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The final report of the federal Advisory Council on the Implementation of National Pharmacare, which was chaired by former Ontario health minister Eric Hoskins, recommends a universal pharmacare program with Ottawa covering all incremental costs. We offer a second opinion. There are better, cheaper ways to achieve the same goal.

The council’s proposal would begin by covering 136 essential medicines as of 2022. As many observers have repeatedly warned, a one-size national program would not mesh well with existing provincial drug programs, nor with the provincially managed and funded doctor and hospital services that run alongside them. Because provincial tax-funded drug programs have varying levels of coverage and costs, the advisory council’s recommendations imply major differences in incremental cost and therefore in related federal funding across the country. That very likely would be a problem in our hypersensitive federation.

Our recent research describes two ways of filling current gaps in comprehensive coverage that would come with lower price tags. One estimates the cost of new provincial programs for uninsured individuals that would be similar to what is currently available to seniors and low-income households in each province. These estimates are uncertain, because uninsured people may use fewer or different drugs than people currently covered, and their coverage may involve copayments and deductibles different from what people currently covered pay. Subject to those caveats, filling gaps in comprehensive coverage in this way could cost up to $5.6 billion across the country in 2022. That’s 40 per cent more than the projected cost of existing programs. The potential increase varies a lot from province to province, ranging from nothing in Quebec — which already has universal coverage via a mix of public and private plans — to more than double baseline spending in New Brunswick, Manitoba and Alberta.

The second estimate models the cost of implementing a universal insurance scheme similar to Quebec’s insurance model, which since 1997 has made enrolment in either public or private insurance mandatory. Quebec collects premiums from working-age and high-income senior enrollees in its public system. These premiums are a useful proxy for the cost of covering currently uninsured people, since enrollees’ premiums do collectively cover their costs. Filling gaps in comprehensive coverage in this way might cost $2.3 billion across the country in 2022 — a 16 per cent increase from the baseline. This approach, too, has different implications for cost increases from province to province. They range from zero in Quebec, which already has such a system, up to increases of one-third or more in New Brunswick, Manitoba and British Columbia.

Like Quebec, provinces adopting this insurance model could recover much or all of their costs with premiums. (In Quebec, premiums initially more than offset the incremental cost, with the result that direct provincial spending on prescription drugs fell by about $5 per person.)

The advisory council’s proposals would increase overall public prescription drug expenditures by some 54 per cent compared to the baseline — more than either of the options we looked at. The increases by province range from about 40 per cent in Ontario and Alberta to almost double in Quebec and Newfoundland and Labrador. These differences — like the differences among the gap-filling approaches we model — reflect differences both in the share of the population of each province currently covered by public or private insurance, as well as in the extent of current coverage, including which and how many medicines appear in provincial formularies. As of 2015, none of the provincial prescription drug insurance plan formularies covered all medicines considered essential for primary care. There is even less agreement between public formularies when it comes to other drugs.

In all provinces, the estimated cost of implementing Quebec’s insurance model is lower than the cost of the universal essential medicines plan the advisory council recommends. The difference between the two estimates is largest in Quebec ($0 vs. $280 per capita, respectively) and smallest in B.C. ($100 vs. $170 per capita, respectively). Another serious drawback of the advisory council’s approach is that it would rule out premiums like those Quebec collects, thus preventing other provinces from financing their increased costs this way.

The advisory council’s report does briefly note the different implications of its recommendations for costs in different provinces, but spends too little time reflecting either on the reasons for these differences or the fairness issues bound to arise if federal financial support differs appreciably from one province to another. Instead of providing everyone with limited coverage for a limited number of medicines, provinces could achieve universal coverage with a more comprehensive formulary in a mixed system, at less cost. That would be a more effective and fairer route to better drug coverage.

Published in the Financial Post

Rosalie Wyonch is a policy analyst and William B.P. Robson is president and CEO, C.D. Howe Institute.