National drug plan could save $10.7 billion annually

Canada could save up to $10.7 billion a year in drug costs through a national pharmacare program according to a new report from the Canadian Centre for Policy Alternatives.

The Canadian Health Coalition is urging the Federal government to work with the provinces towards such a plan.

“Canada has an American-style system of paying for drugs, and it yields American results – inequity, waste and high cost,” says Health Economist Robert Evans. “Private insurers, Big Pharma, anti-tax ideologues and apathetic governments have kept this beyond our reach.”

“Canadians cannot afford not to have universal pharmacare,” says the study’s author, Marc-Andre Gagnon, an assistant profession in the School of Public Policy at Carleton University. Gagnon argues that Canada’s “jumbled assortment of public and private plans” are inefficient, costly and inequitable.

“A drug insurance plan is not only a way to compensate for or reimburse drug expenses, but also a way to control costs through efficient pharmaco-economic assessment of new drugs and by developing bargaining power when dealing with powerful transnational drug companies,” states the report.

The call for a national pharmacare plan is not new. In 1964 the Royal Commission on Health Services recommended such a plan, as did the National Health Forum in 1997. Even the 2002 Romanow Commission recommended catastrophic drug coverage as a first step towards a national pharmacare program.

Canada spent $25.1 billion on prescription drugs in 2008. It is one of the fastest growing health care costs – since 1985 drug costs have risen by 10 per cent per year.

Almost one in four Canadians has no drug coverage, and 8 per cent of Canadians say they did not fill a prescription in the last 12 months due to the cost of the drugs.

Savings would come from:

  • 6 per cent savings on administrative costs, amounting to $560 million/year
  • 10 per cent savings on tax subsidies on private plans totally $933 million/year
  • Public plans are better able to negotiate better drug prices — Private plans pay 7 per cent more for generic drugs, and 10 per cent more for non-patented brand name drugs

At present Canada’s pays 30 per cent more for drugs than the OECD average. Australia, New Zealand, United Kingdom, France and Sweden have lower costs, and lower growth of drug costs. All have some form of universal public drug coverage.

The report is being released just as the provincial and federal health ministers meet in St. John’s, Newfoundland this week. The Ministers are working on a plan to use their collective buying power to reduce the price of drugs.

To download the complete report, go to:

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