With the federal election on the horizon, the Advisory Council on Implementation of National Pharmacare released its final report, providing the Liberals with a path forward on how to implement a universal, a single-payer, public system of prescription drug coverage starting in 2020. The plan also helps to fulfill the Trudeau government’s mandate commitment to make prescription drugs more affordable.
The report provides a stepwise implementation plan to achieve universal coverage by 2027 and includes a pathway for expensive drugs to treat rare diseases. The Council argues this system will save Canadians billions by directly lowering the price of prescription medicines and by avoiding the costs incurred when improperly treated manageable conditions become life threatening illnesses.
The politics of National Pharmacare
With the release of the Advisory Council’s report, we anticipate that a roadmap to implementing pharmacare will be a key plank in the Libera’s re-election plan. The report provides political value for the Liberals prior to the 2019 election in two ways:
- First, it reinforces the Liberals’ progressive credentials: Elections in Canada are increasingly about the ability of the progressive coalition to unify behind one party and turn out to vote. There is a risk for the Liberal Party that the wide progressive coalition that brought them to power in 2015 would splinter to the NDP and Greens or be disillusioned and stay at home in 2019. For a party and a Prime Minister often criticized for not getting things done, the report provides the foundations for implementing a long sought-after progressive goal.
Both the NDP and Greens are expected to campaign on national pharmacare, but the fact that the Liberals did the groundwork and costing bolsters the Party’s credibility in progressive circles. It also gives Liberals credence on the campaign trail to say, “why vote for an untested and un-costed NDP or Green pharmacare plan when you can have the real deal with the Liberals?” The government will seek to highlight this contrast, pointing out that it isn’t “nation building on the back of a napkin.”
- Second, it reinforces the Liberals’ commitment to making life more affordable for Canadians: Liberals ran in 2015 on improving life for “the middle-class and those trying to join it.” In recent months, Conservatives have sought to portray Liberal policies such as carbon taxes and higher deficit spending as making life more expensive for that same middle-class. With the release of the report, Liberals will try and put the debate back onto their footing to argue that policies like pharmacare will make life more affordable to middle-class Canadians and to seniors. We should expect the Conservative counterpunch to be focused on the increased $15 billion cost of the proposal, situating the expense alongside broken promises on deficit spending and previous promises on pharmacare that have not come to fruition.
The plan also provides a benchmark against which the health platforms for the Conservatives, NDP, and Greens will be measured. Given that the House of Commons is about to rise next week, and likely will not sit again until after the 2019 election, and that voter attention will soon be distracted by the joys of a Canadian summer, the Liberals need to deliver results on issues which form the basis of their core narrative and promises.
While the NDP and Greens may offer competing visions for universal pharmacare, Conservatives will draw distinctions on what role the federal government should play in delivering health care. While health care has always ranked high as an election issue for Canadians, it remains an open question whether universal pharmacare will be a defining question for Canadians at the ballot box in October.
However, the true test to implementing national pharmacare lies afterward. The next federal government, regardless of stripe and composition, will have to negotiate implementation with provincial and territorial governments if they wish to implement pharmacare. Renegotiation of the Health Accord was not smooth sailing for the Trudeau government early in their mandate and the Federal-Provincial-Territorial relationship has become even rockier with the recent wave of conservative-leaning provincial governments. Many of the Advisory Council’s recommendations rely on negotiation and collaboration with the provinces and territories to achieve national pharmacare and meet its ambitious timelines and the state of this relationship for the next federal government will be critical to implementation.
A potential roadmap
Tasked with providing the Ministers of Finance and Health with advice on how to implement national pharmacare, the Advisory Council’s report proposes applying the five fundamental principles of the Canada Health Act to pharmacare: universal, comprehensive, accessible, portable, and public. Like health care, provinces and territories would deliver national pharmacare in a manner that meets or exceeds agreed-upon national standards in exchange for federal funding.
The roadmap to national pharmacare includes:
- Enacting national pharmacare through new legislation, separate from the Canada Health Act
- The creation of the Canadian Drug Agency, an arms-length organization that will have strong patient representation and be accountable to Canadians
- The creation of a national formulary in two key phases:
- Establish an essential medicines list to cover most major conditions and represent about half of all prescriptions by January 1, 2022
- Establish a full, comprehensive national formulary by January 1, 2027
- The development of a detailed national strategy and distinct pathway for funding and access to expensive drugs for rare diseases, implemented by January 1, 2022
These measures will be supported by several other recommendations to ensure that the cost of a national pharmacare plan is reduced as much as possible, including:
- Strict management of the national formulary, including mandatory generic substitution policies, requiring biosimilar substitution, and raising awareness of the equivalence of generics to brand name drugs to increase use
- Negotiating performance-based funding agreements with manufacturers of rare disease drugs
- Recommending the federal government advance efforts to strengthen the Patented Medicines Regulations to lower prices for all payers (reforms which were first introduced in May 2016)
How much would Canadians pay?
Improving the affordability of prescription medicines was a central component of the Liberals’ 2015 platform. The Council’s recommended strict limits to copayments would help achieve this goal. Recommended limits include:
- $2.00 Copayment for drugs on the essential medicines list
- $5.00 Copayment for all other drugs
- Exemption from copayments for Canadians receiving social assistance, government disability benefits, or the federal Guaranteed Income Supplement (GIS)
- No person or household would pay more than $100 per year
The report estimates that the average Canadian household spends about $450 annually on prescription medicines, placing the savings at about $350. For employers who provide drug benefits, the Council estimates that over $750 would be saved annually per employee, with the average worker saving over $100 per year in plan premiums.
The Council also recommended that Canadians be permitted to purchase private insurance to supplement coverage under national pharmacare, which could be applied to associated out of pocket costs, such as copayments and drugs not listed on the national formulary.
How much will it cost to implement?
The Council recommends that the federal government pay for the incremental cost of implementing national pharmacare and proposes that a new, dedicated fiscal transfer be created to provide long-term, predictable, fair, and accessible funding to the provinces and territories.
The cost of the proposed program is supposed to be incremental to the federal government, while achieving reductions in overall prescription drug spending through increased negotiation power, lower administrative costs, and other efficiencies:
- In 2022, it is estimated that national pharmacare will cost an additional $3.5 billion, with total prescription drug spending pegged at $300 million lower than it would be without pharmacare
- By 2027, as the national formulary becomes comprehensive, incremental costs are expected to reach $15.3 billion, while total spending on prescription drugs is estimated to be $5 billion less than without pharmacare
Initial reaction to the plan
Health Minister Ginette Petitpas Taylor issued a statement thanking the Advisory Council for its work and committing to carefully reviewing the report and its recommendations. The Minister also pledged to work with the provinces and territories as they consider next steps, while moving ahead with Budget 2019 commitments, such as establishing the Canadian Drug Agency.
Conservative Leader Andrew Scheer expressed no confidence in the Liberal government to implement the plan and called for the government to focus on the ‘gaps in the system.’ NDP leader Jagmeet Singh welcomed the report and its findings, noting that the NDP have long advocated for a universal national pharmacare plan. Green Party Leader Elizabeth May called for implementation now, not eight years from now and noted that the Council’s recommendation to lower prices of patented drugs was “too weak,” and that the Greens would apply the approach of the UBC Therapeutics Initiative to new medicines.
In the lead up to the fall election, the Council’s report and its sixty recommendations will be reviewed in detail by parties, governments, and stakeholders alike. Promises and proposals on some form of pharmacare have been made before and many Canadians will be skeptical whether the promise of pharmacare will be fulfilled following the 2019 election.