Better planning could save Ontario hundreds of millions in health costs: Auditor-General

Posted on in Health Debates – A-G Report
December 6, 2017.   

Hundreds of millions of dollars could be saved every year in drug purchases and health treatments if Ontario’s government planned more thoughtfully and responded more quickly to problems, according to the province’s Auditor-General.

Auditor-General Bonnie Lysyk said her office found numerous instances where money could have been saved over the past year by the provincial government, according to her far-ranging annual report to Queen’s Park. Released on Wednesday morning, the 1,119-page report highlighted possible savings in health care, the electrical system and services for newcomers, proof that the government needs to “plan better,” she said.

“A theme that was central to almost all of our audits this year was the need for government to plan better – and sometimes to just have a plan in the first place,” Ms. Lysyk said in a statement.

Looking for savings in Ontario’s $52-billion annual health budget, Ms. Lysyk’s office found that the province is spending hundreds of millions of dollars too much on generic drugs, laboratory services and stem cell treatments.

At the time of the report, the Auditor-General’s office calculated that stem cell transplants cost $28-million more than necessary because 53 patients were sent to the United States for treatment due to a lack of capacity in Ontario. The transplants cost $35-million in total, five times more than similar care in Ontario’s hospitals – a cost of $660,000 for every patient sent to the United States, compared with a $128,000 cost on average in the province.

The Auditor-General said projections show 106 patients will go to the United States for stem cell transplants from July, 2017, to 2021 for a total cost of $70-million – about $56-million more than the cost of similar care in Ontario.

The report also found that the province is lagging behind other provinces in covering the full cost of cancer drugs. Most new cancer drugs can be taken orally and at home, which means they aren’t fully covered in Ontario. British Columbia, Alberta, Saskatchewan and Manitoba provide full coverage of cancer drugs, regardless of whether they’re taken at home or in a hospital. Cancer drug costs in Ontario have increased by 12 per cent annually, to about $791-million in the 2016-2017 fiscal year.

Ontario could save a substantial amount of money on generic prescription drugs, Ms. Lysyk found. The Auditor-General’s office looked to other countries and found that Ontario’s Health Ministry was still spending too much on drugs, despite efforts over the past decade to reduce drug costs. “Opportunities appear to still exist for the ministry to obtain further discounts on generic drugs,” she said in a statement.

For 20 commonly used generic drugs, Ontario paid $100-million more than the cost of the same drugs in New Zealand, the Auditor-General reported, about a 70-per-cent markup. One reason, according to the Auditor-General, is that the Kiwis tender competitive bids from drug manufacturers, something Ontario does not do.

Ontario’s Health Ministry spent $5.9-billion on drugs last year. However, the audit also found that the Health Ministry spends more on generic drugs than the province’s hospitals – who can buy drugs through their own programs. The ministry spent about $271-million more on common generic drugs than hospitals, according to the report.

Despite significant advances in technology, the government has not updated the list of prices it pays for laboratory tests in nearly 20 years, according to the report. The province’s health ministry is currently working on an updated list of prices, to reflect the decreasing costs of many tests. The province spent nearly $2-billion on about 260-million tests last year. Had a new price list been in place, the government could have saved $39-million last year alone.

“At a time when the provincial health-care sector is being squeezed from all sides, savings of tens of millions of dollars a year could be used for other public services,” Ms. Lysyk said.

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