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June 13, 2013 – Canada’s provincial pharmacare systems have flaws not found in other developed countries that could be addressed by integrating prescription drug coverage into the broader healthcare system, according to a report released today by the C.D. Howe Institute. In “Rethinking Pharmacare in Canada,” authors Steven Morgan, Jamie Daw and Michael Law find that integrating pharmaceuticals into the healthcare system by covering medically necessary prescription drugs at little cost to patients would result in improved performance on key pharmacare policy goals.

All developed countries with broad public healthcare systems provide universal coverage for prescription drugs – except Canada, note the authors. Instead, Canadian provinces allocate limited public subsidies for prescriptions drugs, leaving the majority of costs to be financed out-of-pocket and through private insurance. They review three of the main approaches to provincial pharmacare policy – exemplified by British Columbia, Ontario, and Quebec – and compare them with policies in other countries.

“All provincial systems in Canada involve considerable patient charges and multiple payers that are not responsible for financing patients’ medical and hospital care,” said Steven Morgan.  “The costs borne by patients are known to reduce the use of medicines that might otherwise improve patient health and reduce costs elsewhere in the healthcare system.” In addition, “the involvement of multiple payers diminishes purchasing power, adds administrative costs, and creates funding silos that limit the potential for healthcare managers and providers to consider the full benefits and opportunity costs of prescription drugs as an input into the broader healthcare system,” said Morgan.

Countries that integrate pharmaceuticals into the healthcare system achieve better access to medicines, and greater financial protection for the ill, at significantly lower total cost than any Canadian province achieves, the authors find. They recommend that provinces expand public pharmacare programs to all segments of the population with a specific focus on promoting access to medicines of proven value-for-money in our healthcare system. “Though the immediate effect of this would be an increase in government spending, this would, over time, be more than offset by savings to patients, employers and individuals who purchase stand-alone private drug coverage,” concludes Morgan.

Click here for the full report.

For more information contact: Steven Morgan, Associate Professor, University of  British Columbia, Centre for Health Service and Policy Research; or Colin Busby, Senior Policy Analyst, C.D. Howe Institute. 416-865-1904; email: cdhowe@cdhowe.org