Pangaea Express: Advisory Council of National Pharmacare Final Recommendations

June 13, 2019

By Beverley HerczeghMarla Weingarten

Universal, single-payer, public pharmacare in Canada. This is the recommendation from the Advisory Council on the Implementation of National Pharmacare as presented yesterday at a press conference by Eric Hoskins, Chair and Vincent Dumez, Vice Chair. Overall the goal is to replace the patchwork system for drug coverage that exists today.

As described by the Council, this national pharmacare system will require new federal legislation supported by federal funding. Similar to the current healthcare system, it will be delivered by the provinces and territories. There will be both an essential list of medicines and a full list of medicines. Co-payments will be limited to $2 per prescription for medicines under the Essential List and $5 per prescription for all other drugs on the national formulary. Some exemptions will apply.

The following steps are outlined to bring about this single-payer plan in a phased approach:

2019:

  • The creation of a Canadian drug agency (as announced in 2019 federal budget). This drug agency will be responsible for determining which drugs and related products (devices and supplies) should be listed on the national formulary, based on the clinical and cost-effectiveness of the drug compared to other treatment options. The agency will negotiate prices and monitor the safety and effectiveness in real-world use.

January 1, 2022:

  • Legislation in force to formalize national standards and funding parameters of pharmacare with the Feds to pay for incremental costs
  • Create a national formulary of essential medicines
  • Implement a detailed national strategy and distinct pathway for funding and access to expensive drugs for rare diseases

January 1, 2027:

  • Create a national formulary of a full list of drugs

As with medicare, provinces and territories will be able to opt-in to the national pharmacare program. The council believes the national formulary will eliminate the need for private drug insurance but does recommend Canadians be allowed to purchase private insurance for drugs not listed on the national formulary. There are of course many more details among the 60 recommendations provided by this Advisory Council including biosimilar substitution, performance-based funding for drugs for rare disease and public disclosure of payments. Please refer to the link above for a full list of recommendations, costs, savings and roll-out as recommended by the Advisory Council.

What could this mean for industry?

Big Picture Pros:

1. Private payer coverage can still exist and employers will be able to offer their employees additional drug coverage beyond the (likely) limited coverage on the national formulary full list of drugs

2. The establishment of a distinct pathway for the consideration of expensive drugs for rare diseases – a crucial element of drug coverage that industry and patient groups have been pursuing

Big Picture Cons:

1. Smaller employers may eliminate additional drug coverage for employees as private drug plans will no longer be seen as a necessary benefit

2. There will be tougher negotiations on drug pricing and stricter guidance on appropriate use of drugs with greater tiering of various drug products

3. Essential medicines list will be primarily generic and national formulary will be limited with its listing of new innovative medicines

Big Picture Questions:

1. Will the structure of the Canadian Drug Agency modernize/ replace the current responsibilities of CADTH, INESSS and pCPA or will it add another layer of bureaucracy and cause even greater delay for the listing of new drugs?

2. Will provinces choose to opt-in? Though the incremental cost will be from the Feds pocket, will all jurisdictions, including Quebec, adopt a federal system with a federal formulary and give up their autonomy?

3. Is this REALLY a single payer system if private drug coverage persists?

The current federal Finance and Health departments don’t see eye to eye on this universal, single payer drug coverage system as demonstrated by their separate Standing Committee reports. Bill Morneau, Minister of Finance had previously stated he would prefer a “close-the-gap” structure. Even if all provinces choose to opt-in, the negotiations of transfer payments could get ugly. We saw how long it took for the Feds to negotiate transfer payments with all jurisdictions for medicare.

In the end, the biggest question may be whether this report is really just political posturing in light of the upcoming election.The NDPs support a universal, single payer system while the PC’s would go for the “close-the-gap” structure. If the Liberals do adopt this single-payer universal national pharmacare system, it will likely be used in harmony with medicare, a system that already evokes a sense of Canadian pride, to generate a groundswell of Canadian satisfaction towards this “nation building” strategy.

For more information, please contact Bev Herczegh or Marla Weingarten.