Pharmacare: leaning toward filling the gaps?

In advance of the federal government’s Advisory Council on the Implementation of National Pharmacare releasing its final report this spring, an increasingly prevalent view is that program reform should use a fill-the-gaps approach to universal coverage, rather than a first-payer approach.

One strong indication comes from the House of Commons Standing Committee on Finance, which released its annual report of pre-budget recommendations, entitled “Cultivating Competitiveness: Helping Canadians Succeed,” in December 2018. Recommendation number 63 advises the federal government to allocate funding to:

“Build on the existing drug coverage enjoyed by millions of Canadians and follow a close-the-gap approach to pharmacare to ensure that all Canadians have access to prescription drug coverage, in addition to examining ways to provide catastrophic drug coverage to Canadians.”

Although the Advisory Council is not bound by the committee’s recommendations, “it’s an objective data point that indicates that backbench MPs have a better understanding of the benefits of the coverage that already exists for Canadians, and the risks of abrupt reform to those benefits. This report gives a bit of a sense of where they may be leaning,” observed Stephen Frank, president and CEO of the Canadian Life and Health Insurance Association (CLHIA).

Moreover, the committee’s recommendation this year indicates a change in mindset when compared to last year’s pre-budget recommendation, which leaned toward a first-payer model. At that time, the committee suggested that the federal government “work with the provinces/territories to introduce a pan-Canadian prescription drug program.”

The finance committee’s recommendation this year also echoes the main topics of discussion during CLHIA’s meetings with government stakeholders. “We’ve been hearing more about options for coverage for really expensive, rare-disease medications. It seems like more people are understanding that’s one element of what smart reform is going to have to include, which is an interesting shift [from a year ago],” said Frank.

The focus on coverage for expensive medications is a good sign for the private sector, he added, given how employers also struggle with how to provide access to these medications. “It is one of the pain points in the system across the board. This could be a very positive thing for employers if we were to reform the system to allow for better collaboration on issues like ensuring appropriate access and prices for rare disease drugs. There could be an important and helpful role the federal government could play along with insurers in this area. I expect that would be one piece of what the reform package would look like.”

Vishal Ravikanti, manager, pharmacy consulting for health benefits and payment solutions at TELUS Health, agreed that a fill-the-gaps approach would be the most prudent course should a national pharmacare agenda take sustainable root. He further noted that cost may be one factor influencing the Council. “A fill-the-gaps approach would be much easier to navigate and much more cost-effective for the public payer,” said Ravikanti.

Canada’s Parliamentary Budget Officer (PBO) has estimated that total drug spending under a first-payer approach would be $23.7 billion in 2020-2021; however, it also estimates this would represent savings of about $4.2 billion, compared to the current system, due to reduced costs in other areas (e.g., lower drug prices, more generic substitution, etc.). The Conference Board of Canada, meanwhile, estimates a much higher drug spend for public plans, at $34.4 billion, under a first-payer approach.

What do Canadians think?

Given that it’s an election year, the current federal government will also likely give significant weight to voters’ opinions when it comes to determining next steps for national pharmacare.  The Advisory Council’s research included an online survey of Canadians, to which more than 15,000 responded. The survey asked respondents if and how they are currently covered for their medications, and how important it is for them to maintain their current level of coverage.

While the results of the Advisory Council’s research have not been made public, private pollsters have surveyed Canadians as well. For example, according to an Abacus survey in July 2018, funded by CLHIA, 90% of Canadians believed that a national pharmacare program should not put their private health benefits plan at risk, and 89% did not want mandatory switching to government coverage. Seventy-five percent agreed that government should not spend on those who already have coverage.

A spokesperson for the Government of Canada confirmed that the Advisory Council will deliver its final report to the Ministers of Health and Finance in spring 2019. In advance of that, “the Council will be releasing a report in early 2019, which will provide an overview of what the Council heard over the course of their engagement [with Canadians,]” wrote Nickolas Moore, communications officer, Strategic Policy Branch, Health Canada, in an email. This preliminary report will be available at the Advisory Council’s web page.

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