September 23, 2010

CANADA CAN AFFORD UNIVERSAL PHARMACARE, September 16-30, 2010, issue of People's Voice

(The following article is from the September 16-30, 2010, issue of People's Voice, Canada's leading communist newspaper. Articles can be reprinted free if the source is credited. Subscription rates in Canada: $30/year, or $15 low income rate; for U.S. readers and overseas readers - $50 per year. Send to: People's Voice, c/o PV Business Manager, 706 Clark Drive, Vancouver, BC, V5L 3J1.)

Excerpts from The Economic Case for Universal Pharmacare, published by the Canadian Centre for Policy Alternatives, Sept. 13, 2010


A public drug insurance plan should form an integral part of a country's pharmaceutical policies. The plan must tie together social programs designed to provide a minimum of well-being for all citizens, health policies designed to optimize public health, industrial policies aimed at attracting foreign investment, intellectual property policies, and tax policies designed to ensure greater fairness in redistributing wealth...

As far back as 1964, the Royal Commission on Health Services recommended that a universal drug insurance plan be established for all Canadians. The National Health Forum, under Jean Chrétien in 1997, recommended universal drug coverage. The Romanow Commission in 2002 recommended catastrophic drug coverage as a first step towards universal Pharmacare. But the National Pharmaceuticals Strategy, implemented since 2004, has failed to achieve even catastrophic drug coverage for all Canadians.

The lack of political enthusiasm for Pharmacare can mainly be explained by fears of the escalating costs such a plan is expected to entail. But this argument, which also predominates in the media, is completely lacking in substance.

The sound economic analysis included in this report shows that the rational implementation of universal Pharmacare, with first-dollar coverage for all prescription drugs, would not only make access to medicines more equitable in Canada and improve health outcomes, but also generate savings for all Canadians of up to $10.7 billion in prescription drugs. Canadians cannot afford not to have universal Pharmacare.

Canada spent $25.1 billion on prescription drugs in 2008. The cost of drugs has risen at more than 10% per year since 1985, and represents a major element in the increase of total health expenditures.

To reduce the burden on public finances, access to private insurance (though more costly to individuals) has also risen. So have deductibles and co-payments in government plans, coupled with a constant increase in the share of out-of-pocket expenditures for prescription drugs.

Only 45% of total drug expenditures come from public spending, which is very low compared to other OECD countries. Canada is second among OECD countries, behind the United States, in the participation of private insurers in drug expenditures.

According to a survey by Statistics Canada, 24% of Canadians have no drug coverage, and 8% of Canadians admit they did not fill a prescription in the last 12 months due to the costs of drugs.

Citizens with inadequate drug coverage are mostly unemployed or self-employed workers. This lack of coverage for drugs prevents many Canadians from receiving the quality of health care they need. For example, after myocardial infarction, free medications would increase a patient's life by one year, on average.

The current system has become a jumbled assortment of public and private plans in which individual coverage is no longer based on patients' needs, but subject to where people live and work, as well as on each person's and family's financial means.

.... Canada has among the highest detail prices for prescription drugs among OECD countries, and Canadians pay 30% more than the OECD average. Switzerland, like Canada, pays high prices to support its national pharmaceutical industry. The burden is not problematic for Swiss citizens since 94% of drug costs are paid by public spending as compared to 45% in Canada. Switzerland benefits from huge spin-offs from the industry: the ratio of pharmaceutical R&D on sales is 113%, but only 7.5% in Canada...

In Canada, the prices of brand-name drugs are normally capped at the median price of seven comparator countries. The problem is that these seven comparator countries include the four countries with the most expensive brand-name prices (United States, Switzerland, Sweden, and Germany). Every year, Canada is thus automatically the fourth or third most expensive country in terms of brand-name drugs. By taking a more rational approach to choosing the comparator countries used by the Patented Medicine Prices Review Board for determining the price of patented drugs, by sliding from the fourth to the seventh most expensive country in the world, Canadians could save another $1.43 billion.

A universal Pharmacare program would also help coordinate public programs to address the unethical rebate system for pharmacists. By setting up a supply system such as the hospitals have, a universal Pharmacare program could save at least $1.31 billion per year on the cost of generic drugs - and without reducing the profits of generic manufacturers. Ontario has moved to eliminate the system of kickbacks, but, without national coordination, it is not clear if the savings in Ontario will translate into overall savings throughout Canada.

If Canada chooses to get rid of industrial policies that artificially inflates drug costs in order to implement competitive purchasing (in the same way that New Zealand does, for example), Canadians could save more than $10 billion on the cost of their prescription drugs.

A universal public plan would make it possible to realize these substantial savings in an efficient, fair, and transparent manner.

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