Pharmacare promises

In two years, maybe three, a lot of people in health policy circles might be wondering what happened to that whole pharmacare thing.

Or it might not be that much of a mystery. The initial flurry of bullish press coverage that followed the tabling of Bill 64 — “An Act respecting pharmacare” — was itself followed almost immediately by more caustic commentary questioning whether the bill really represented the sea-change in social policy its proponents said it was.

“You see a lot of ‘path-toward’ language in the legislation but I struggled to find anything that looked like a concrete path to a new system,” says Marion Sandilands, a specialist in constitutional law at Conway Litigation. “It’s very limited in terms of what’s on offer and what the federal government is obliged to do.”

“Federal governments, specifically Liberal ones, have been discussing national pharmacare since the Second World War,” says Chris Bonnett, a consultant on drug plans and policy. “We don’t seem to have achieved much so far.”

A lot of early coverage of the pharmacare bill oversold it — but it’s also not quite the nothingburger described by its critics. The bill does not establish a national pharmacare program. It doesn’t even offer immediate coverage for the two categories of pharmaceuticals the Trudeau government has earmarked as the starting point for a national pharmacare program: contraception and diabetes drugs.

However, it does extend an offer to negotiate individual agreements with provinces and territories to “make payments” to them to “increase any existing public pharmacare coverage—and to provide universal, single-payer, first-dollar coverage—for specific prescription drugs and related products intended for contraception or the treatment of diabetes.”

It commits the federal government to “maintaining long-term funding for the provinces, territories and Indigenous peoples to improve the accessibility and affordability of pharmaceutical products, beginning with those for rare diseases.” It states that the federal health minister must task the Canadian Drug Agency with drafting a national formulary of “essential” drugs that would be covered by a future national pharmacare system (which critics say is the sort of thing you’d have completed before tabling legislation).

“It’s worth remembering that there’s no money on the table at this point,” says Sandilands. “There’s nothing in this year’s budget; it’s supposed to be in next year’s budget. So you have to wonder who’s coming to the table when there’s no money on it. The [health] minister apparently needs some time to determine how this is going to work.

“So no, I don’t think you’re going to be seeing negotiations start anytime soon.”

Bonnett says the premise of pharmacare itself was oversold when the Parliamentary Budget Officer released its report last year. The PBO report predicted that while a single-payer universal drug plan would cost federal and provincial governments $11.2 billion more in the first year and $13.4 billion more in year four, Canada would save money on drug purchases — $1.4 billion in 2024-25, rising to a saving of $2.2 billion by 2027-28.

“The problem with the PBO’s estimate is that it’s based on the assumptions given to it by a parliamentary committee,” says Bonnett. “It assumed pharmaceutical companies would make across-the-board price cuts, and ignored that billions of dollars of drugs now covered by private plans would no longer be covered by pharmacare.

“The PBO said it could save about 5%, but that assumes that brand pharmaceutical makers are willing to cut their prices by 20%. That’s an unsupported assumption.”

And the idea that pharmacare would be a fully public system — supported by Bill 64’s offer of “single-payer, first-dollar coverage” for contraception and diabetes drugs — could be a source of tension if a future national formulary turns out to be less generous than those offered by the more than 100,000 private plans that cover most Canadians now.

But even if this legislation kicks the can far down the road, says Bonnett, provincial and territorial governments should think hard before rejecting its offer of negotiations.

“If I were them, I’d be looking to discuss adequate, long-term funding,” he says. “My fear is that the climate in this country is so politicized, so polarized, that this legislation is so closely associated with a prime minister who is not terribly popular, that the provinces might not see this for the opportunity that it is.”

Provinces and territories could use the time between now and the next election to negotiate with Ottawa a combination of “filling in the gaps and topping up,” Bonnett says.

“This could be used to add coverage for new drugs, or to eliminate co-pays for drugs that are already covered, so that they are free to patients,” he says. “The federal government would be there to expand coverage or eliminate cost-sharing on certain drugs and related devices.”

The actual contours of a national pharmacare plan (assuming one ever emerges) won’t be apparent for years to come. The legislation’s narrow scope undoubtedly reflects how deficit spending during the pandemic narrowed the federal government’s fiscal elbow room.

“If we’d tried to do this in the 1960s or 1970s, if we were starting from scratch, then sure, the public model probably would be the way to go,” said Bonnett. “You’d probably see lower administrative costs and lower drug costs. But the government is so deeply in debt and deficit now, launching something as costly and comprehensive as a public plan at this point seems impossible.”

Plus, current polling suggests the Trudeau government faces long odds in the next election. Bonnett argues that ought to encourage provinces and territories to seek a deal with Ottawa now, while they still can — because social spending is politically awkward to eliminate.

“Considering the Conservatives’ current strength in the polls, the Liberals may not be in a position to pursue this anyway,” he said. “The Conservatives’ history suggests they’re content to let the provinces deal with this.

“But if [provinces and territories] can do deals by [the next election], with funding in full, it’s very unlikely that a subsequent federal government would be able to abandon that.

“Look at what happened in the U.S. with Republican efforts to undo the Affordable Care Act. They pursued that for years, and it went nowhere.”