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Is It Time for a Universal Drug Plan?

Canadians could save billions through a nationwide plan to cover prescription drugs for all citizens

Most Canadians have come to think  very highly of their universal health-care system since it was established nationwide almost 50 years ago. But for all its benefits, it doesn’t cover every health-related cost: medications outside hospital, for example, are exempt. Why? The commonly cited reason is that they would be too costly to include. But a study involving U of T researchers suggests a nationwide “pharmacare” program could save Canadians billions of dollars, without costing governments much more, if anything.

“In many of the scenarios that we modelled, universal pharmacare was cost-saving or cost-neutral for governments. This goes against current thinking that a universal program will cost a lot more,” says Dr. Danielle Martin, one of the authors of the study, published in the Canadian Medical Association Journal.

Canada is the only developed country with universal health insurance that does not also offer universal prescription drug coverage, explains Martin, a professor in the depart- ment of family and community medicine and vice-president of medical affairs and health systems solutions at Women’s College Hospital.

The study, led by University of British Columbia researcher Steve Morgan and co-authored by Martin, modelled costs based on data describing $22.3 billion worth of retail prescription drug purchases in the fiscal year 2012-13. The researchers created three scenarios for a universal public drug plan: best- and worst-case, and a “base” scenario, which is the expected outcome.

They found that most prescriptions are already paid for by government, through tax revenues, with $9.7 billion spent directly on public drug plans and $2.4 billion spent on private drug plans for public-sector employees. Private-sector spending on private insurance plans currently accounts for $5.7 billion, and uninsured patients pay $4.5 billion out-of-pocket for prescriptions they fill.

If Canada could negotiate lower prices for drugs (comparable to the prices researchers found in several peer countries) and raise the rate of generic drug use to that seen in some provincial drug plans, a universal public drug plan would reduce total spending on prescription drugs in Canada by $7.3 billion per year, or 32 per cent, according to the study.

These cost savings would be due to economies of scale in drug price negotiations and better product selection, taking into account a small increase in costs from greater use by people who were uninsured. These savings, the authors said, would be beneficial in a multitude of ways. For instance, Canadian governments could spend more on health sciences and on research into new drugs, an area in which the country currently invests little. “Better access to medically necessary prescription drugs and improved quality of care go hand in hand with these significant cost savings,” says Martin.

Drug costs are rising quickly, but these costs are being driven up mostly by high prices for new classes of drugs, such as biologics (drugs synthesized from biological sources) and cancer therapies. Martin notes that a nationwide, universal pharmacare program would position Canada to negotiate better prices in the future for these expensive treatments.

“While we shouldn’t sugar-coat the pressures that will be put on any payer for drugs in the future, if more and more expensive drugs come on to the market,” she says, “there’s no doubt that the best way to be ready and to respond is going to be under a single-payer program.”

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