Universal Pharmacare: A Tough Pill to Swallow

Canada is the only industrialized country in the world to provide universal Medicare without universal coverage for prescription medication. Healthcare is always a topic of great concern during federal elections, and 2019 was no different. Three of the major federal parties promised a universal pharma care program if elected, or at least, steps in that direction. However, are these promises simply putting a band-aid on the symptoms without diagnosing the real underlying issues? Pharmacare may currently be one of Canada’s biggest buzz words, but the buzz may just be sounding out the many clamorous intricacies of the Canadian pharmaceutical industry. In light of this, it is important to re-analyze the conditions of the Canada Health Act. 

One of the greatest challenges Pharma care must face is managing all the stakeholders.  Between the multinational and local drug companies, private and public insurance providers, health boards and professionals, and patients there lays a complex web of competing interests that the government must somehow untangle. Any proposed program must walk the fine line between lowering drug costs to Canadians and promoting investment in pharmaceutical firms’ R&D. Canada’s R&D investment, however, has experienced a decade long decline; even before talks of a Pharma care program. 

With 4% of the world’s peer reviewed research publications coming from Canada, it appears as though Canada is still a world leader in R&D – especially considering Canada makes up only 2% of the world’s GDP and 0.5% of the world’s total population. However, Canada’s performance today is based on decades of previous strategic investments in training and infrastructure. How Canada competes in the near future depends on the policy discussions made within the last decade. Canadian research and development investments by Pharma companies seriously lags that of other countries of the Economic Organization of Co-operation and Development (OECD). In 2016, Canada spent 1.69% of total GDP on R&D, well below the OECD average of 2.34%. This is telling of Canada’s downward trend in R&D spending. In 1995, the ratio of sales to research and development for all patentees was 11.7%. In 2017 this number was only 4.1%, a 65% decrease. While there is hope that the recent changes in pharmaceutical policies may be the change that can disrupt this persistent trend, unfortunately the only interruption these policies will bring is another jagged drop in R&D investment.  

Amendments to the Patented Medicines Regulation passed in August will see major changes to methods used by the Patent Medicine Price Review Board (PMPRB), leading to the biggest reform of Canada’s drug pricing regime in decades. One of the roles of the PMPRB is to monitor the prices of Canada’s patented drugs to prevent excessive increases in prices. To do so, while also allowing for greater pharmaceutical investment in Canada, PMPRB uses comparator countries with strong pharmaceutical industries to base these prices. As a result, among the 34 countries of the OECD, Canada paid the third highest prices for brand name drugs in 2017 and had a higher total per capita expenditure on pharmaceuticals than any other OECD country with universal health coverage. The new amendments change the comparator countries – replacing the two countries with historically high prices, the U.S. and Switzerland, for six new countries with more comparable rates. These changes are estimated to save Canadians $13.2 billion over the next decade. This certainly seems like a step in the right direction for a country trying to figure out how it could afford a pharmacare program. However, the changes have not been met without some backlash. In August, six drug companies filed a constitutional challenge to the regulations and in September Innovative Medicines Canada filed for judicial review of the plan. With uncertainty already looming over Canadian pharmaceutical regulations, those championing a pharmacare program must be careful not to scare off further investors (a fear that is not unfounded in other countries). 

New Zealand, Australia, and the United Kingdom are often quickly cited as countries that already have national pharmacare programs. What is cited less is the reduced access to medicine found in those countries due to lowered costs of pharmaceutical drugs. Take New Zealand for example, which has had a form of pharmacare since 1993. In an effort to reduce prices, the country has shifted more in favour of generic drugs that can be mass produced after their patent expires. This approach, however, often leads to assigning a virtual monopoly to the cheapest provider, which then drives out any potential competitors. Reliance on a single competitor is risky, because in the case that one provider cannot meet market demand, it is difficult to arrange supply with a previously unused manufacturer, or to find a manufacturer that can meet the new demand. This was the case in 2005 when the national vaccine provided by the sole-tender was deemed unsuitable and the country was suddenly faced with no supply. The low prospects of profits in New Zealand also deter many drug companies from renewing or acquiring regulatory approval there. As a result, the marketing approval rate in New Zealand for most drug classes (medications with similar chemical structures) was 70% or less, whereas in Canada it is greater than 90%. Of those drugs approved, not all of them are covered by the country’s pharmacare program. A study shows that between 2009-2014, only 13% of approved drugs were reimbursable by the public insurer, ranking it last out of the 20 countries evaluated.  

Without even considering how a pharmacare program could be integrated into Canada’s existing system of private and public insurance, the creation of policies needed to allow Canada’s pharmaceutical industry to effectively serve such a program would be a monumental task. However, for the 700,000 Canadians who have to skip food purchases in order to afford medication, the internal mechanics of the industry is not what is of concern to them. Despite Canada having a safety net of provincial public drug plans, people who work precarious or part-time jobs may not qualify, and consequentially fall through the cracks. It is these people who should not be forgotten when considering the cost-analysis of industry changes. At the same time, when party leaders make such big promises, the economics should not be forgotten; or else those promises will soon be broken.