Dr. Steven Morgan (Professor, School of Population and Public Health, University of British Columbia, As an Individual):
Good afternoon. Thank you for having me here today.
By way of introduction, I am Steve Morgan. I am a tenured full professor at the University of British Columbia. Over the past 20 years, I have published 105 peer-reviewed pharmaceutical policy research studies and 43 reports on pharmaceutical policy for governments, research centres, and think tanks in Canada and abroad.
My remarks today draw on that research and on the years of research and consultations that went into the production of the report “Pharmacare 2020: The Future of Drug Coverage in Canada”, which was published last summer. That report provides a clear, principled, and evidence-based vision of what pharmacare should be for Canada.
Specifically, it recommends that federal, provincial, and territorial governments work together to implement a universal public pharmacare program that has a predefined and transparent budget with which prescription drugs of proven value for money, from a public health care system perspective, are made available to all Canadians at little or no direct cost to patients.
The “Pharmacare 2020” recommendations have been reviewed and endorsed by 281 of Canada's leading university-affiliated experts in health care policy and clinical practice, including 12 members of the Order of Canada. I say this to assure the members of this committee that those recommendations are rigorous, credible, and widely respected by disinterested experts from across Canada.
The first point I'd like to make in my remarks today is that such a model of pharmacare is an essential yet missing component of Canada's universal health care system.
The United Nations and the World Health Organization have declared that health is a fundamental right and, as a consequence, that all governments are responsible to ensure their citizens have access to necessary health care, including medically necessary prescription drugs. All member states of the United Nations, including Canada, have effectively ratified several declarations to that effect over the past 30 years.
Consistent with those recommendations, nearly every developed country has achieved universal health coverage, and every developed country with such coverage also provides universal coverage for prescription drugs, all such countries with the exception of Canada, that is.
Canadian medicare, our public system that provides universal equitable access to medically necessary hospital and physician services, effectively ends as soon as a patient is handed a prescription to fill. From there, the drug coverage in Canada is an uncoordinated and incomplete patchwork of private and public drug plans. Approximately 10% of Canadians have no drug coverage at all. A further 11% have ineffective drug coverage involving high deductibles and co-insurance that imposes ongoing financial burdens and creates known barriers to accessing necessary medicines.
A 2015 survey by the Angus Reid Institute found that more than one in five Canadians report that they or members of their households have not taken medicines as prescribed because of costs. Almost one-third of working-age Canadians report such barriers for themselves and for their family members.
This was not supposed to be the case. On clinical, ethical, and economic grounds, comprehensive public drug coverage has been recommended by national commissions on the health care system in Canada dating as far back as the 1960s. Twenty years ago, the National Forum on Health recommended that Canada establish a universal public pharmacare system just like medicare.
Government did not act on this recommendation. At a 1998 national conference on pharmacare, the then health minister, Allan Rock, summarized his government's thinking by saying:
||In an ideal world, were the slate clean and money not a factor, few would doubt that a first dollar publicly-funded, single payer...system would be the best outcome. It would be the least expensive to society as a whole. And it would be the most fair. It would also follow through on the original recommendation of Emmett Hall's 1964 Commission on Health Care: namely, that the national plan be expanded, over time, to include, among other things, prescription drugs. But, we do not, of course, live in an ideal world, with that clean slate and unlimited money.
Thus, despite the government's acknowledgement that a public pharmacare system would be better, fairer, and less costly overall, Canadians were told that a private-public mix of insurance would have to suffice. Things did not get better. Just five years later, the 2002 Romanow commission called once again for pharmacare.
Romanow specifically recommended that the federal, provincial, and territorial governments begin work immediately to specifically bring carefully selected medicines into Canada's universal first-dollar public health care system. But once again, policy-makers argued that government couldn't or shouldn't act on those recommendations. Over the years that followed, we were told that the private and public mix of drug plans would be fine, because governments would offer catastrophic coverage for all Canadians. Yet, contrary to those assurances, access barriers have remained and drug costs have increased substantially, despite having catastrophic coverage in almost all Canadian provinces.
Our lack of action on comprehensive public pharmacare is unacceptable and, to be perfectly clear, Canadians are literally dying as a result. A 2012 study by researchers at the University of Toronto estimated that in Ontario alone, over 700 diabetic patients under the age of 65 died prematurely each year between 2002 and 2008 because of inequitable access to essential prescription drugs. If those numbers are correct, that is like a plane full of Canadians crashing every year, perhaps every month, while governments refuse to take action because of concerns about costs and politics.
This brings me to my second message today. Universal public pharmacare is the economically responsible thing to do on behalf of Canadians. The existing private-public mix of pharmaceutical insurance in Canada fails because it is neither universal nor integrated with the rest of our public health care system.
No country with a universal public health care system finances its system of universal drug coverage through a separate private insurance system. The reason is simple. In countries with publicly managed health care, including Canada, universal public drug coverage allows for prudent expenditure management at a societal and health system level. Such integration of systems consolidates purchasing power and best aligns the incentives of providers and managers of health care by integrating the management of pharmaceuticals with the management of other components of the health care system. Countries that do this achieve far better access to medicines than any province in Canada does today, and they do so at considerably lower costs.
Canada spends 30% to 50% more on pharmaceuticals than 24 of the OECD countries, including many with health care systems comparable to ours. These other systems achieve pharmaceutical savings through more cost-effective medicine use and greater purchasing power, which translates to lower prices.
Though provinces have done well to coordinate their pharmaceutical price negotiations in recent years, provincial drug plans are far from having the power of a single-payer system. A universal public pharmacare program would dramatically increase Canada's purchasing power in the global market for pharmaceuticals and enable careful evidence-based selection of medicines by system managers, prescribers, and patients. Credible estimates based on conservative assumptions about policy outcomes indicate that this would save Canada approximately $7 billion per year.
This brings me to my third and final message for you today, and that is that the transformative change that is required in Canadian pharmacare depends on federal involvement and financial contributions. This is a familiar story in Canadian health care policy. Every major stage of Canada's universal medicare system was brought about through federal cost-sharing that helped provinces to afford the changes needed and helped provinces to overcome political opposition that stood in the way of progress. Pharmacare will be no different.
On their own, provinces may not have the resources or purchasing power needed to implement the prudent pharmacare system. Regardless of size, all provinces will certainly need help to overcome the predictable opposition that comes from select industries that profit from the private-public mix of drug plans in our system and the resulting high prices for medicines in this country. As they have repeatedly done in the past, pharmaceutical sector interests will oppose a universal public pharmacare program, because such a system will almost certainly achieve better outcomes at, importantly, lower costs.
The pharmacare reforms that Canada needs, therefore, require the truest test of political leadership: ability to champion the legitimate but diffuse interests of ordinary Canadians, dare I say middle-class Canadians, over the concentrated and thus powerful interests of specific actors. This is not to say that governments that take action won't find support from the Canadian public. On the contrary, the 2015 Angus Reid Institute survey mentioned earlier found that 87% of Canadians support adding prescription medicines to our publicly funded Canadian medicare system.
I will conclude by noting that it is important for this committee, indeed this government right up to the Prime Minister, to realize that now is the time for pharmacare reform. Canadians have been waiting for pharmacare since it was first recommended in the 1960s. Evidence suggests that decisions not to implement universal public pharmacare is costing us billions of dollars, and worst of all, hundreds of lives every year.
Unlike past eras when pharmacare was on the policy agenda, there is currently political alignment of a majority of governments across Canada that would support the broad goals and objectives of pharmacare reform. Such policy alignment is a once-in-a-generation opportunity for Canadians, and it may not be present by the next time a federal election comes around. Thus, now is the time for action. Now is a once-in-a-lifetime opportunity for political leaders wishing to leave a lasting positive legacy in the Canadian health care system.
With that, I would note that I wish your committee well as you study this issue and contribute to such a positive legacy for all Canadians.
Dr. Danielle Martin (Vice-President, Medical Affairs & Health System Solutions, Women's College Hospital):
Good afternoon and thank you so much for inviting me to join you.
My name is Danielle Martin. I am a practising family physician and I'm also a hospital administrator. I'm the vice-president of medical affairs and health systems solutions at Women's College Hospital in Toronto. I'm also an assistant professor at the University of Toronto.
I want to speak to you today mostly as a practising family doctor, but also as someone who is trying to help run a hospital and organization in the Canadian health care system, someone who is working to try to make care better for patients on the ground every day. I'd like to share with you what I see from my own vantage point about what the problem is that needs to be fixed with respect to pharmaceutical policy in Canada. It is that our current patchwork system is letting many groups, not just a single group, but many groups of Canadians fall through the cracks. It encourages and provides incentives to make bad prescribing choices. It is forcing doctors and other health care workers to engage in what can only be described as crazy workarounds to try to get our patients the basic health care that they need.
As the committee now knows—and I know you're up to date on these basic statistics—more than 50%, probably somewhere around 60%, of Canadians are covered by private drug insurance, usually through their employers or the employers of their spouses or parents. In those private plans, by and large, whatever a physician prescribes or another provider prescribes to a patient with private coverage will be covered. This is what's known as an open formulary drug plan. The majority of private drug plans function in this fashion. They make absolutely no attempt to base their coverage on medical evidence until an individual's spending on drugs gets into the many thousands of dollars annually. As a physician, if I write a prescription for a patient, their private plan will nearly always cover it.
Now that might sound good to you. I know it sounds good and you will probably hear people present to your committee over the coming days who will try to convince you that it is good, but in fact, it's not. It's not good for health, and it's not good for the economy. Why? Such open formulary plans give licence to doctors and other providers to prescribe more expensive medicines when less expensive ones are just as good or even better. This results in high costs for no reason and is one of the many drivers for the high costs that you've heard described by Steve and others.
Eventually, of course, those costs are passed on to Canadians, either directly or indirectly. Open formulary plans also encourage what's known as off-label prescribing, which leads to doctors writing prescriptions for cases where the drugs are not medically proven to work, and they fail to provide any guidance to patients or to prescribers about what the most appropriate drug choice is for a given condition.
This leads to a culture of over-prescribing and inappropriate prescribing that has real effects on the health of Canadians every day and leads to statistics of the kind we know. For example, one in five Canadian seniors today takes a drug on the Beers list, which is a list of medications that should almost never be prescribed to people over the age of 65 because the risks outweigh the benefits.
Indeed, private insurance plans have no incentive to reduce inappropriate prescribing. In fact, the incentive is just the opposite, because the more prescriptions we write, the more money they make.
Now the fact that many people depend on those employer-based drug plans also causes problems in the job market. A parent whose child has diabetes or whose spouse has cancer cannot afford to lose his or her employer-based insurance, and that traps people in jobs that may not be right for them.
Importantly, many Canadians who are working—the self-employed, people who work on contract, people who work part-time, and people who work in small businesses—do not have private coverage. It isn't only the working poor. The changing nature of work in Canada means that the issue now extends well beyond the nannies and taxi drivers of the nation, although we should of course be concerned about the nannies and the taxi drivers of the nation. In my own practice, I see lots of self-employed consultants and others with medium to high incomes who don't have drug coverage. As you will know from interactions with your own constituents, precarious work is on the rise in the Canadian economy. More and more people are working on serial contracts and in more than one job, and there are fewer long-term jobs with a single large employer.
As our economy shifts into an age where old models of employment become increasingly rare, old models of benefits are also disappearing. It's important to understand that many middle-class Canadians either don't have good drug coverage or are at risk of losing their drug coverage in the modern Canadian economy.
That's the private drug plans. They're not working well for Canadians.
Now let's talk about our public insurance plans. Every province, and also the federal government, runs at least one public drug plan, but most Canadians with jobs are excluded from public plans, despite the fact that they may not receive coverage through their employer, unless their costs become what is known as “catastrophic”. As you know, those catastrophic plans are supposed to kick in to save people from having to mortgage their homes in order to pay for their drugs. It is really important to understand how unhelpful catastrophic drug coverage is for the patients in my practice and practices across the country: people living with diabetes, high blood pressure, asthma, chronic heart disease, and chronic lung disease. To give you an example, in Ontario, where I live, on an income of $20,000 annually, a patient would need to spend $800 out of pocket before her coverage would kick in. This requires an upfront cash outlay that a person living on $20,000 a year simply can't afford, so what happens is that people just don't fill their prescriptions. For people who can't afford those catastrophic deductibles of 3%, 5%, 10%, or 12% of their income, having access to catastrophic drug coverage is equivalent to not having any drug coverage at all. In that context, it should not surprise any of us that one in five Canadian households now reports that someone in the household does not fill a prescription due to concerns about costs.
The impact is not only on patients, but it is also on the practice of medicine and on clinical practice across the nation. The reality is that every day in your communities doctors are doing things they shouldn't have to do in order to get medicine for their patients. We are allowing ourselves to be lobbied by pharmaceutical reps in order to get a few boxes of drug samples. We are prescribing an alternative to the drug that is actually needed by our patient, so that he can afford to fill the prescription. We are admitting people to hospital so we can give them treatments that they can't afford to take at home. We are wasting time begging companies to give our patients compassionate access to a drug they can't afford. Sometimes we just buy our patients' medicine ourselves, and sometimes the pharmacists do the same. Sometimes we just advise them that they should go on social assistance so that they can get the drug card they need.
It is abundantly clear to those of us who work in it that our current system, one in which private insurance drives unnecessarily expensive prescribing and huge numbers of Canadians go without their medications, is fundamentally flawed. Given the importance of medicine in modern-day clinical practice, the ongoing exclusion of prescription medicines from our publicly funded health care system makes no logical sense. Instead, we need a national pharmacare program with five key elements.
First, every single Canadian must be covered by a public plan. Just as we have done for doctors and hospitals, essential prescription medicines must be accessible to everyone.
Second, not every medication should be covered for every person. We need to devise an open, transparent, and evidence-based process, one that is at arm's length from government and free of industry influence and political interference, to make our decisions about what to cover.
Third, copayments should be extremely low or zero, especially for low-income people, because there is very strong evidence that even very small copayments can prevent low-income people from filling their prescriptions.
Fourth, governments must band together to purchase all drugs for the nation. Even the pCPA, with its limited success thus far, has failed to get the kinds of savings on drug prices that other countries get, because even with the federal government participating, public plans represent only 40% of the market for drugs in Canada.
The fifth and final element of a well-designed pharmacare program is an emphasis on reducing over-prescribing and improving quality and safety. This critical job cannot be left to private insurance companies or to pharmaceutical companies, which neither are accountable to the public nor have any kind of incentive to decrease rather than increase prescribing.
As I close, I would like to say that a national pharmacare program does not need to involve a full uploading of all provincial jurisdiction over drug plans in order to be successful. A co-operative effort, convened by the federal government, could be achieved without any constitutional hassle and without sticking the federal government with the whole bill. The tasks involved in pharmacare are discrete and could be shared between the federal government, the provinces, and the territories to achieve the five elements I have just outlined.
Canadians are rightly proud of the principle that our universal public health care system should base access to care on need rather than ability to pay. Until we deal with the lack of national pharmacare in this country, I am sorry to say that I don't believe we are living up to that principle.
Dr. Marie-Claude Prémont (Professor, École nationale d'administration publique, As an Individual):
I will continue, Mr. Chair.
My name is Marie-Claude Prémont. I am a full professor at the École nationale d'administration publique in Montreal, where I teach health and social services law, among other things.
I would like to thank the committee for inviting me to appear. I am pleased to tell you about Quebec's pharmacare system.
As the federal government is analyzing, through your great services, the issue of drug coverage across Canada, it might be tempting to follow the example of a province. That is what the federal government did in the late 1950s. It followed Saskatchewan's example and implemented the hospital insurance plan. Quebec has set an example that might appear innovative and inspiring to people.
Let me tell you right away that my primary goal today is to explain why I don't think Quebec's system is an example that should be followed. On the contrary, I would like to warn you about Quebec's type of system, which has been in force since 1997. Next year, it will have been in place for 20 years. Let's start by understanding the principles of the system.
First, it is important to understand that, when pharmacare was introduced in Quebec, a fundamental paradigm shift took place. Canada and all the provinces operate according to the logic of a universal hospital insurance and medical insurance system, whereas Quebec's pharmacare is a general, not universal, system, although everyone is covered. This is not a marginal distinction, but rather a fundamental one.
Let me explain. With a universal system, the primary insurance is public and everyone is covered in the same way. With a universal health care system such as the one in place right now, private insurance is prohibited. That is the case in Canada for 90% of people, who are covered under provincial legislation that provides for a plan forbidding private insurance.
With Quebec's pharmacare, unlike health insurance, private insurance has privileged markets, while public insurance is stuck with the least profitable and most challenging markets. So, in Quebec's system, it is private insurance that gets the first pick in terms of pharmacare.
Steven told us about the patchwork concept. Danielle reiterated that, right now, we are dealing with a patchwork system across Canada. Actually, Quebec's system is just setting in stone this patchwork of plans. That's the best description for Quebec's system: it is a patchwork of plans.
On the one side, there is a public system for the most vulnerable—seniors and the unemployed—and on the other hand, there is a multitude of private group plans that are provided by employers or associations. Let me repeat: Quebec's system has only further set in stone what was there before. It has then tried to plug the holes to ensure that the entire population is covered.
I will not dwell on the basic principles and terms and conditions, but I will instead draw your attention to the fact that, in Quebec's system, the premiums of private insurance companies are not regulated. In the past 20 years, we have seen a gradual increase in private sector premiums to the extent that more and more people are leaving the private plans to seek refuge in the public system, which is heavily subsidized.
Only the public part of the system is regulated, because people could not afford what the system truly costs without substantial subsidies.
Quebec's system has four major features.
The first feature is that the system operates on a systemic triage of risks. This means that good risks go to the private companies, which represent those who work. Those private plans cover 57% of Quebec's people. Conversely, the bad risks go to the public sector. We are talking about seniors or the disadvantaged, meaning 3.5 million people. This logic recognizes a role for the public sector in terms of social assistance. This is a residual logic in the sense that the public sector is there just to take care of the most disadvantaged. That is truly the fundamental feature of Quebec's system.
The second feature has to do with funding. We are seeing the funding being moved away from the tax system. This means that, instead of being funded by taxes, as is the case for medicare, the funding structure basically emulates the way the private insurance industry does things. There is a premium, a deductible and co-insurance. Furthermore, this mimicking of private insurance funding is a complete illusion.
When the public portion was put in place, we were told that the plan was going to be self-funded. However, as we can see—I checked the latest numbers from RAMQ—the contributions, made up of deductibles and co-insurance for the public portion, don't even cover 20% of the plan. That's why huge subsidies must be invested for the system to work. In terms of the private portion of the system, there is no relationship between the contribution made to the private plan and people's income. So the plan operates completely removed from the tax system.
The third feature is that tax tools that normally belong to public authorities have been made available to the private insurance sector. We are talking about mandatory insurance for clients and patients whose employer provides the service. We are talking about source deductions, like income tax, which are then forwarded to the insurance sector. Then, private insurers have the advantage of covering only group plans. As soon as an individual does not have access to a group plan, they must obtain insurance from RAMQ, the public system.
The fourth feature of the system—the last but not the least—is that the role of public authorities is completely overlooked, because the social solidarity between segments of the population has been completely dismantled. The system is not forward-looking, contrary to what people may think and contrary to what a public insurance system should be. People who contribute to a private system their entire lives receive no warning when they are removed from the system and are insured by public insurance as soon as they turn 65 years old. There is no inter-funding between the private and public portions of the system, and the coverage terms and conditions vary a great deal between the public and the private portions.
Quebec's general system is therefore a dead end, and this blocks any reforms, even if the costs have been pointed out on a number of occasions in Quebec.
Dr. Marc-André Gagnon (Associate Professor, School of Public Policy and Administration, Carleton University, As an Individual):
Thank you very much, Mr. Chair.
My thanks also to all the members of the committee for this invitation.
My name is Marc-André Gagnon. I am an associate professor at the School of Public Policy and Administration, Carleton University, Ottawa. Today, I will talk to you about the problem, the solutions and the way in which a public system could be funded.
My colleagues have already talked about the Canadian anomaly. Canada is the only country in the OECD with a universal public health insurance system that does not include prescription drugs, as if drugs were not an essential element of health care in Canada. Our system is fragmented and it relies first and foremost on the primacy of private plans, as the public sector must look after those who have no access to private plans.
This system is becoming very costly. In 2012, prescription drug expenditures in Canada were $771 per capita. The average of OECD countries is $498. In Canada, we pay 55% more than the OECD average. Not only do we pay more, but there is also a more pronounced increase in costs in the long term. Between 2000 and 2012, the costs per capita in Canada have increased by 96%. They have almost doubled, whereas in countries like the U.K. and France, which have universal public drug insurance plans, the growth was around 55%.
Some countries have spent a lot of time on the issue of appropriate usage. For instance, Denmark's growth was 36%. In the U.S., which remains the model of waste and inefficiency, the increase was 87%, which is still lower than what was observed in Canada. To give you an idea of the scope, if Canada had been able to limit the increase in expenses, the way the U.K. and France had done, right now there would be savings of $5.8 billion per year. If we could measure up to Denmark, we would be saving $8.3 billion annually. For that, we would have had to equip ourselves with the institutional capacity needed to better contain costs, while ensuring that the prescriptions were more appropriate and the health results better.
Other systems are more effective because they are public systems structured in such a way to maximize the therapeutic value for the people, which is clearly lacking in Canada. The cost growth in Canada is not sustainable in the long term, meaning that major reforms will have to take place one way or another. The issue is determining what types of reforms will be put in place. A possibility would be to transfer the risks to patients, by increasing premiums, co-insurances and deductibles. The other possibility would be to start preparing reforms by drawing on the best practices of other countries.
The problem with the current system is that it is fragmented. When you have a fragmented system, it is always easier to shovel the costs to other parts of the system instead of trying to set up a way of containing them. In Canada, private plans have priority. By definition, those plans are far less effective in containing costs. That is normal because private plans are built on the logic of benefits negotiated under collective agreements that seek to have conditions that basically please employees. Our logic is one based on privileges provided by employers to employees. We are not using a logic that strives for the best results in terms of public health care.
The result is this sort of culture in Canada where a good drug insurance plan covers everything at any cost, which leads to a huge waste in many respects. Let me quote Express Scripts Canada, the largest provider of private health benefits management services in the country. Keep in mind that private plans reimburse about $10 billion per year. Express Scripts Canada tells us that the amount wasted in private plans is estimated at $5.1 billion. That is money spent without obtaining any additional therapeutic benefits compared to what we might have paid had there been less costly alternatives.
In 2013, the Canadian Life and Health Insurance Association published a very interesting report.
The report indicates that there are problems of fairness and that the plans are not sustainable in the long term. We need government intervention. Private plans alone do not have the tools for self-reform. We need government intervention. Unfortunately, the proposed solutions go in directions that are sometimes problematic.
If we are trying to think of solutions based on the current fragmented system, we end up thinking that the public system is some sort of trash can for bad risks. This means that, if private plans are not able to handle something, the public system will get it. The Canadian government should therefore look after those without coverage and perhaps provide coverage for expensive treatments or for some more problematic drugs that private systems are not able to cover, such as those related to oncology.
If we do that, the public system is based on the commercial needs of private plans, not on the health needs of Canadians. The typical example is the Quebec model, which is sometimes held up as a model. That should not be the case because the Quebec model simply makes the ineffective structure of private plans mandatory for everyone. It institutionalizes a system that is defined by its ineffectiveness in containing costs. When all is said and done, it is not surprising that, if we compare the costs per capita in Quebec to the costs per capita in the rest of Canada, Quebec spends on average 20% more per capita than in the rest of Canada.
What do the employers have to say about that?
They say some interesting things. Last December, Benefits Canada, the largest publication on private benefit plans, published a survey for its members, over 200 managers of private benefit plans. Employers were asked what had to be done to ensure greater sustainability of drug insurance plans. Respondents were asked whether they would support the idea of establishing a universal public prescription drug insurance plan. Thirteen percent of respondents were opposed to the measure, 33% were undecided or unsure and 53% were in favour. We can therefore see that employers feel that a universal public prescription drug insurance plan would be an interesting solution for businesses as well.
The respondents who were in favour were also asked whether they would support the idea of universal public prescription drug insurance even if that meant additional fees for companies to fund the plan, such as an increase in taxes for companies. Seventy per cent of them were in favour of that measure, since the increase in fees would still be lower than what they are paying now for ineffective plans.
We need a public solution based on best practices. What form should a universal public system take? We must pay attention to that. We must not think of a universal public system solely in terms of transfers of funds. A public system must not be an open bar. If the idea is to reimburse everything at any cost, I am opposed to that type of system. We need to set up a system that is structurally built around evidence-based data in order to maximize the therapeutic value of each dollar spent.
Take blood services, for example. The Canadian Blood Services is an independent agency funded both by the provinces and by the feds. With its budget, it must coordinate blood services across the country by maximizing the therapeutic benefits of each dollar spent. A universal public prescription drug system could be built on the same basis. We could have a depoliticized independent agency that would rely on evidence. For instance, we could merge the Canadian Agency for Drugs and Technologies in Health and the pan-Canadian Pharmaceutical Alliance. This agency could manage the national formulary, meaning the list of covered drugs, but always with a view to maximizing the therapeutic value of each dollar spent.
People might think that a national formulary of this kind would reduce the choices for patients, but that is not at all the case, because waste would be reduced. If patients still wanted treatment that is not based on evidence in terms of its effectiveness or if they wanted more expensive treatments when a less expensive alternative was available, they could do so by paying out of their own pockets.
They would not rely on the solidarity of other taxpayers or work colleagues.
I would like to address how a program like this can be financed. I'd be happy to talk to you about that if you like. If you ask me for my opinion as an expert, I will tell you that a universal public program is not only the best way to improve access to medical treatment at a lower cost for Canadians, but would also help significantly reduce the labour costs in Canada, which would in turn increase the competitiveness of Canadian businesses.
As for financing, I would like to speak a little more on that, but let's say that there is no real economic obstacle to putting a program like this in place. All we need is a little political will.
Thank you very much.
Mr. Robert Oliphant (Don Valley West, Lib.):
Thank you, Mr. Chair.
Thank you. It's very much the A-team who are with us.
I just want to make sure, Mr. Chair, that the report, “Pharmacare 2020” is entered into evidence. I'd formally request that so that we have the report for consideration by the committee.
I am just an alternate here. I'm happy to substitute any time for both sides, if you would like me to substitute.
Voices: Oh, oh!
Mr. Robert Oliphant: This is an issue I care a lot about.
I want to dig down a little bit and start with a case. A nurse in Vancouver called me a year and a half ago. She was on a drug called Xolair, which is a biologic medication for asthma. BC PharmaCare decided to, I call it, bureaucratically substitute. It took the drug off the formulary. She was forced to actually move to Alberta, as a nurse, because the nurses' plan mirrored the B.C. pharmacare plan. There was a cost saving which BC PharmaCare was required to do, but she was actually forced to move.
On the good side of your report is a national patchwork-free kind of pharmacare system where every Canadian would have the same. On the downside, how do we ensure that Canadians have the drugs they need and that they are provided in an affordable way?
I'm not sure who wants to answer that.
Dr. Danielle Martin:
I really appreciate the question.
Not only can a pharmacare system give Canadians the best health possible, but a pharmacare system could give them much better health care than they currently get.
To me it's incredibly important that this message come across clearly in this afternoon's discussion, that giving everybody access to every drug all the time is not good health care. It leads to inappropriate prescribing, which causes real harm to people's health. What we need is to push ourselves and to push Canadians to understand that what they need access to, what they deserve access to, are drugs for which there is good, solid medical evidence.
This is why I think the notion of depoliticizing the formulary compiling process, moving those decisions out of the reach of industry, out of the reach of politicians—with the greatest of respect—and into an area that is entirely based on the best medical evidence.... You're still going to have really difficult conversations about cost-effectiveness, about clinical effectiveness, about how many of the me-too drugs within a given class. There are going to be lots of important conversations to have about what goes on the formulary.
What goes on the formulary should be the drugs for which there is solid evidence, and then there should be a transparent and fair appeals process. If this nurse has been through 14 different drugs that are covered on the formulary, and she has some unusual variant of asthma that responds only to this specific drug, and there is a process by which she can make her case and her physicians can make her case, then there needs to be a method for us to assess that. But we shouldn't be paying for the fifth-line therapy that costs ten times the price of the first-line therapy for every single person. It makes no economic sense, and it makes no sense from a health perspective as well.
Mr. Colin Carrie (Oshawa, CPC):
Thank you very much, Mr. Chair.
First of all, I want to thank the witnesses today. When we started this study, I think all of us thought that where the system was.... After hearing from witnesses, we're starting to paint a bit of a picture out there. At first, I thought Canadians weren't getting access to pharmaceuticals and that was the biggest problem. But in hearing the witnesses who were here last week, and then using Mr. Google, I've found out that Canadians are the number two consumers of pharmaceuticals in the world.
I like what Dr. Martin said. We rank in the top 10% of countries that use benzodiazepines, opioids, and stimulants. We're number four with respect to antidepressants, number two with respect to opioids. That in itself is costing taxpayers a lot of money. And with all due respect, Dr. Martin, it's not just which drugs you choose, but at the end of the day, somebody is writing prescriptions for these things.
I know we're trying to get our heads around what the role of the federal government is. I know that different governments have taken different approaches, and I remember a controversial one for the opioids. I remember Deb Matthews in Ontario a few years ago, the frustration.... She was out there urging all provinces and territories to band together to convince Health Canada to block generic forms of opioids. She's on the ground as a politician. She's a lot closer than we are. She said that Ontario had the highest rate of prescription narcotic abuse in the country, two to four times higher than any other province. She mentioned the challenge with first nations communities, where the federal government does cover prescriptions. She said it has devastated many first nations communities, including one small northern reserve where 85% of residents are addicted to opioids. When we hear stuff like that, it just tears our hearts out, because you want to do the best. All Canadians want to have access to the pharmaceuticals and treatments that they need. She was quoted as saying that we simply don't need easily abused long-acting oxycodone drugs to achieve better care.
My question would be, how far do governments go? Dr. Martin, you're on the ground. Do you agree with Deb Matthews and her analysis with certain segments of the pharmaceutical prescriptions?
Dr. Marc-André Gagnon:
That's a very interesting question.
It's important to understand that current private plans are in fact already generously funded in part by the government, by public budgets. For the Government of Canada, it is estimated that federal tax subsidies are 13% of overall spending for private plans. As for the provinces, although they don't all offer them, it's 7% or 8%. Overall, it is estimated that close to 20% of what private plans pay out are covered through tax subsidies by the various governments.
However, I would add one important thing. Keep in mind that 30% of spending by private plans is for coverage of public servants. So it's already being covered through public budgets, to maintain plans that are not very cost-effective.
So almost half of spending by private plans is funded by public budgets one way or another. In fact, private plans reimburse some $10 billion. Furthermore, an estimated $5.1 billion of private plans are directed toward what we call waste and toward establishing a universal public plan to ensure proper use and maximize therapeutic benefits in order to minimize waste.
It's important to understand something about the issue of economic costs. The population can be divided in two: the employed and the unemployed. For the moment, the provinces are already setting aside funds for people who don't work, including seniors and social assistance recipients. Every province provides public funding to cover those individuals. What about people who are working, so those who are covered by private plans? So when we look at the numbers and dig a little, we can see that public funding is essential for these private plans. I think we simply need to take this public money and use it more effectively to better serve the population's needs.
Dr. Steven Morgan:
We know from repeated studies, literally dozens of studies conducted in Canada, the United States, and elsewhere in the world, that even relatively small costs borne by patients can be a barrier to filling prescriptions. It's important that we understand that patients don't act the way that we as managers of a health care system might wish them to act.
If you put a $10 charge on a prescription drug for a patient, many will look at that drug and think that it's a preventative thing, that it's for their cholesterol, or for their hypertension, or for managing their blood sugars because they're a type 2 diabetic. They'll say, “I don't think I will fill that prescription. I'll just get by without it, because I don't feel there's a benefit.”
That personal choice by the individual, which is quite rational to an individual, ends up costing our health care system money in the long run. It's those very drugs, those preventative drugs, that patients stop taking and then end up in the hospital, where it costs us far more money than we will have saved in the long run by asking them to pay the copayment.
I've often argued that we need to have some form of first-dollar coverage for prescription drugs. I tend not to necessarily call it first dollar, because in the Canadian context, this idea of giving away medicines with no copayments whatsoever is currently politically untenable. It is not something that I think any province or the federal government will accept. Canadians fill so many prescriptions that even a $2 to $5 prescription charge to patients will raise billions of dollars of costs to the program.
As a consequence, I refer to coverage in an ideal pharmacare model as being first-prescription coverage. There should be no deductibles, because deductibles are the worst barrier to filling prescriptions that patients need. From the very first prescription, depending on the drug type, it might be a very low copayment, maybe free if it's a preventative treatment that we know patients should have, or it might be a modest to a high copayment if it's something that we know is more of a private benefit, such as a painkiller that patients could have substituted an over-the-counter drug for. One could imagine a pharmacare system with something of a blended copayment that actually took the copayments based on evidence, not just a flat copayment across all prescriptions.
Dr. Steven Morgan:
Yes, if I may.
I have a couple of things to highlight in terms of the probability or possibility of moving forward. We can learn a bit from countries that have reorganized the way they cover medicines in their countries in recent years.
New Zealand created this purchasing agency referred to as PHARMAC in 1993. It didn't exist for decades prior to that.
There's no other country in the world that doesn't have universal drug coverage as part of their health insurance in the postwar era. All countries that developed their systems developed drugs and health care together. Canada is the only outlier in that regard.
We can look to New Zealand's purchasing agency. We can look to the United States Department of Veterans Affairs' health administration. They reorganized how they purchase their medicines also about two decades ago. We can look to Sweden which more recently reorganized how they purchase their medicines.
To give you an idea of how important it is to defray the political tension that comes from having manufacturers demanding prices for medicines that may not be justified, there are a growing number of countries around the world that are coming together and buying their medicines together across national boarders. We can't even do this in Canada across provinces, and yet the Scandinavian countries have developed a purchasing consortium that will be rolling out this coming year and will buy medicines on behalf of multiple Nordic countries.
A number of Russian-speaking nations are now creating a single market for pharmaceuticals, including single regulatory processes and single coverage decision-making processes.
Even the Dutch and the Belgians are joining together in purchasing medicines, that is, in making these difficult decisions as two countries coming together and binding themselves to the same formulary. It's precisely because they do not want the political tension, the political pressure, to fund the drug just because their neighbour does. They want to fund drugs based on value for money, not peer pressure.
Ms. Rachael Harder:
I think the point remains that it's one thing for Canadians to be in support of something. I think we can all be in support of free pharmaceuticals—it sounds great—but at the end of the day, it's not free. It does have to come from the pockets of the taxpayer. If the broad band of the Canadian public isn't in support of that, I don't know how we can move forward with a program like this.
That's a statement, not a question. I do have another statement to make.
Mr. Morgan, when we asked what role politicians have to play in this, you mentioned the veterans program. It concerns me that you would bring this up as a model to follow, because there are a couple of things that have happened with the veterans program. One is that there's an extremely long waiting list, to the point at which there are actually people who are passing away before they can access the pharmaceuticals they need. If that's a model we're going to replicate here in Canada, that seems problematic to me. The other reason this is concerning to me is that there are managers who, it has been proved, actually falsify information in order to cover themselves very well and prevent themselves from being fired. That's another reason that I feel that this, perhaps, is not the program we need to be modelling after.
That said, my question is for Ms. Martin or, I suppose, Mr. Morgan. When we're saying politicians need to get out of the way, where are we suggesting the accountability for such a program would come from?
Dr. Danielle Martin:
Thanks for the question.
There has been quite a lot of study done on what influences the prescribing decisions made by physicians, and also what influences the demands patients make. In fact, one of the most powerful forces in prescribing in present-day North America is the influence of industry.
Some of you who have been following the news recently may be aware that there's quite a lot of controversy about the relationships between the pharmaceutical industry and physicians, and the ways in which industry can influence the prescribing decisions of physicians, such that as a medical community—and certainly as a medical educator I know that this is the case with our educational programs—we are increasingly trying to move away from allowing industry to have a big influence on the way we educate physicians about how to prescribe. Again, we want those decisions to be made based on medical evidence as opposed to marketing. Some of the marketing that goes on can be linked to education, or the education can be linked to marketing, in ways that I think are increasingly making the medical profession uncomfortable.
Similarly, there's quite a lot of evidence with respect to direct-to-consumer advertising. As you probably know, it's not legal currently in Canada for pharmaceutical companies to advertise their products directly to Canadian patients, but Canadian patients tend to consume a lot of that advertising through American television and other sources, and that can also have an influence.
But actually, one of the many things that influence prescribing decisions among physicians is habit. There are many thousands of drugs on the market today, and most of us get comfortable with a number of them. We really understand the side effects and the mechanisms and how they interact with other drugs or whatever. Most physicians tend to prescribe the same small number of drugs over and over again. That's why we need to make sure that the education we get from the outset is based on sound evidence, and use the formulary to make sure that those initial decisions we make are good ones, and then educate patients. I actually think that some interchange between physicians and patients about prescribing is good. I welcome my patients questioning me and pushing me about what they want to have, but those conversations need to be based on the best medical evidence as opposed to marketing from industry, and I think that's where some improvements need to be made.
Dr. Steven Morgan:
I strongly disagree with means testing of a universal drug benefit.
If a drug is deemed to be safe and effective at addressing legitimate health care needs and it represents value for money from a public health care system perspective in how we address those health needs for a Canadian, it shouldn't matter where they live, where they work, and what their income is in terms of their accessibility for that medicine.
There have been a number of provinces in recent years that have implemented income-based drug plans, otherwise known as catastrophic drug coverage, under the idea that we shouldn't be giving medicines away for free to people with higher income.
There are two problems with that. One, as I mentioned earlier, it means that everyone faces charges, or people with a higher income face charges that may dissuade them from taking the very medicines we really want them to take, preventative medicines that keep them out of hospital. The second problem is it breaks down the willingness of those with middle and upper incomes to support a universal drug benefit: they pay higher taxes, so shouldn't they also get essentially equal benefit? There are clinical, economic, and perhaps ethical grounds to avoid means testing of a drug benefit.
I think on those grounds what we want to think about is that it's a paradigm shift for Canada. It's changing our dialogue about pharmacare from which particular Canadians are going to have access to virtually every drug to which particular drugs are so deserving that every Canadian should have access to them.
Under that latter model—and I know Danielle has written about these sorts of options—we could envision building pharmacare in planned stages, probably using a planned budget increment, starting maybe at $10 billion for the national program, perhaps as much as $2 billion of which would come from the federal government and the remaining money from provinces and through other contributions, like copayments, and moving towards the $20-billion or $25-billion program down the road that we would need for truly comprehensive coverage.
As you rolled it out in that kind of planned fashion, of course there would be room for the private insurance industry to continue to offer drug coverage for things that aren't in the first phases.
If all of the evidence that we've gathered from other countries is correct, I believe that Canadians will actually see that a program can demonstrate value as it's rolling out. As a consequence, I think you will find that Canadians will continue to support the program and support its expansion.
Mr. Len Webber:
I want to talk about our provinces and the silos in which we tend to work within our health care system, and the fact that a universal pharmacare purchasing power, by bringing all the provinces and territories together, would certainly be beneficial.
Mr. Gagnon, on your statistics with regard to how Canada ranks very poorly when it comes to drug costs and such, it just makes sense that we come together as a country to purchase our drugs.
I'm going to mention organ and tissue donation. There is clear evidence that our provinces and territories work in silos with respect to sharing organs and tissues, and I find it very frustrating. We, as the federal government, should work toward having an overarching system as well when it comes to organ and tissue donation. I know we are talking about pharmacare here, but it's just the attitude. Mr. Gagnon, you said it is constitutional, that the provinces have their jurisdictions and that the feds should not step into their jurisdictional areas, but I think this is something that all provinces and territories need to discuss and they need to move forward with bulk purchase power buying.
I think about Quebec, for example, who run their own—I'm back to organ and tissue again. There is very much a silo in Quebec when it comes to organ and tissue donation. I just don't understand it.
Ms. Prémont, with your experience in Quebec, maybe you could talk about why there are silos throughout the country, in particular in Quebec.
Dr. Marc-André Gagnon:
I would like to answer that question.
I provided my opinion to the Government of Quebec, which put in place a bidding system for manufacturers of generic drugs. I should point out that this is where there are the most shortages.
It's true that some people feel that if prices are lowered, there would be more shortages. You need to be careful with that kind of statement. When it comes to generic drugs, how the supply system is organized is important. For example, if you launch a call for tenders for generic drugs and provide specific provisions to ensure the safety of the supply, that will help reduce costs while improving the safety of the supply. That's the case in Sweden and New Zealand. The cost of generics is a third of what we pay in Canada. Despite that, there are far fewer drug shortages there.
As for drug access, people think that if you pay more for a drug, it will be easier to access. That isn't the case at all. Standards are used, such as that of quality-adjusted life years.
Let me give you an example.
A government agrees to pay $50,000 for a drug because of the quality-adjusted life years. The manufacturer of a new drug decides to make the rate $100,000 instead. If the government in question agrees to pay that amount, every company will then ask $100,000. Indeed, agreeing to pay more won't solve the access problem. It will only push back the problem, which will come up again later.
If you continue to accept the increases, you'll only encourage people like Martin Shkreli, who is selling a drug for 50 times more than he should because he says that people are crazy enough to pay it. So that creates more problems with drug access and shortages. The large pharmaceutical company Valeant pretty much follows the same business model. These are predatory dynamics in the system in Canada, and we have no protection against it.