other considerations associated with various pharmacare models, including universal pharmacare. 

The study was commissioned by CPhA and conducted by PDCI Market Access (PDCI), Canada’s leading pharmaceutical pricing and reimbursement consultancy, authored by pharmaceutical pricing and reimbursement expert and PDCI President Neil Palmer.

“There are several approaches for extending drug coverage to Canadians with inadequate prescription drug coverage,” says Palmer. “While all options have costs and benefits, a single public payer national pharmacare program would likely incur significant public costs for limited net benefits to Canadians, based on our research to date.”   

The PDCI interim analysis concluded that the universal pharmacare model proposed in a recent national study significantly underestimates costs to taxpayers – actual costs are likely closer to $6.6 billion rather than the $1 billion increase suggested by the model. Furthermore, overall net expenditures would decrease by approximately $1.6 billion – significantly less than the estimated $7.3 billion decrease in expenditures proposed in the universal pharmacare model.

In addition, the analysis identifies other consequences associated with a single public payer national pharmacare program, including a significant reduction in the number of drugs covered, longer wait times for reimbursement for new drugs, and reduced incentives for manufacturers to bring innovative medicines to Canada.

CPhA hopes these important findings will ensure Canadians have the facts to make an informed decision on the issues around prescription drug costs and access and will open the door to a thorough exploration of a variety of pharmacare models worth consideration.

“As the front line health care professionals responsible for delivering medications to patients, pharmacists care first and foremost about the health and welfare of Canadians,” says CPhA Chair Carlo Berardi. “That’s why we’re calling for a national discussion on pan-Canadian pharmacare models. We’re not for, nor are we against, any particular model – we simply want Canadians to inform themselves so we as a society can have a balanced conversation.”

CPhA believes all Canadians should be able to access medically necessary medications, regardless of income. In a national survey conducted last year by Abacus Data for CPhA, 79% of Canadians support the idea of a pan-Canadian pharmacare program, however, they are concerned about limiting choice, administration and costs.

While universal pharmacare may be an option for Canada, CPhA feels that, so far, one model has dominated the national conversation and has ignored all other possibilities – which can only be to the detriment of patients. CPhA welcomes a constructive debate about the options to achieve this goal – it’s the only way Canadians can hope to move toward realistic, practical, and implementable change for better health outcomes.

PDCI’s findings will be released in two phases: the first, released today, is a preliminary  assessment of a national pharmacare model (i.e. universal pharmacare) and its estimated costs. The second report, which is due at the end of February, will provide a summary of the cost estimates for several additional proposed pharmacare models.

A backgrounder on the report findings follows.

About the Canadian Pharmacists Association

The Canadian Pharmacists Association (CPhA) is the uniting national voice of pharmacy and the pharmacist profession in Canada. As pharmacists undertake an enhanced role in the delivery of health care services, CPhA ensures that the profession is recognized as a national leader in health care, influencing the policies, programs, budgets and initiatives affecting the profession and the health of Canadians. More information is available at www.pharmacists.ca.

To arrange interviews, please contact:

Mark McCondach
Director, Communications
Canadian Pharmacists Association
613-523-7877 ext. 285
mmccondach@pharmacists.ca

 

Backgrounder

“Pharmacare Costing in Canada Preliminary Report: Assessment of the National Pharmacare Model Cost Estimate Study”

This Preliminary Report was conducted by PDCI Market Access (PDCI), a leading pharmaceutical pricing and reimbursement consultancy firm, located in Ottawa/Toronto. PDCI is led by President Neil Palmer, who also lectures on comparative international health care systems at the USC Pharmacy School program in Health Care Decision Analysis.  He was previously with the Patented Medicine Prices Review Board (PMPRB) and the Health Division of Statistics Canada.

Key findings of the Preliminary Report’s analysis of a proposed national pharmacare model include:

• Potential savings attainable from the proposed program are overstated – actual costs to governments and taxpayers are likely closer to $6.6 billion rather than $1 billion.
• Overall net expenditures would decrease by approximately $1.6 billion – significantly less than the estimate of $7.3 billion proposed by a national pharmacare model.
  • This figure includes changes in expenditures to both private and public plans (whereas private plans will be eliminated, public spending will increase).
    • Previous estimates of savings were based on the differential between drug prices in the UK and prices in Canada. Those figures have seen that differential narrow significantly due to fluctuating exchange rates.
    • Previous estimates also assume that public sector unions will be willing to lose the value of private coverage without requesting that compensation be made up for elsewhere in their contracts. The PDCI estimate does not make this assumption, instead choosing to keep overall contract values consistent.
• Potential savings to private sector employers (who no longer have to pay for private drug insurance for employees) but may be offset by increased benefits elsewhere in unionized organizations.

• Significant reduction in the number of drugs covered (more than 2500 individual drug products or DINs)
  • According to a different study, between 2004 and 2010 public coverage was expanded to include 23 per cent of new, Health Canada approved drugs. In contrast, private sector plans covered 84 per cent of new approved drugs in that same timeframe.
• Longer time to reimbursement for covered drugs.
• Reducing incentives for manufacturers to bring innovative medicines to Canada.
• Elimination of the private drug insurance, with resultant job losses.

• Legislative and administrative barriers make implementation unlikely.