The premiers vs. drug costs

TheStar.com – Opinion/Editorial
Published On Sun Aug 15 2010

Merchants routinely offer one item for $3 or two for $5. Canada’s premiers want to extract the same sort of bulk savings from prescription drug manufacturers by coordinating their purchases.

The provinces collectively spend $10 billion a year on prescription drugs, so the stakes are high. And any money saved could be reinvested in other health-care services.

At their annual meeting in Winnipeg earlier this month, the premiers announced plans to set up a national agency that would be responsible for purchasing prescription drugs and, ultimately, medical equipment, as well as for jointly evaluating and approving new drugs for all the provinces and territories.

“We’re really just beginning to understand how much we can do together,” noted Premier Dalton McGuinty. But that’s not quite right. Coordinating drug approval and purchasing as a means toward reducing costs is not a new idea. Indeed, at the end of their 2001 annual meeting, the premiers, including Ontario’s Mike Harris, announced that they would work together to control drug costs.

That initiative went nowhere, however. Since health-care costs, of which drugs are an increasing part, are rapidly moving beyond our ability to pay, the premiers cannot afford to fail again.

There are some welcome signs that this time will be different. The last round was contingent on Ottawa’s involvement; this time the provinces seem willing to go it on their own. The fiscal situation is so dire that they have little choice. In Ontario, the health budget already consumes 46 cents of every program dollar and is projected to rise to 70 cents in 12 years, crowding out every other service.

However, it is one thing for provinces to agree in principle and another for them to get a national agency up and running. If there is a risk that this plan will get bogged down in inter-provincial politics, Ontario, which accounts for $4 billion of drug purchases, should be prepared to strike deals with other willing provinces. The remaining provinces can always come on board later when they see it is working.

McGuinty’s provincial Liberals have already shown that savings can be achieved with some political will. Earlier this year, they did battle with pharmacy chains to bring down the price of generic drugs from 50 per cent of the brand-name version to 25 per cent.

The timing of further successes is important. The federal health-care funding accord, under which Ottawa subsidizes 20 per cent of provincial costs, expires in 2014. The provinces will be in a stronger position to negotiate a new deal if they can show they’ve done all they can to control costs.

But any savings achieved through coordinated drug approvals and purchasing should be reinvested in necessary health-care services rather than be used as an excuse for cutbacks in federal funding.

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