Canada's health system has plenty in common with the U.S. — and that's not a good thing

Most Canadians would likely agree that those who need potentially life-saving prescription medications should have ready access to them.

Yet prescription drug coverage in Canada varies widely depending on where you live and your health status, income and age.

Canadians don't like to hear this but when it comes to pharmaceuticals, our health insurance system has plenty in common with the United States.

In fact, the U.S. is marginally ahead of us where prescription medication is concerned.

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Provinces usually cover medications for the very poor, but so does the U.S. system.  Provinces also tend to cover seniors, although not as generously as in the U.S. since many provinces are in the process of de-insuring 'wealthy' seniors because of budget constraints — if they haven't done so already.

Limited provincial drug plans are also riddled with deductibles and co-payments, meaning financial barriers still deter many from getting the drugs they need.  

This U.S.-style approach to prescription medications leaves us with U.S.-style results. That's not a good thing.

Many Canadians have no drug insurance whatsoever and one in five Canadians now report that someone in their household is not taking their prescription medicine due to concerns about costs.

Results devastating for Canadian health

In Ontario we insure, for example, bunion removal and IVF services, but not insulin for young and middle aged diabetics.  As a result, an estimated 830 diabetic patients are dying in Ontario every year for want of something as basic as insulin.  

Here's something else we have in common with the U.S.: despite not covering everyone, we still manage to spend more on drugs than most other countries.

Consider England and New Zealand, where everyone is covered for a broad range of prescription drugs, there are minimal co-payments and, for poor or frequent users, many drugs are completely free.

All this and they still spend much less on prescription medicines than Canada or the U.S.

Why?

Universal drug plans mean national bodies negotiate fairer prices for prescription drugs. The results are dramatic.

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In 2009, the cholesterol-lowering drug, simvastatin (20mg), cost New Zealand just over two cents compared to a whopping 62 cents in Ontario.

So while some critics claim that universal prescription drug insurance is a nice idea, but not affordable, it's very clear that universal prescription drug insurance is actually the key to affordability.  

How to create universal pharmacare

One strategy is to expand the federal Canada Health Act to include pharmaceuticals but let the provinces largely run the show.

Participating provinces would need to agree to have a fair process for identifying essential medicines by an independent agency.

The federal government could provide a limited budget of, say, $5 billion for this program, paid as transfers to the provinces over 10 years.

Provinces could also collect premiums as a percentage of income, just like a pension plan to help cover the costs. Or they could stream premiums from private insurance plans into a central purchasing pool.

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The list of essential medicines wouldn't be set in stone. If the prices of drugs are negotiated down, resources are freed up to add more essential drugs. And each province could negotiate their own prices with drug companies, but ideally most would agree to negotiate together through pan-Canadian structures to increase purchasing power.

A more ambitious strategy would be to create a federally-administered pharmaceutical plan for essential medicines — the feds would run the show.

This proposal offers a new vision for health care in Canada by maximizing the buying power of a nation. Under this plan, pharmacies could bill the federal government directly when Canadians present prescriptions for essential drugs.

Not as expensive as it sounds

About $5 billion would likely cover a core list of approximately 150 essential medicines, making them free of charge for all. Money could be saved by eliminating current tax-breaks offered to private insurance plans.

Of course, private insurers would still cover other drugs not included in the basket of essential medicines or other health services.

There would be no need to change the Canada Health Act.  In the spirit of cooperative federalism, this option could be offered to provinces without any legal requirement to participate.  

With at least two viable models for universal pharmacare, it is possible to be fiscally conservative without burdening Canadian patients in need of drugs, at the time they need them.  And employers would have the benefit of a significant reduction in the costs of keeping their workforce healthy.

Colleen M. Flood is Director of the Centre for Health Law, Policy and Ethics, University of Ottawa and an expert advisor with EvidenceNetwork.ca.