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May 02 2017

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Mature Medicare

May 2, 2017 | By

A Prescription for Canada’s 150th

In 1957, Canada was just ten years shy of celebrating its centennial—still an adolescent nation, wrangling with domestic soul-searching and trying to carve out a name for itself in the international community. That year would see government pass the Hospital Insurance and Diagnostic Services Act. Combined with the Medical Care Act of 1966 and the Canada Health Act of 1984, it would take almost 30 years to form the foundation on which Medicare is built. The result forever altered what it meant to be Canadian, and continues to form a significant part of our modern identity. So it’s an exciting thing to consider: where might we be in 50 years, and could bold health care policy transform our national identity again?

The inception of Medicare itself was transformative. At its core, it essentially eliminated worry about paying for medical expenses. Canadians would not need to borrow money from relatives or banks to cover medical procedures or hospital stays; there would be no more spiralling into poverty as financial insult was added to health injury. That decision – and its reaffirmation over the many decades since – remains a central component of Canadian pride as we approach our nation’s 150th anniversary.

Source: Mike Skreptak Collection. Green Binder. University of Windsor. Leddy Library. http://swoda.uwindsor.ca/node/1322.

But that’s what we did in our adolescence. As our country now approaches adulthood, surely we can continue to mature? Canadian Medicare is far from perfect. There are many issues to be addressed, but most important for patients and our economy is this: Canada is the only developed country that provides universal coverage for doctors and hospitals, but not universal coverage of essential prescription medicines.

Universal public pharmacare would begin to make good on the promise Canadians made to each other when we decided to create Medicare.

Our former Prime Ministers could arguably be forgiven for their oversight. Throughout the 1950s and 60s, health care was predominantly delivered in hospitals and by physicians. But advancements in health care technology and a shift in culture have resulted in a society that increasingly receives care in the community. At least one-third of Canadian adults now live with a chronic health condition and one of the key ways of treating chronic disease is prescription drug therapy. Despite this – and despite the fact that prescription drugs save lives and are key in the prevention of devastating and expensive complications of chronic disease – Canada has been strangely content with a completely dysfunctional system of drug coverage.

Ask any doctor or nurse in the Canadian health care system what it’s like to see patients who come to the emergency department with strokes because they couldn’t afford their blood thinning medications, or are re-admitted (and re-re-admitted) because they are taking their puffers every other day instead of daily to try to space them out. They will tell you stories reminiscent of those pre-Medicare days that we are so proud in Canada to call ancient history, as we marvel with a sense of superiority at health care debates south of our border.

Universal public pharmacare would begin to make good on the promise Canadians made to each other when we decided to create Medicare.

Our mix of private and public drug programs is also costing us a fortune. In the absence of a coherent approach to drug pricing, coverage and purchasing, we manage to pay more than nearly every other country in the world for prescription medicines and still leave millions uncovered.

Middle-class Canadians who have private coverage through their employers often don’t perceive the problem until they get really sick – or enter the modern economy of self-employment, contract work and part-time work that is increasingly the norm. That shifting reality is leaving a growing cohort of Canadians without private benefits through their place of employment, and who will not be covered in their retirement.

For those patients with private drug coverage or benefits through work, a 20 per cent co-pay on prescriptions may seem manageable. But a single cancer or Multiple Sclerosis diagnosis can be devastating to a family’s finances, and more and more plans are putting annual or lifetime caps on drug expenditures. For these Canadians, the budget for food and housing for their families will always take priority over their long-term health.

Those of us with coverage often don’t realize how much we are overpaying – directly or indirectly – for our drugs. Having dozens of individual buyers for medicines creates a patchwork system where Canadian purchasers can’t negotiate effectively or purchase in bulk. The result is that Canada pays 30 per cent more than the OECD average for our prescription medicines. Other developed countries vastly outpace Canada with programs that buy medications using a single public entity. They are able to accrue greater bargaining power by making purchases on behalf of the entire population, with one set of negotiations and lower prices spread across a larger population. This results in significantly lower costs for payers that then provide these medications as part of universal pharmacare.

The costs of our patchwork system pile up beyond the price of a prescription. Canadians subsidize private insurance plans, even if they do not work for an employer that provides one. This is because companies that sign up for private insurance plans receive tax breaks that are paid for by every Canadian. What’s more, these private plans cost Canadians more in administrative fees, and are ultimately inefficient: Canadians pay billions more in premiums than they receive in benefits from those same plans.

Pharmacare should not be a blank prescription for the country—it is vital that medications be prescribed accurately, based on evidence, and in a way that is most effective for the patient and cost-effective for the system. Too many Canadians have been the victims of overprescribing, with medication seen as the quick fix while other potentially more effective treatments go untried. With national pharmacare, the incentive for policy makers to try to ensure quality prescribing is that much greater. A regulatory entity that lists the best uses for medications, potentially in the form of a national formulary, could mandate quality prescribing. This would give us more efficient prescribing tools, aiding in the proper use and prescription of medications as well as making patient history more transferable. A formulary that collects this information could generate significant data on the utility of prescription medications, improving quality of life and potentially saving lives.

Even so, pharmacare sounds expensive until you actually look at the numbers. In reality, we currently pay collectively for public drug programs in each province, which often cover low-income seniors, persons with disabilities or people on social assistance. Beyond subsidizing private plans, we also use our tax dollars to pay for private drug plans that cover employees of municipal, provincial and federal governments. In each of those cases, we are paying significantly more money than we need to pay.

There is of course a cost to be borne in the shift of the responsibility from the private to the public sector—though it is nowhere near where most politicians think it is. A 2015 study quantified the potential cost of pharmacare: the annual savings to employers, unions and private citizens would amount to $8.2 billion. And, if we were to achieve drug prices comparable to those obtained by similar countries, the incremental cost to governments could be as low as $1 billion spread across all governments – or lower. This figure does not assume the cancellation of tax subsidies for private insurance plans, let alone the savings to the system as a result of people taking their medications as prescribed. These steps, combined with improvements in overprescribing and inappropriate prescribing, would make the cost that much less.

But just as it was 70 years ago, bringing significant change to our system is a daunting task. Politicians face varied stakeholder voices, and a public that sometimes prefers social programs more in theory than in practice.

Avoidance of pharmacare is thus not really about the money. It is a choice of political will, just as was the case for doctor and hospital coverage. Poll after poll shows that Canadians broadly support universal public pharmacare. Numerous Royal Commissions and studies have confirmed that it would be a net benefit to Canadians. But just as it was 70 years ago, bringing significant change to our system is a daunting task. Politicians face varied stakeholder voices, and a public that sometimes prefers social programs more in theory than in practice.

Yet the economic, public policy and human health cases are indisputable. Canada needs a universal public pharmacare program. It could be constructed in any number of ways: as a national, pan-Canadian or combination program. It could involve ceding some jurisdictional responsibilities to an arms-length agency or to a single jurisdiction to do work on behalf of the federation. We need not cover all medicines for all people all the time; costs can be made predictable and sustainable by ensuring that only medicines that are both clinically effective and cost effective are covered. It could be financed through any number of mechanisms including income taxes, corporate contributions, social insurance or other creative means. We have options. We don’t need to do everything for everyone at any price. But we need to do something. Now.

Lester Pearson, Tommy Douglas, Monique Begin, Pierre Trudeau – these leaders understood that their job was to lead on issues of health coverage, even when the temperature got hot. But we cannot take credit from the Canadians who voted for them and who gave them the courage of their convictions. As we commemorate 150 years since Confederation, with an aging population that loves its health care more than ever, we need to ask whether Canada is still the sort of place that believes in equity of access to necessary health care services. If so, then it isn’t about looking backwards for inspiration. We have done enough patting ourselves on the back since 1984, 1966 and 1957. Our country has changed, will continue to change and, after 150 years, Canadians deserve a grown-up health care system. Few decisions would improve as many lives as would the institution of universal pharmacare.


As Canada marks its 150th birthday this year, Canadians have a historic opportunity not only to celebrate a century and a half of accomplishments, but also to look forward to what we can achieve in the future. The Mowat Centre is releasing a series of short written pieces and video interviews in the weeks leading up to July 1st that will look ahead and present a variety of bold, potentially transformative policy ideas.

More Bold Ideas

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