Federal politicians are saying one thing, but the experience on the ground tells a different story.
The idea of a national drug plan has finally gained traction in this election campaign. And, as numerous commentators have explained, it’s an excellent idea. In the first place, and in the spirit of the Canada Health Act (which still has considerable support amongst Canadians), it entails a redistribution from the healthy rich to the unhealthy poor. In the second place, it is more economically efficient, as the purchasing power of a single national entity could command much more competitive rates than a system fragmented between numerous public and private purchasers. (For a number of reasons, Canada pays amongst the highest prices in the world for both brand-name and generic drugs). But God and the devil are in the details, and it may be worth considering why pharmacare might be difficult to implement politically regardless of its strengths.
Is Canada really ready for a truly national redistributive health care policy? The redistributive health care systems we currently have are discrete provincial systems, largely funded by provincial tax revenue. (Federal health care transfers amounted to only 12% of provincial health care spending in the 1990s following the CHST, currently stand at about 20%, and are forecast by the PBO eventually to fall back to 12% given the most recent federal funding formula.) Provincial populations support public health care: no provincial government to date has attempted to introduce a robust private insurance system, even though it is fully within their capacity to do so. But these systems are regionally demarcated: they are not national. It is one thing for citizens to agree to use their tax dollars to support the well-being of their neighbours; it is another thing altogether for one’s taxes to be used for the health care of those in another corner of the country. Is this an uncharitable reading of Canadians’ support for redistribution? Perhaps not. The very notion of Canada as a “social union” has been supplanted by devil-take-the-hindmost federalism. There is a great deal of resentment on the part of those in the larger and wealthier provinces for the current level of redistribution; it is difficult to see that there would be much enthusiasm for even more redistribution. Ontario, for example, is especially bitter about the $11 billion “gap” between what Ontarians contribute to the federal treasury and what is returned to the province in the form of transfers and spending. Yet a national pharmacare program will disproportionately benefit the sicker, poorer, and uninsured; and the highest rates of chronic ill health, poverty, and uninsurance are not in Ontario. Pharmacare will be another program subsidized by populations already feeling beleaguered and disgruntled at current levels of national redistribution. What makes pharmacare such an admirable programme – its redistributive potential – may also be the reason it becomes too difficult to sell in a federal system.
A separate issue arises with the willingness of taxpayers to cover the cost of drugs. A public pharmacare plan shifts costs from the marketplace to taxpayers; and, as the vitriolic debate over the Affordable Care Act in the US showed, the willingness of taxpayers to shoulder new premiums or higher taxes (especially if they are part of a demographic who are not high users of health care services) cannot be taken for granted. Again, there is nothing wrong in asking citizens to be their brothers’ (and sisters’) keepers: a citizenry which takes such responsibility seriously is the touchstone for a stable and resilient society. But what are the limits? It probably depends on the costs themselves. Livio de Matteo has noted, on this site, the slight decline of drug prices in recent years. Part of this is a result of key brand-name drugs coming off patent; another part is arguably the impact of the recession. But this respite may be short-lived. Pharmaceuticals are increasingly developed on the basis of “precision medicine,” which is the attempt to tailor treatments according to genetic and epigenetic pathways. But the cost of these “precision drugs” is staggering: in the US, five of the most recently approved niche drugs cost an average of US$150,000 per patient per year. Three of these drugs cost US$300,00 per year. And, because they are so lucrative, pharmaceutical companies are increasingly focusing upon these kinds of drug categories for development. Unsurprisingly, the majority of these precision drugs are in the area of oncology, which is why the price of oncology drugs has consistently been rising more quickly than drugs in other areas. But it is not simply the cost of these drugs; it is also their quantity. The number of drugs approved by regulators such as the FDA and EMA that are targeted for use within precision medicine have been increasing precipitously. It is highly likely, then, that the price of drugs may well begin to gather momentum yet again. A cautious individual may see this as good reason to hold off on pharmacare until we know whether it will remain something that we can afford (as we have been doing since the first Hall Report). On the other hand, the time to implement a national drug plan may precisely be before costs start rising again. If provinces were given the gift of prophecy in the 1960s and could see both the total amount, and the proportion of public funds, now spent on health care, it is hard to believe that they would have carried through with their public insurance schemes. Yet despite their cost, we are nonetheless unwilling to give them up now that we have them. Would a public drug plan be any different?
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