Pharmacare – A Solution in Search of a Problem

Seeing the recent news that the federal Liberals and New Democrats have reached a ‘confidence and supply agreement’ that will see the NDP support the minority Liberal government with confidence votes in exchange for progress on Pharmacare and Dental-care programs has piqued my interest.  Is a nationalized Pharmacare program just around the corner?  Or is the opposition we are starting to see from some of the Provincial Premiers a sign that this initiative will fail to launch? 

Actuaries with Insight

While I am not a subject matter expert on this issue, I believe it is worth reminding our readers that back in February 2021, the Canadian Institute of Actuaries issued a paper on this topic entitled:  Pharmacare: Is There a Pill for That?  This paper was largely commissioned to share expert actuarial insight on Pharmacare as a public policy issue of growing importance.  Shortly after the release of this report, my colleague Joe wrote a blog about this topic that you can read here.

One of the main conclusions from this paper was that it is too soon to wholly replace the existing system with a nationalized Pharmacare program.  Instead policymakers should focus on improving the existing system and filling the gaps for individuals without coverage.

One of the key highlights from this report is as follows:

The Government of Canada is considering potential option for universal drug coverage, such as a single-payer federal Pharmacare program. We agree that no Canadian should be left without prescription drug coverage. However, we believe the best way to achieve increased health outcomes across the country is through a Canada-wide framework with elements managed by the federal government, provincial/territorial governments, and private insurance.

The paper went on to propose a framework for prescription drug coverage.  Building on the current private and public programs, the framework was designed to get the current programs to work better together, and to fill-in some gaps.  The framework included key features, like:

  • Negotiating drug prices collectively for all federal, provincial, and private plans across Canada.
  • Establishing a national formulary to define the core and specialty medicines to be covered, ensuring consistency across the country, and limiting the cost borne by the patient to an affordable amount.
  • Providing flexibility to the provinces to design their own structure to coordinate their public plan with private insurance.
  • Pooling the costs for high-cost drugs at the highest level where risk can be better absorbed.

The actuaries who prepared this analysis conclude that this framework would:

  • Provide individuals with the coverage they need;
  • Cap the total costs and volatility for the provincial and private plans; and
  • Allow the federal government to have greater level of participation in providing prescription drugs.

The Right Answer

Again, I am not a subject matter expert on Pharmacare, so I am not going to try to convince you whether this proposal has all the right answers.

Nevertheless, I am skeptical that Pharmacare is in need of a complete re-build, and I am skeptical that nationalizing Pharmacare would be a better solution – especially when the experts in my field are saying that tweaks to the current system would work better.

It is fine for governments to think big and have grandiose ideas for solving problems.  But sometimes, it’s better to improve upon that which is already in place, rather than trying to re-create something from scratch.

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