It’s Canada’s only hybrid model that leverages public and private insurers to provide universal access to most drugs. And it’s relatively inexpensive.
Canada is about to take a critical shot at a national approach to pharmacare — ensuring that every citizen is able to fill a doctor’s prescription regardless of income, age or health.
This reform is badly needed. Today, drugs often provide the most effective medical treatments, sometimes eliminating the need for major surgical procedures and preventing manageable conditions from developing into critical ones. Yet not all Canadians can afford the drugs they’ve been prescribed. Public drug benefits cover seniors, and only three provinces have specific public drug programs for children.
Ensuring universal drug coverage at a reasonable cost for government is a worthy public policy goal, but there are various ways the federal government can achieve it.
The foundations for Canada’s first national pharmacare system are expected to be set after the federal budget is handed down on March 19. The final report of the Advisory Council on the Implementation of National Pharmacare is expected to be delivered sometime soon afterwards, offering recommendations for what measures the federal government should take.
One jurisdiction public policy-makers should be encouraged to look at is Quebec. It has made remarkable achievements with its unique hybrid pharmacare plan, which it introduced in 1997 as a framework to improve accessibility and better control public drug costs. It is the only province using a hybrid model that effectively leverages both public and private insurers to achieve universal coverage.
Quebec policy-makers began their pharmacare journey with an ambitious set of goals:
- They wanted to provide universal access to a comprehensive list of medically necessary drug treatments, to improve public health outcomes and reduce unnecessary medical procedures.
- They wanted to set clearer rules of engagement for all public and private stakeholders (employers, unions, multi-employer trusts and trade associations, individuals, insurers, government agencies, pharmaceutical companies and their wholesalers) to work more cohesively so that all Quebecers would have access to drug coverage that was as comprehensive as possible and as affordable as possible for the province.
- And they wanted to reduce public expenditures for drugs and public health care, and eliminate a patchwork of existing drug-access programs that had evolved over the years.
In a nutshell, they wanted to achieve the holy grail of health policy: more for less.
So how did they do?
Quebec’s pharmacare hasn’t met all its objectives, but it has achieved something remarkable.
The evidence is in a study I did in the summer of 2018 for the Canadian Life and Health Insurance Association. For it, I assessed the financial performance of Quebec’s pharmacare in relation to its features and underlying policies. It was not a simple task given the limited availability of granular data over such a relatively short period of time. What I found is also supported by the most recent statistics by the Canadian Institute for Health Information.
All citizens now have first-dollar access to the most comprehensive list of drug therapies in Canada, which means no deductible must be paid for seniors and children, and adults pay a low deductible — $19.90 a month.
When private expenditures on drug treatments are tallied up with public expenditures, the total spent on drug treatments is 10 to 12 percent higher per capita than in the rest of Canada. But when calculated alone, public expenditures for drugs have gone down on a per capita basis.
A lot of adjustments have been made over the years to get there. For one, R&D incentives for drug manufacturers were abandoned in 2005 as companies continued to shift away from Canada. Policy-makers also came to acknowledge the significant progress in reducing drug costs made by other Canadian provinces through the program listing agreements (PLAs) of the pan-Canadian Pharmaceutical Alliance (pCPA); Quebec joined the program in 2016. Also, health officials eliminated a policy called BAP-15 in 2013 that extended certain brands’ drug product patents by roughly three years, and removed roadblocks to generic substitutions in 2015.
These changes have reduced costs so much that Quebec’s hybrid system of pharmacare could well be the most effective drug plan in Canada, once the effects of joining pCPA’s PLA program are more fully reflected.
Quebec’s per capita net public drug costs dropped significantly compared with costs in the rest of Canada after policy adjustments were made in 2013 and 2016, while the province continued to provide greater coverage (figure 1). The savings would have been higher had these policy changes been in place earlier (figure 2).
Quebecers owe this happy development to policy-makers who were willing to look outside the box and find the most effective ways for public and private insurers to work effectively together. They did this by setting the rules to produce these outcomes:
- Employers and private insurers were given minimum yet high standards for providing drug coverage — providing competitive workplace benefits to their employees.
- The public could rely on a healthy and competitive environment as private plans competed with each other through pricing and customized features, which tended to influence the offerings of the public plan. But nobody could be left without coverage due to their health status.
An employer’s plan is mandatory for anyone eligible to join. However, those who do not have access to an employment-related plan must join the public plan and chip in for the equivalent of the premiums they would otherwise have to contribute, with exceptions being low-income citizens and social-benefit recipients.
Now, is Quebec’s pharmacare program perfect? No. Quebec health authorities still have to routinely improve access, especially for the province’s low-income working population. But so do health authorities in the rest of Canada. However, Quebec has achieved an impressive number of its program’s objectives, and it is still making improvements.
Public spending on drugs is now lower per capita in Quebec than it is in the rest of Canada, according to the Canadian Institute for Health Information data (and as seen in figure 1). This is thanks to reforms and regulations that have been introduced over the years.
Quebec’s public costs are offset by, among other things, the premiums paid by the 1.5 million Quebecers who have to join the public plan’s drug access pool because they cannot access health benefits through their workplace. The institute outlines these net expenditures in its statistics (table D.4 in the data tables available here), and these are the figures I have used in my research. They are not to be confused with the institute’s total tally of public expenditures before the premiums of those of 1.5 million otherwise uninsured Quebecers are factored in (table D.3).*
Once the advisory council has presented its report in March, Canadians will have to determine whether their national pharmacare system should be run by a single public agency or whether the hybrid system we have now (a public-private system) should be strengthened with a new set of rules.
The lesson of Quebec’s hybrid system is that it is possible to keep public and private interests in a competitive balance with less cost to the public treasury and less burden on public administration to develop and deliver all the possible solutions.
An earlier version of this op-ed stated the advisory council’s pharmacare report is due out on March 19, the day the budget is released. It is expected sometime soon afterwards.
* The information in this paragraph has been added to further explain the statistics used by the author and to more precisely identify their source.
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