June 2019

Final report of the Advisory Council on the Implementation of National Pharmacare: Our experts react

In its 2018 budget, the federal government announced the creation of an Advisory Council on the Implementation of National Pharmacare.

This initiative led us to write our White Paper in November 2018, detailing our analysis on four key guiding principles: access, cost stability, public-private mix and efficiency.

In March 2019, we published our analysis of the Advisory Council’s interim report, which outlined the core principles and foundational elements of the prospective national plan. At the time, we lauded the focus on the principles of access, efficiency, and, to a certain extent, cost stability. But what about the public-private mix?

The Advisory Council delivered its final report on June 12. This report sets out a list of 60 recommendations for the implementation of a national pharmacare program. Here is an overview of our three key findings:

(+) At the outset, there are several recommendations supporting a national strategy for expensive drugs to treat rare diseases. This approach supports more consistent access and the negotiation of funding agreements to foster cost stability across the country.

(+) Moreover, several other recommendations support our principle of efficiency through the creation of a Canadian drug agency, which would be responsible for assessing the cost effectiveness of drugs, deciding which drugs to include in the formulary and negotiating prices and supply arrangements.

(­–) However, the Advisory Council recommends establishing a universal single-payer national pharmacare program to cover prescription drugs for all Canadians. This program would cover a list of essential medicines starting in 2022, and that list would be expanded gradually over the next five years. These medicines would be fully covered following a $2 or $5 copayment, up to an annual out-of-pocket cap of $100 per household. Of the four guiding principles established by Normandin Beaudry, these recommendations leave out the public-private mix and raise serious concerns about efficiency and cost stability.

How can we promote accountability and sound consumption choices if Canadians are spared the responsibility of prescription drugs costs, besides a small contribution to the overall cost at the pharmacy? With the suggested reimbursement methods, how does the government intend to influence behaviours to mitigate waste and accelerated cost increases?

Prevention should be at the core of societal concerns, which would counter rising health care costs. Private plans are grounded in this principle and foster the presence of healthy and active employees in the workplace. Prescription drug costs are a significant incentive for organizations to invest in health care.

And our list of concerns just keeps getting longer:

  • The Advisory Council recommends that the universal public plan establish the foundations for the provinces and territories. Has the risk of negative impacts on proven plans in some provinces—such as Quebec’s PPDIP and BC’s Medical Services Plan, which are often quoted as examples—been properly assessed? In its initial discussion paper, the Council proposed the analysis of three prescription drug insurance plan models. However, of those three, two models (the mixed plan and the catastrophic coverage plan), are barely touched upon throughout the report’s 171 pages.
  • A single-payer public plan would involve the implementation of national IT infrastructures, in an area where health, technology and insurance collide. How would such an intricate matter be managed in order to avoid mistakes that have already occurred in other major, nationwide IT projects?
  • Furthermore, there is no mention of the agreements included in different employment contracts and promises made to retirees.
  • A final mystery remains: who will pay? According to the Advisory Council, employers would save $750 per employee, per year and the average worker would save over $100 per year. Based on the Advisory Council’s estimates, the plan should cost the government approximately $15 billion by 2027. However, out of nothing comes nothing: companies and citizens will surely have to pay for this new program through direct or indirect contributions, which will offset any promised savings. And given the risks related to inefficiency and waste, are there any guarantees that this option will not eventually lead to a cost increase?

Many key questions remain to be answered.

We wish to express our appreciation of several recommendations included in this report. On the other hand, we deplore the fact that existing management mechanisms and tools that have proven to be effective are swept aside. We are also concerned about the limited analysis regarding how to raise the additional $15 billion in public funds required to fund the national pharmacare plan.

_Excerpt from the Advisory Council’s final report, page 96
“As the focus of our work was to make recommendations on the design and implementation of national pharmacare, we did not feel it was our place to go more deeply into the issue of how to raise the revenue needed to fund the federal contribution to the program.”

The next steps will reveal whether the Government of Canada will consider the Advisory Council’s recommendations and the issues raised by Normandin Beaudry. As always, we will keep you informed of any developments. In the meantime, feel free to contact our experts for more information.