Parliamentary Budget Office releases estimated cost of single-payer universal drug plan

The Canadian Life & Health Insurance Association (CLHIA) is warning that many Canadians will lose access to drug coverage and that the government’s proposed universal drug program will cost unnecessary billions, after the Office of the Parliamentary Budget Officer published its report, Cost Estimate of a Single-payer Universal Drug Plan, on October 12.

The report estimates the various costs of a single-payer universal drug plan – dubbed Pharmacare in the document – over the 2023 and 2024 period, extending out to 2027 and 2028. “The estimated cost reflects a national application of Quebec’s  Régie de l’assurance maladie du Québec (RAMQ),” the report states. The CLHIA says while the province’s list is considered the best of any public plan, it still covers 7,000 fewer drugs than most private drug plans. 

Incremental costs to the public sector (federal and provincial governments combined) are estimated to be $11.2-billion in 2024 and 2025, increasing to $13.4-billion in 2027 and 2028. Total drug expenditures under Pharmacare are estimated to be $33.2-billion in 2024 and 2025, increasing to $38.9-billion in 2027 and 2028.

The report breaks down current drug spending in Canada, provides a provincial breakdown of projected costs, looks at the percentage spent on generic drugs versus their brand name counterparts and makes assumptions about how the implementation of Pharmacare will impact drug prices. First, they say they expect a common formulary would allow for stronger negotiating power. “Therefore the price of all existing drugs could be negotiated down to the current lowest observable prices in Canada,” they write. “Second, we assume a single public payer would be able to negotiate an additional discount consistent with current confidential rebates that provincial governments are able to negotiate with drug companies.” 

The government’s catastrophic drug plans and essential medicines plan are also examined and broken down.

The CLHIA in a statement says the measures would shift over $14-billion in private insurance coverage onto the government’s books. “Such a program will also result in millions of Canadians having less drug coverage than they do today,” they state. “In 2022, insurers paid $14.3-billion in drug costs under workplace health benefits plans – accounting for over a third of prescription drug spending in Canada. Under a single-payer plan, this entire cost – which grew at eight per cent last year – would shift to government balance sheets.”