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Feds Need to Become Involved with Pharmacare

par Andrew Rickard | October 23 2015 11:33AM

A report from the C.D. Howe Institute suggests that the federal government needs to play a larger role in helping the provinces to manage drug care costs, and suggests looking at a mixed financing model like the one used in Quebec.

Authors Åke Blomqvist and Colin Busby point out that, measured as a share of overall health expenses, prescription drug costs more than doubled between 1975 and 2014, going from 6.3% to 13%. They argue it is unrealistic to imagine that a universal pharmacare plan could pay essentially all drug costs with only very limited patient charges.

Instead, the paper recommends a federal initiative that would deal with gaps in access, high drug prices, and varied provincial coverage by allowing some drug costs to be privately funded. In return for providing a base level of coverage and ensuring access for low-income people, the provinces would receive partial funding from the feds. The report suggests that, with federal involvement, there would also be an opportunity for more cross-country cooperation in drug pricing, formulary design, and in the creation of a drug strategy for rare and high-cost diseases.

"In the model we envision, a province’s plan would automatically include anyone without private insurance (or coverage through another provincial plan), as in the model used in Québec today," reads the report. "In Québec, every resident is covered either by a (government-approved) private plan offered through employment or membership in an occupational group, or by one of the government plans. Those enrolled in the provincial catastrophic plan would be charged a tax-based premium (collected as part of their income tax, along with the drug costs they would be responsible for under the plan’s deductible)."

The authors say that private plans would be required to offer coverage that would be at least equivalent to the provincial catastrophic plan, including deductibles or patient co-payments, and with respect to the drugs included in its formulary.

"Because it would rely on a combination of public and private coverage, the approach we advocate would imply less cost and risks to provincial governments than the single-payer public monopoly model that has featured in several recent reports. And because it builds directly on existing provincial plans, our approach would also stand a better chance of overcoming the political hurdles that any proposal for a joint federal-provincial initiative inevitably faces in this complex area," conclude the authors. "None of the provincial models that exist today is 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."

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