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An expanded federal role in financing pharmacare would set the stage for wider coverage and greater cooperation in drug pricing.

October 21, 2015 – An expanded federal role in financing pharmacare would set the stage for wider coverage and greater cooperation in drug pricing, states a new report from the C.D. Howe Institute. In “Feasible Pharmacare in the Federation: A Proposal to Break the Gridlock,” authors Åke Blomqvist and Colin Busby propose a politically affordable way forward to start addressing the runaway drug prices paid by Canadians.

“Pharmacare is a top-of-mind issue for many Canadians,” states Blomqvist. “As a share of overall health costs, prescribed drugs rose from 6.3 percent in 1975 to 13.4 percent in 2014,” he adds. There is also widespread agreement among provincial premiers and health policymakers that Canadians need improvements to the existing arrangements for drug policies.

The authors concur that, every province, no matter its size, should ensure that no one fails to fill a prescription because of lack of financial means. However, they caution that in considering how this could be accomplished, one must pay close attention to the additional burden that such an initiative would put on government budgets, which will be increasingly strained as Canada’s babyboomers retire and working-age taxpayers become a smaller share of the population. 

The report proposes instead a less costly federal initiative under which a substantial share of total drug costs would continue to be privately funded, but in which the main problems – gaps in access, the high cost of pharmaceuticals and varied provincial coverage – would be eased. Under this initiative, the federal government would:

  • transfer additional funds to provinces whose existing or new pharmacare programs respect minimal conditions for an income-tested upper limit on annual family payments, and the timing of such payments;
  • become a partner in an expanded version of the Pan-Canadian Pharmaceutical Alliance (PCPA);
  • cooperate with provinces on a model drug formulary and financing of exceptionally high drug costs for patients with certain “rare diseases”; and
  • work with the provinces to improve quality of prescriptions.

Because it would rely on a combination of public and private coverage, this approach would imply less cost and risks to provincial governments than a single-payer public monopoly model. Further, because it builds directly on existing provincial plans, it would stand a better chance of overcoming the political hurdles.

“None of the provincial models that exist today are perfect, but some are better than others and we think it is time to break the political gridlock and start moving towards a model that makes important inroads into the biggest shortcomings of the expensive and flawed system we have today,” conclude the authors. 

Click here for full report​

The C.D. Howe Institute is an independent not-for-profit research institute whose mission is to raise living standards by fostering economically sound public policies. It is Canada’s trusted source of essential policy intelligence, distinguished by research that is nonpartisan, evidence-based and subject to definitive expert review. It is considered by many to be Canada’s most influential think tank.

For more information contact: Åke Blomqvist, Adjunct Research Professor at Carleton University, and Health Policy Scholar, C.D. Howe Institute; Colin Busby, Senior Policy Analyst, C.D. Howe Institute; 416-865-1904, or email: amcbrien@cdhowe.org.