Prognosis for “Patchwork” Canadian Drug System
The Canadian Life and Health Insurance Association is calling for both tactical and fundamental reforms to the nation’s prescription drug system so that Canadian citizens can reap the benefits long term.
More than 23 million Canadians depend on private insurance to pay for their prescription drugs as only a minority of citizens (those over 65, on social assistance or with catastrophic drug costs) are covered by public insurance. Cost pressures for these citizens are set to get worse due to steadily increasing number of extremely expensive drugs prescribed to treat rare diseases, rates which the Canadian Life and Health Insurance Association (CLHIA) forecasts will grow from 15 per cent of total expenses to over 25 per cent in just three years.
Thus, according to the insurance body and its recent report, Ensuring The Accessibility, Affordability and Sustainability of Prescription Drugs in Canada, action must be taken on the back of its recommendations, or the future of pharmacare in Canada could look very gloomy indeed.
Radical reform
Currently, over 9 million Canadian workers and their dependants rely on employer-sponsored plans, but employers themselves are facing difficulties with prescription drug coverage costs and the insurance body maintains that these schemes will not be sustained for long – creating disastrous consequences. “A pullback on drug coverage by employers would have dramatic implications, not only for individuals but also for governments that are themselves struggling with rising healthcare costs,” according to the paper.
Another 339,000 self-employed workers in the region must purchase health insurance for themselves and their 424,000 dependants. In 2011, life and health insurers reportedly made benefit payments for prescription drugs of $10.1 billion, with private payers accounting for over half of all prescription drug purchases.
But the frightening financial outlook that these figures suggest could be avoided following the publication of the policy document from the CLHIA, which demands – as a priority – the “fundamental reform” of the Patented Medicines Prices Review Board (PMPRB), the federal body that sets prescription drug prices. “There should be one price for prescription drugs for Canadians regardless of whether they have public coverage, private coverage or pay out-of-pocket,” the CLHIA says.
"We need to get the conversation started and believe that our recommendations will result in lower costs and improved access to prescription drugs for all Canadians,” said Frank Swedlove, president of CLHIA. "Employers and individual Canadians should expect nothing less."
Less talk, more co-operation
According to the report, serious discussions must begin with an aim to creating a common national minimum formulary in order to reduce the widespread complexity and confusion in the system. Defining this would not only be a step toward the creation of a new, collaborative end-to-end approval and funding regime for orphan drugs; it would also facilitate the smooth transition of individuals between public and private insurance. A more accurate monitoring framework could then be established as regards off-label prescribing, increasing patient safety and minimising cost escalation effectively, says the insurance association.
Other recommendations by the CLHIA include the suggestion that Canadian provinces adopt a policy of automatically listing newly approved generic drugs as bio-equivalent with the brand drug, filling the current listing gap and creating a substantial amount of savings for affected patients. A more rational approach is also called for on the coverage of specialty drugs for conditions like cancer and auto-immune disorders.
“There is no question that the prescription drug system that exists today is badly in need of reform,” said Swedlove. “The current patchwork of systems across the country inflates costs, creates a great deal of confusion and, even worse, results in significant financial hardship for some Canadians with respect to the cost of drugs.”
Just behind its American neighbour, Canada has the second highest per capita drug costs in the world, primarily down to the inadequate drug cost control in operation. However, the CLHIA report notes that if Canada were to reduce its costs to the average level of OECD countries, the nation’s drug bill would drop by a whopping $9.6 billion annually.
But any long-term solution to the challenges listed above will require both public and private payers to make adjustments to their programs and to work more collaboratively in the future. In order to optimise access to essential prescription drug, a huge increase in co-operation between government and industry (not to mention consumer groups and employees/citizens) will be required.
The CLHIA video can be viewed here.