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Our pharmacare system in Canada is designed to fail and its costing us billions
A version of this commentary appeared in the Huffington Post, Globe and Mail and the Winnipeg Free Press Another budget cycle has passed without remedy f or the biggest unresolved problem in our health care system. From 1980 to 2010, spending on pharmaceuticals used outside of hospitals in Canada grew more than 15-f old, f rom just under $2-billion to just over $30-billion. Yes, billion. In contrast, spending on health care covered under the Canada Health Act hospital care, including drugs used in hospitals, and medical care provided by physicians grew just over 5-f old during the same period, f rom $12-billion to $83-billion. Part of the reason that pharmaceutical spending has grown so rapidly is that waves of new drugs have come to market since the 1950s that allow us to treat an ever expanding range of medical conditions and thats mostly a good thing. In many instances, pharmaceuticals are unquestionably the most cost-ef f ective way to treat a patient. But much of the growth in pharmaceutical costs in Canada results f rom the perverse structure of our health system. Canada is the only country in the world that of f ers universal health insurance f or medical and hospital care but not f or prescription drugs. Instead, we have a patchwork of private and public plans that ef f ectively leaves nobody holding the reins of this important component of health care. Our f ragmented system of drug coverage means that many Canadians cannot af f ord the medicines they need. Research published last year in the Canadian Medical Association Journal showed that one in ten Canadians report that they skip doses or decide not to f ill prescriptions because of cost. By international standards, that is a very poor record on access to medicines. Yet, by international standards, spending on pharmaceuticals in Canada is extraordinary. Our drug costs are higher and f aster growing than all other countries in the OECD with the exception of the USA hardly an admirable comparable. Canada does have regulations that limit list prices of patented medicines to the median of prices f ound in 7 comparator countries: France, Germany, Italy, Sweden, Switzerland, UK and the US. But such price controls, unf ortunately, do not result in expenditure control. In the late 1980s, when our price regulations f irst came into ef f ect, per capita pharmaceutical spending in Canada was below the median of our 7 comparator countries we were doing pretty well. But our spending was growing more quickly than in other countries and continued to do so. By 1997, our level of spending had caught up to the median of our comparator countries, placing us squarely in the middle of the pack. Turns out, those were the good old days. In 1997, the National Forum on Health called f or a universal pharmacare program in Canada. T hey recommended this as a means of improving access to care and better controlling costs.

We did not move f orward on that recommendation. Since then, per capita pharmaceutical spending in Canada has continued to outpace comparator countries, so much so that, as of 2010, we spent $280 more per capita than the median of our comparator countries. To put this in perspective, if we had implemented a pharmacare program in 1997 that controlled our drug spending so that it continued to grow, but only at the same rate as our comparator countries f or drug price regulation, we would be spending $9-billion less per year than we are today. T hats enough to f inance the 42-year lif e cycle of the F-35 f ighter jets in just 5 years! Our f ragmented system of prescription drug f inancing is the root cause of our troubles. When pharmaceuticals are integral to health care f inancing and management as they are in all universal health care systems comparable to ours system managers and, importantly, practitioners have more incentive and opportunity to manage costs. T hey have better incentives to consider the value f or money spent on new drugs versus older ones, and on drug therapy versus other f orms of care. And they also have more purchasing power in price negotiations with drug manuf actures. Not recognizing that our pharmacare system (or lack thereof ) is designed to f ail is costing us billions of dollars every year while many Canadians go without access to the medicines they need. We deserve better. We deserve a medicare system that includes prescription drugs and thereby delivers the access and ef f iciency f ound in all other countries with health care systems comparable to ours. Steve Morgan is an expert advisor with EvidenceNetwork.ca and Associate Professor and Associate Director at the UBC Centre for Health Services and Policy Research.