The hidden health-care crisis
NationalPost.com – FullComment
17/09/13. Frank Swedlove, National Post
While the rising costs of hospital and physician services continue to grab most of the attention in the debate around health-care reform, high drug costs are eating away at our health system in virtual obscurity. Canadians pay some of the highest prices for prescription drugs in the world and our patchwork system of public and private coverage results in gaps for many. And this situation is about to get much worse as high-end “exotic” drugs will soon be hitting the market. Canada will struggle to pay for them.
We are quickly approaching the point where some employers, particularly small and medium-sized businesses, are considering whether they can maintain their employee drug plans in their present form, or even whether they can keep them at all. Any significant reduction in coverage by employers would leave governments to pick up the slack. If Canada’s drug system is to be successful, provinces and private insurers need to start working much more co-operatively than they do now.
There is some evidence that reform is already happening on a number of fronts. The provinces themselves are working together through the Council of the Federation on brand drug pricing, and also on generic price reform. In addition, earlier this year, all private insurers in Canada launched a national drug pooling agreement that protects fully-insured drug plans, and therefore the plan members, from the full impact of recurring high-cost drug claims.
But there remains much work to be done. Today, employers struggle to understand why they should pay some of the highest prices in the world for drugs while their own provincial government pays less. Further, individual Canadians struggle to understand why a particular lifesaving drug is not covered for them, but is for their friends or family in another province. Meanwhile, the increasing number of very expensive drugs that treat relatively rare diseases threatens the financial sustainability of the entire system.
Today, of 25 OECD countries, Canada ranks second highest, behind the U.S., in total per capita spending on drugs. If Canada made changes so that spending on drugs was more in line with the median of the OECD, it would save more than $9.6-billion per year in drug costs. Prices for prescription drugs are regulated in Canada by the Patented Medicines Prices Review Board (PMPRB), a federal agency that was created over 20 years ago and whose mandate is geared towards keeping prices high. The government needs to update the PMPRB’s overall mandate and operations to convert it into a consumer-driven organization that works to drive prices down.
The ultimate goal for reform of the prescription drug system in Canada must be to ensure that Canadians have access to a fair and equitable system
We also need to level the playing field across Canada with respect to which drugs are covered. Not only do different drug plans each cover a different list of drugs, but our current system adds cost for employers who are trying to offer attractive and comparable drug plans to their employees across different provinces. We believe the time has come for provinces and insurers to begin discussions on creating a common, national minimum list of drugs that will be covered for everyone regardless of where they live or who their employer is. The goal is to provide standard drug coverage for all Canadians, while still allowing those who want to purchase additional coverage to do so.
Finally, Canada needs to put in place an approval and funding strategy for very rare and expensive drugs. Canada lags the U.S. and Europe in reviewing and approving these so-called “orphan” drugs. Health Canada is currently putting in place a new approval process for orphan drugs. However, it is important to establish a fair and sustainable way to pay for them. The private and public sectors will need to work together to find workable solutions.
The ultimate goal for reform of the prescription drug system in Canada must be to ensure that Canadians have access to a fair and equitable system, and that they can get the drugs they need without undue financial hardship as a result of prescription drug costs. Canada’s life and health insurers are ready to play their part.
Frank Swedlove is president of the Canadian Life and Health Insurance Association.
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