I call the meeting to order.
It being 8:45, we will start the proceedings. We are going to hear from an array of witnesses today, and after that we are going to do some committee business.
Our witnesses today are Mr. Ake Blomqvist, health policy scholar from the C.D. Howe Institute, and Victor Elkins and Chandra Pasma from the Canadian Union of Public Employees. Appearing as individuals are Colleen Flood, professor, university research chair, and director of the Centre for Health Law, Policy and Ethics at the University of Ottawa, and Mélanie Bourassa Forcier, professor and director of health law and policy programs at Université de Sherbrooke.
I am going to invite Mr. Blomqvist to have his five-minute opening statement. After that, we'll go to the next ones, and then we'll have questions.
Thank you. My name is Ake Blomqvist. I am an adjunct research professor at Carleton University and co-author of the C.D. Howe publication called “Feasible Pharmacare in the Federation”, which we have submitted to the committee. I am a part-time health policy scholar at the C.D. Howe Institute, but I am also presenting on behalf of my co-author, Colin Busby, who is an associate director of research at the institute. He is responsible for the work on health care and was supposed to be the main presenter, but he was called away unexpectedly because of a sudden and very serious illness in his family, so I am presenting on his behalf as well.
I have been writing about health policy in Canada for some 35 years and very much support the view that we advance in the paper, which is that the most constructive thing the federal government can do for pharmacare today is focus on things it can do independently and in support of reforms that are already under way in the provinces.
We don't think that an attempt to create a universal public single-payer plan would be helpful at this stage. Obviously we share the view that too many Canadians still report not filling prescriptions or not completing treatment courses for financial reasons and we recognize that the prices of drugs in Canada are still very high by international standards. Also, there are major issues with the quality of prescriptions in various places. We think that the proposals to overcome these problems through a national pharmacare plan would create very major difficulties.
A stand-alone plan managed by the federal government would be unwise, we think, because it would result in less integration in the management of the overall health care system and less incentive to make cost-effective choices among drugs and other inputs in health care. A federal pharmacare plan, for example, could not influence doctors' prescribing behaviour, something that greatly impacts the cost and effectiveness of any pharmacare plan.
We also don't think that using the approach of conditional federal-provincial transfers would be a good idea. Trying to get the provinces to create a set of single-payer public plans would quickly deteriorate, we think, into a federal-provincial standoff about money. It would also be complicated by the fact that the existing public drug plans in different provinces are so different from one another.
Instead of a big push to revamp our mixed public-private system, we think the federal government should work with the provinces to continue developing the pharmacare initiatives that several of them have already started. Ultimately, we believe that provincial reforms are likely to lead to some form of universal pharmacare coverage everywhere in Canada.
To be a bit more specific, we advocate a strategy with several components. There are things that the federal government can do independently of a national plan to lower drug costs in Canada. It should be applauded for joining the pan-Canadian Pharmaceutical Alliance, but it could go further and take a leading role in that alliance. It could also make arrangements to include private insurers in the alliance to bargain jointly with the public plans.
The federal government could also reform the rules according to which the Patented Medicine Prices Review Board regulates prices. It could do so by incorporating the idea of value-based pricing.
Second, the federal government can work jointly with the provinces on strengthening the use of drug formularies that are used in the public plan and strengthening the role of economic evaluation in designing these formularies.
The third strand is that the federal government can ask the provinces, as we propose, to ensure that every citizen has access to a default plan with an upper limit on the percentage of income that a family has to spend on drugs. This idea could be pursued in a way similar to what the federal government currently does with respect to carbon pricing—setting a reasonable minimum standard for provincial plans and offering partial financial support for provinces that meet that standard.
In sum, we think there are several ways the federal government can speed up the process of pharmacare reform that is already happening in the provinces. We think this approach would stand a much better chance of achieving significant progress than the big bang approach that many advocate.
Canada has not done well in recent international rankings in health system performance. My personal view is that many of the shortcomings of our current system are due at least in part to our complicated model of divided federal-provincial jurisdiction over health policy. We think federal-provincial relations in health care are complicated enough already, and an undertaking to tear down and rebuild our system of pharmaceutical financing would just make them more complicated.
Good morning, everybody.
I'm the director of the University of Ottawa Centre for Health Law, Policy and Ethics. I want to thank you for listening to me today. I want to thank you for the work that you're doing here today and for your service generally. My brother-in-law in New Zealand is an MP, so I kind of feel your pain a bit.
I completely disagree with the former speaker, so I guess that's good. Maybe that's why you put us together. I am going to speak on why in fact we do need universal pharmacare—not necessarily national pharmacare, but certainly universal pharmacare.
To cut to the quick of it, essentially in most provinces we have a U.S.-style system for prescription drugs. Poor people are covered, working people are mostly covered through private health insurance, and provinces kind of pick up the elderly. Increasingly, they are de-insuring the elderly, particularly those they describe as the wealthy elderly, so they cover the poor elderly.
Then there is always a gap of people who are uninsured in Canada. That's about 18%. That has been persistent, and it isn't getting any less through provincial reform; it's getting worse. That's the problem that we have to deal with.
I'll give you one piece of research that I think is deep and profound on this issue. It is from the Institute of Clinical Evaluative Sciences in Ontario, probably the best research institute we have in the country. Work by Dr. Gillian Booth on access to prescription drugs for young and middle-aged people under the age of 65 in Ontario found that close to 1,000 young and middle-aged people who are diabetic die every year for want of access to something as basic as insulin, which, by the way, we invented. Banting and Best made one of the great Canadian discoveries, and we can't make sure through our governance system and our insurance systems that people get access to this most basic drug.
We also know that the U.S.-style approach results in U.S.-style costs. Ake has already spoken to the fact that we're a high spender, relatively.
Justice Emmett Hall, a smart man, said back in 1964, “prescribed drugs should be introduced as a benefit” and “its authorization should be an early objective of the Canadian Parliament”. That was 52 years ago. He didn't put it into the basic set of benefits back in the day because he thought it was too expensive and that we should wait for the cost of pharmaceuticals to come down.
Maybe he wasn't as smart as we thought: they haven't come down, and that's because they're not part of a single-payer plan. They're not part of a concerted effort on the part of government to purchase those drugs.
We know that every other developed country around the world that has a universal plan includes prescription drugs in its basic benefit package. We're standing out in the world for not doing that, so I disagree with Ake. I think we are a relatively poor performer these days precisely because we're not doing a good job on insuring pharmaceuticals, community care, and home care, and that's causing all sorts of other problems with our hospitals and physician services.
What can we do about it? I do agree with Ake that it's important that whatever we do is not too much of a burden on the provinces and is respectful of federal-provincial relationships and the Constitution. There are two basic scenarios in my mind.
The first is to expand the Canada Health Act to include community-based pharmaceuticals. Then you say, “You're just going to spend gazillions.” No, not necessarily, if you stipulate as part of the Canada Health Act that the provinces must have a fair process to decide what to include in the basic benefit package. They would be choosing then. For example, they may say that insulin is a higher priority than fixing my bunion. I can go and have my bunion fixed—and actually my doctor organized all of that in a few weeks, free—but people are dying for want of insulin. Surely no rational, reasonable kind of health care system would permit that.
I think if the Canada Health Act could be opened up to include community-based pharmaceuticals and a respectful requirement that provinces have a fair and transparent process to decide what is in and what is out, it would leave them to decide. That leaves them to decide that they'll fund insulin but they won't fund bunions. That's completely doable.
The other way is the kind of bigger bang approach, I guess, which is that the federal government itself would permit this.
Sorry; I should go back and say that the concern we presently have is that we all have private health insurance. We don't want to lose this stream of funding. The Canada Health Act does not necessarily require that everything be tax financed. Provinces charge premiums currently, and you could do this. You could finance this in part through CPP payments.
You could also funnel the funding from the private health insurers into a central plan. The private health insurers would essentially pay a premium to the central plan to do the buying. This is a proposal that Aidan Hollis at the University of Calgary has put forward. I think it's a pretty good one, and I detail it with a bit more specificity.
The final idea is that the federal government do it itself. That's the big bang approach. I actually do have a figure here; we did a bit of a back-of-the-envelope calculation. For about $5 billion, you could cover 150 essential drugs for all Canadians.
I could talk a little about that proposal, but there you have two viable proposals. I don't think either of them would break the bank, and they would put us back on a par with other competitive nations to make sure we deliver health care to the people as they need it.
Thanks for listening to me.
My name is Mélanie Bourassa Forcier and I am a professor in the Faculty of Law at the Université de Sherbrooke, where I direct the master’s programs in health law and policy. I would like to thank the committee for inviting me to come and give my impressions on the development of a national pharmacare program.
Am I for or against a national pharmacare program? Basically, I subscribe to the two positions that have been presented to you today. I believe that they can be reconciled to a certain extent. Clearly, I am in favour of access for all to medication. However, assuming that the federal government does not want to revisit the provinces’ tax base in order to maintain their autonomy in their areas of jurisdiction, I am in favour of increasing federal transfer payments to the provinces. Those transfer payments would allow the provinces first, to ensure access for all to medications, second, to increase their pharmacare coverage, and third, to ensure the sustainability of their programs that could be threatened by the advent of biological medications that are particularly costly.
In addition, I would add that I am in favour of increasing federal transfers in order to ensure health care services that go beyond the archaic philosophy whereby medically necessary services are those centred on hospitals. It therefore seems important to me to broaden the definition of what can be considered medically necessary. I am likewise in favour of reducing the costs of medications. No one can be against that. However, you will have gathered that I am in favour of respecting federal and provincial areas of jurisdiction.
Let us discuss the savings alleged in contemporary studies on the establishment of a national pharmacare program. Basically, this is all about the savings mentioned in contemporary studies. The oldest studies on the matter, the Hill, Kirby and Romanow reports, focused on the idea of universal access and not on the savings that could result from the establishment of a national pharmacare program. Therefore, the savings alleged in the contemporary studies on the establishment of a national pharmacare program are essentially the result of volume—as Ms. Flood mentioned. Clearly, one single major insurer has much greater negotiating power than a multiplicity of insurers. Such are the laws of the marketplace.
Of course, consolidating power has its advantages: savings are considerable because of bulk buying, because there is a single set of rules, and because all Canadians have equal access. However, consolidation also means setting decision-making autonomy aside, sometimes at a cost. Without that cost, we would long ago have seen the advantage of joining with the United States to increase the volume of our purchases of a variety of goods. If the federal government had not held fast to that autonomy, Health Canada would long ago have accepted medications being put on the market after they had been approved in other jurisdictions, rather than conducting its own health testing. So yes, autonomy comes at a cost, but it also has a value.
Therefore, I am against a national pharmacare program that would be established pursuant to any federal legislation other than the Canada Health Act. I also want to remind you of the 2011 Supreme Court of Canada decision on the Reference re Securities Act. You may recall that the reference dealt with the constitutionality of an act designed to create a fully national program to regulate securities. Section 9 stated that the purposes of the act were to provide investor protection, to foster fair, efficient and competitive capital markets and to contribute to the integrity and stability of Canada’s financial system. In a word, the objectives were laudable and difficult to contest.
As the Supreme Court pointed out, the act as worded did not unilaterally impose a unified system of securities regulation. Instead, it permitted provinces and territories to opt into the program if and when they wanted. The court held that the act was unconstitutional because it exceeded the powers of the federal government and represented an interference into provincial areas of jurisdiction. I remind you that the same court, in its 1997 decision in Eldridge, once more confirmed provincial jurisdiction over health.
However, the same court, still in the securities decision, insisted that it was possible for provinces to cooperate contractually to establish a national securities program.
In my opinion, the pan-Canadian Pharmaceutical Alliance is the way to reach such a consensus on the supply and coverage of medications in Canada.
However, I will conclude by insisting that it is important for the federal government to maximize the development of its own jurisdiction, given its clear impact on the costs Canadians pay for medications.
In my opinion, therefore, the federal government should intervene more broadly in the area of public health. With patented medications, the federal government has the power to intervene—as has been mentioned—through the Patented Medicine Prices Review Board. The board is currently in the process of reviewing its mandate, but it is still important to act quickly, especially with a view to regulating the prices of biological medications. There is also the issue of preventing sudden increases in the price of medications.
Unfortunately, as you know, the board does not have the power to regulate the prices of non-patented medications. However, the federal government's jurisdiction over competition may be a factor here. The Competition Bureau’s mandate is too limited, in my opinion. A registry of all mergers and acquisitions in the pharmaceutical industry, as well as an examination of the impact of agreements between pharmaceutical companies on competing in the marketplace could certainly ensure greater competition and lower prices.
Thank you for your attention.
My name is Victor Elkins. I'm the president of the Hospital Employees' Union and a regional vice-president for B.C., sitting on CUPE's national executive board.
It's my pleasure to speak to you this morning on behalf of the 630,000 CUPE members across the country, which includes 150,000 members in the health care sector, working in hospitals, long-term care residences, and community health centres or providing home care.
I want to share with you why CUPE members support a national health care program and why we most certainly do not support simply patching up the status quo.
You have already heard from many witnesses who spoke of the gaps that exist in our current prescription drug regime. Canadians are paying way too much for prescription drugs, and too many people are falling through the cracks, with no coverage or simply inadequate coverage.
Some have suggested that all we need to do in response is extend the current system so that everyone has coverage of some kind, whether public or private. This kind of model exists in Quebec today, but a hybrid model is not the answer, because if we rely on private insurance, drug coverage costs are simply unsustainable. Private coverage is highly inequitable, inadequate, and needlessly expensive.
Let's go over each of these points in more detail.
Private coverage is fundamentally inequitable. The lower a person's income and the more precarious their work, the less likely they are to receive benefits from their employer. In fact, according to an analysis by the Wellesley Institute, nearly all employees in Canada earning $100,000 or more a year receive health benefits, but of those earning $10,000 or less, only 17% get benefits. Since those with lower incomes are also at greater risk of health problems, such as cardiovascular disease, depression, and diabetes, this means that those who are most likely to need prescription drugs are the least likely to have employer-related coverage.
Unionized workers are also more likely than non-unionized workers to receive benefits. However, while CUPE and other labour unions have been highly effective at achieving prescription drug costs and other health-related benefits for our members, that doesn't mean the solution to Canada's prescription drug problem lies at the bargaining table. Obviously, we want to see our members, and all Canadians, have good drug coverage, but ideally decisions about what kind of medications people have access to shouldn't depend on the outcome of negotiations between employers and unions: they should be decisions made by patients and their doctors.
We want medically necessary health care, such as medications, to be available to all Canadians, regardless of where they work or whether they do not work. Prescription drugs should be provided on the same basis as any other form of treatment recommended by a doctor. We are calling for this based on principle, but also because the rising cost of prescription drugs is not sustainable and cannot be addressed without a national drug plan.
Prescription drugs represent the largest portion of employee-paid health benefits, and the rising cost of prescription drugs is placing an increasing burden on employers and employees. The current patchwork system cannot contain these costs. Part of the problem is that the very nature of the system gives it no mechanism or incentive to contain costs. There are 24 separate insurance companies negotiating individually with the large pharmaceutical companies over the price of each individual drug, and the costs of those drugs are simply passed on to employers and employees, so where is the incentive to keep the costs low?
The current system also allows drug companies and pharmaceutical companies to play Canadians against each other. For instance, there is some evidence that cost savings demanded by public drug plans are just being passed along to private plans. In Quebec, documents that were leaked to the media revealed that when the public plan negotiates a decrease in the price of generics, pharmaceutical companies compensate by passing these costs off to the private plans. As a result, the average cost of a public plan for generics decreases by 5.5 %, but the average cost for private drug plans increases by 6.4%.
Private insurance is also more expensive because of high administration costs and the necessity to provide profits to shareholders. Because of these two expenses, there is a significant gap between what Canadians pay in premiums to private insurance companies and what they receive back in benefits. In 2011, this gap was nearly $6.8 billion.
This gap is also growing over time. If the ratio between premiums and benefits had stayed at the same level that it was in 1991, Canadians would have saved $3.2 billion in 2011. This difference in cost is going to administration and the pockets of shareholders, not to better drug coverage for Canadians.
Finally, as costs increase, private plans aren't moving to contain them but are shifting them to workers instead. The number of plans with maximum annual or lifetime limits is growing. Thirty per cent of employers now have a maximum limit of some kind on their drug plans. This just means that people who actually need the drugs the most are the ones who are cut off and forced to either turn to a public plan for catastrophic coverage or pay out of pocket. More employees are now also required to make copayments or to pay dispensing fees.
Some employers are turning to flexible plans, which require workers to guess at their level of need and to pay out of pocket if they had the misfortune of guessing wrong. Some employers have cut off benefits entirely for certain employees or for retirees, as U.S. Steel Canada has recently done to pensioners in Hamilton.
The solution to all these challenges for Canadians, for workers, and for employers is a comprehensive public drug plan that covers all Canadians, regardless of where they live, where they work, their age, or their income.
However, we are concerned that recent trade deals the Canadian government has negotiated, though not yet ratified, will limit the federal government's ability to contain costs and ensure the safety of Canadians. Both the TPP and CETA are projects that could cost Canadians about $850 million to $1.6 billion annually in increased prescription drug costs. The provinces will be reimbursed for the extra costs, but private plans and Canadians who pay out of pocket will have to swallow them.
You can read more about our recommendations in our written submission, but briefly, what CUPE recommends is that the federal government create a national drug plan that provides Canadians with universal, equitable access to prescription drugs with no copays or deductibles. The program should be publicly administered and publicly delivered. We also urge you not to ratify the TPP and CETA trade deals.
We thank you for your time. I look forward to your questions.
Actually, I have said that I am in favour of the federal government intervening in order to facilitate access to medications for all. My impression is that, for the intervention to be legitimate constitutionally, it has to be done pursuant to the Canada Health Act. Now, that act must be brought up to date.
As you have already heard or read in the briefs presented to you, when the Canada Health Act was passed, the most expensive medications were provided in hospitals. We now see that situation moving. Most medications, even those for the treatment of cancer, are provided in an out-patient situation, and are therefore excluded from the terms of the Canada Health Act.
Clearly, if the federal government expands transfer payments and broadens the term “medically necessary” that appears in the Canada Health Act, additional conditions will have to be included in the act so that the provinces can obtain the new federal transfers. Those conditions could indicate, for example, that all residents of each and every province are assured of reasonable access to medications. Because of the transferability condition written into the act, we could ensure a degree of consistency in the supply of medications, which is possible to do under the Canada Health Act.
We would then be choosing a flexible program that is acceptable constitutionally. I am sure you are aware of the latest positions of our Minister of Health, Dr. Barrette. That is, that provinces would not automatically agree to abide by new conditions governing medications. But the provinces could still at least take advantage of federal transfers that would allow their pharmacare coverage to be broader.
I think the Supreme Court has ruled on several occasions and in recent times that conditionality in transfers between the federal and provincial governments is acceptable. It is, as I said, quite feasible to include community-based pharmaceuticals inside the Canada Health Act and ask the provinces to determine a list of essential medicines. That's not one big national formulary.
If the federal government wished to create one national formulary and one national purchaser, that would require the consent of the provinces, so that's a different ball game. However, the way we've usually done business is through the Canada Health Act or a conditional kind of transfer, and that approach allows the provinces to have flexibility in how they design their health care systems, which could permit, for example, the funnelling of private health insurance premiums or some sort of premium payment through CPP. A model such as you have in Quebec could be okay with this, provided it meets certain conditions, which I would say would be no payment at point of service and no user charges for essential medicines, just as for hospital and physician services. That would be in the spirit of the Canada Health Act. I think it's completely constitutionally permissible.
If the federal government wished to run a big bang federal program, I think that is feasible, but it would have to be voluntary. The provinces would have to agree to participate in it. I would imagine that given their current fiscal situations, most of them would. Quebec may choose not to, but most of them would. I think that would be permissible.
I'd just relate it to something.
We established the pan-Canadian Pharmaceutical Alliance, representing the first ministers of each province and now the federal government. The alliance's function is primarily to negotiate the price of generic medications. With Quebec, and now also the federal government, joining the alliance, we now have much greater bargaining power. With generic medications, the positive effect of volume purchasing can be reflected in the prices we are able to negotiate.
As for the price of innovative medications, negotiating lower prices is difficult, if only because they are patented. It is still possible, by means of confidential product listing agreements. These are becoming more and more common, especially with private insurers.
I agree with Ms. Flood. It has also been suggested that private insurers should join the alliance in order to increase the negotiating power. While still keeping a hybrid, public-private scheme, it is possible to interest private insurers in the negotiations in order to facilitate the purchase of a greater volume at a consequently lower price.
Thank you very much, Mr. Chair, and thanks to all the witnesses here today.
As the chair rightly pointed out, we're getting new information all the time, and my questioning is to see if you have more information for us.
Madam Flood, you mentioned the provinces would be gung-ho for more money for a national pharmaceutical-type program, but the minister has been very clear that there will be no more money in the transfers. There's nothing in the budget even for the promises they made for $3 billion in palliative care.
We've had credible witnesses who stated quite clearly that if we move toward a monopolistic type of system, the day one costs would be anywhere from $10 billion to $14 billion. We know that private insurance companies in Canada do cover a significant amount of health costs.
Here is one of the challenges. If we hear people saying they want to move to a single payer, there's no real definition of the problem. You have some statistics. You mentioned 18% of Canadians don't have coverage, but for what percentage of those people is the lack of coverage even a problem? You mentioned the thousand people who die in Ontario every year from complications of diabetes. My dad died from complications of diabetes, but he had full coverage, excellent coverage. We're having a problem defining the actual problem. There's no update for statistics.
My question is to C.D. Howe, because many of our witnesses have stated that the statistics are quite old. There have been some suggestions they may not even be recent enough to be relevant, given the shifts in recent years with employment and different coverage.
Do you find it difficult to find recent stats and studies to support investigations? Should the federal government update statistics before we make any final decisions? I ask because this is a huge program, and the government is under constraints; I think there is a $30 billion deficit, and this one line item would be $14 billion.
Beginning with C.D. Howe, what are the statistics that you can glean from, and are they recent?
Thank you, Mr. Chairman.
Thank you to all the witnesses for being here today.
I have some data here before me. One in four Canadians say that they or someone in their household cannot afford to take their prescribed medications, resulting in skipped doses, split pills, or unfilled prescriptions. The source for that is the Angus Reid Institute, which conducted a survey in July 2015, a year ago.
Number two is that on an annual basis, approximately one in 10 Canadians do not fill their prescriptions at all because of cost. My source for that is Michael Law et al. in an article that was published in the Canadian Medical Association Journal in February 2012, four years ago.
Finally, Canadians spend $6 billion a year out of pocket on prescription drugs. That's 22% of total spending on all drugs, and my source for that is Pharma 2020's quite well-known peer-reviewed article that was written in July 2015 by a couple of pre-eminent Canadian health economists.
My question is this: does anybody on this panel doubt that there are Canadians right now in this country who are not able to fill their medication prescriptions because of cost? Does anybody doubt that?
Ms. Pasma, do you doubt that?
I was picking up on Dr. Carrie's line of questioning.
The best evidence that I've heard at this committee is that 10% of Canadians right now have no coverage in this country. Of that I have no doubt. I have no trouble believing that is true of people who are unemployed, low-income people, people who work for employers who do not provide extended benefits coverage, part-time employees, and young people. I have no issue believing that 3.5 million Canadians are walking around today with no access to medicine if they get sick.
Another bit of evidence we have heard at this committee is that a further 10% have intermittent or unstable coverage. They might have some coverage when they work. They may have high deductibles or copayments, so effectively 20% of Canadians do not have regular, consistent, full coverage for prescriptions. That's based on recent data that I've seen.
I want to pick up on your point, Ms. Pasma, because I want to put this to the panel as well. I'm going to quote from the CUPE submission, which, by the way, is excellent.
||For nearly 50 years, thanks to Canada's cherished public healthcare system, Canadians have been able to access the medical care they need at no cost, no matter where they live, where they work, or how much money they have. Canada's public healthcare system has delivered high quality care and great outcomes for patients. Canadians are rightfully proud of our system and its values of universality, accessibility and equity.
||However, there remains an astonishing exception to these values—access to prescription drugs. When you visit your doctor and receive a diagnosis, all treatments that are deemed “medically necessary”—such as a cast, surgery, hospitalization or referral to a specialist—are publicly funded because they are covered by the Canada Health Act. However, when the treatment prescribed is medication, there is no universal coverage. Instead, access to prescription drugs in Canada is based on a patchwork system that varies depending on where you live, where you work, how old you are, and what your income is.
I'm going to put a simple proposition to you. We have the Canada Health Act that covers medically necessary coverage. Why do we draw a line when the treatment prescribed is not stitching a finger but rather going to the pharmacy and getting a pill? Should we not just extend our Canada Health Act to provide access to medically necessary prescriptions?
Thank you very much for your presentation. As others have said, there has been a lot learned again today. It's amazing how complex this topic gets the longer we look at it.
It is regrettable in terms of data and statistics that we lost our Stats Canada comprehensive survey form and don't have reliable data now on some of the key economic situations that our Canadian families are in. That's a regret, but I'm happy to see the long-form census being reinstated.
My first question goes to Mr. Blomqvist.
We've heard from different groups here about big bang versus incremental, and obviously your recommendation is for an incremental approach, with some kind of a default plan for low-income families based on percentage of household income and drug costs exceeding that.
The presentation here from CUPE, to quote a little bit of it, said, “Our current patchwork system also allows drug companies and pharmacies to play individual actors against one another.”
If we do the incremental approach, we simply lock in the current inefficiencies that are there in Canada, along with their cost.
I was curious as to whether you looked at all at what was happening in Europe. There are managed competition models, such as in Sweden. There the people have to have private insurance, but it's a heavily regulated private market. Do you have any thoughts about an incremental model based more on better control of the private market?
I am in favour of the option proposed. However, we also have to see if it is feasible to base it on the notion of transferability. If residents of another province come into our province, what will they have access to? Do they have the same access as in their home province?
I think we have to evaluate two options in this regard. Setting up a list of essential medications evaluated by each province is one option.
In fact, we have already done that in a quite different context. You will recall Jean Chrétien's commitment to Africa, when we permitted the export of drugs for public health purposes. The WHO had established a general list of what were considered essential medications. In my opinion, that should not give rise to opposition from the provinces; there would be a consensus.
As for establishing a national formulary, we are actually almost there, through the Common Drug Review. Of course, once again, Quebec is not part of that group, but we are still following what is being done very closely. So we are not too far away from a national formulary, albeit not an official one.
When you are talking about mixed public-private systems, the model we favour in general is to have a public default plan so that everybody is automatically insured through the public plan, but people then have the right, if they so desire, to opt for an alternative private plan.
In response to Mr. Oliver's earlier question, in order to be eligible for a subsidy if you opt out from the public default plan, the private plan you choose instead must be approved. The approval would have to consist of things like lists of what drugs must be covered and a prohibition on excluding someone from coverage because of prior illness or conditions and the like.
We are believers in the principle that we need to define, more clearly than at present, which level of politician is responsible for balancing the public's desire for good health care and its desire not to pay exceedingly high taxes. That issue has to be clarified.
In Canada we suffer from a situation in which the burden of paying for an expensive health care system is kicked back and forth between provincial and federal politicians. I don't think Canadians are well served by that kind of a system. To the extent that we favour some degree of conditionality in transfers from the federal government to the provincial governments, it would have to be with maximum flexibility. In the context of pharmacare, we are all fans of the Quebec model, which is based on the idea of a public default plan that enrols everybody unless they have an approved private plan. There are rules that the Quebec government insists on with respect to what the private plan must contain.
What we fail to understand is why, in Canada, we have a belief that provincial politicians, who are elected by the same citizens and taxpayers as federal politicians are, cannot be trusted to resolve the issue of balancing the public's desire for a better health care system and not having to pay through the nose for it.
Yes, different provinces have different approaches, and that's part of the problem. Across the country we have a wide variety of approaches, and it does depend on where you live. For example, British Columbia does insure everybody, but it has a 30% copayment for pretty much everybody. That is obviously quite a deterrent to those on a lower income and causes problems of access.
Of great credit to Quebec is that it has a universal prescription drug plan. We might not necessarily like its design, but it does have it; however, there are again significant copayments for people at point of service. To me, that's the basic problem. No matter how you design this health care system or national pharmacare, you've got to make sure that people are not deterred because of financial constraints from getting access to the medications they need.
I disagree with Ake that the way to do this is somehow just to leave the status quo in place. Big bang reform around managed competition, even those models that he's talking about, has involved huge government moves—for example, in the Netherlands it meant regulating the private health insurers so that they compete with each other. The private health insurance plan is the public plan. Everybody's in; it's all risk adjusted. They pay in what they can; they get back from it according to their need. There are very small or no copayments at point of service for needed drugs. That's a totally different idea from just leaving it as it currently is.
It's the same with Obamacare. He's moved forward on this, but it wasn't just from leaving the status quo in place. What we saw year after year was little nibbles around the margins, such as introducing benefits for the under-fives and that kind of thing, but no sustained plan to make sure that people who didn't have private health insurance were covered.
Since Quebec joined the pan-Canadian Pharmaceutical Alliance, there have not necessarily been more negotiations that have driven the price of generic medications down. We have followed the schedule of negotiations as planned. However, since Quebec joined, more product listing agreements with innovating companies have been reached. Those agreements are concluded, of course, with the representatives of the various provinces that are part of the alliance. Now Quebec is coming to those agreements too, meaning that more medications are on the reimbursable lists. Without those agreements, the medications would not have been on the lists because they are not considered cost-effective.
When you use quality-adjusted life years, QALYs, an economic mechanism used to determine which medications are reimbursable, you often come to the conclusion that a drug that is too expensive vis-à-vis its accrued effectiveness on the market should not be reimbursed.
I'd like to take this opportunity to mention something about QALYs.
There has been a lot of talk about access to medications for people aged 65 and over. In Quebec, a number of consequences have been threatened. The Government of Quebec uses QALYs, and it has been alleged that this is not fair for older people. You will understand that, with QALYs, they use the gain in the number of life years and the improvement in quality of life after a medication is taken. Of course, the older you are, the fewer life years are gained and the smaller the improvement in quality of life. So the cost-effectiveness ratio can be reduced because QALYs are used. Seniors' representatives allege that this limits their access to the medications.
That is something to bear in mind when you want to focus on a value-based use when listing medications.
If provinces wished to do so, in my view they could negotiate a lot harder than they do with pharmaceutical companies to extract better benefits, but it does help if you have a universal plan that everybody's part of so that you're not shifting the cost from from public to private. The mission of the government, then, is very clear. We're buying pharmaceuticals for our health care system.
My husband actually ran PHARMAC in New Zealand. He was the chief executive officer until I imported him to Canada, and he's just down the road if you need him.
He gave me an example: in 2013, for simvastatin, which is a cholesterol-lowering drug, New Zealand paid 2.4¢ compared to 62.5¢ in Ontario. This is just by hard bargaining, basically commercial bargaining. The New Zealand public insurance plan negotiates hard, just like an HMO in the United States. HMOs in the United States do not pay anywhere near the prices you see as the list prices. They are negotiating hard to get commercial deals for very low prices.
The Canadian way has basically been to cross-subsidize pharmaceutical companies. That gets to your point, because we think we're creating jobs. If we want to subsidize pharmaceutical companies, we should do that in a transparent and open way, and not through high prices that patients have to pay at point of service. If we want to give them transfers, let's do that if we think that's important, but on the same basis we think about automobile companies and all that kind of stuff. It should not be hidden away in prices people have to pay out of pocket to get needed health care.
We can do a lot better. We could do it in a Canadian way, if that was what the provinces wanted to do. I think that's perfectly acceptable. Otherwise, the provinces could do it themselves. There may be a problem with whipsawing, with deals being done between different provinces. That would have to be monitored to watch for drug companies trying to take advantage of that situation. The better way to go would be a Canadian approach, but it would have to have voluntary provincial agreement.
I want to come back to Quebec, because that is an example of a public-private hybrid system in Canada. I want to quote from an article by Marc-André Gagnon. He said:
||In 1997, Quebec created a drug-coverage system where it is mandatory for workers to enrol in private plans when they are available. Those for whom no private plan is available end up on the mandatory public plan. Thus, all Quebeckers are covered by some form of drug insurance.
Then he said:
||What has been the result of Quebec’s hybrid model? Access to medications improved when the plan was implemented, but by keeping a fragmented system based on multiple public and private plans, Quebec has not developed the needed institutional capacity to contain costs. Canada has the world’s second-highest per-capita costs for prescription drugs (only after the United States), and Quebec has the highest costs per capita among all provinces.
||Twenty years ago, Quebec’s system was a great step forward, but it is certainly not a model for the 21st century. While it did provide better access to prescription drugs, the system remains inequitable, inefficient and unsustainable, according to a recent official report by the Commissaire à la santé et au bien-être.
||Inequity persists in the Quebec system because the prices of drugs vary between the public and private plans (...) So who pays? Employers and employees end up paying steep premiums. This increases labour costs and reduces the competitiveness of Quebec’s businesses.
And he said: “Mandatory private coverage is also not related to income, so the costs can be substantial for some—especially the working poor.”
He points out that a student working part time told him she had to pay $190 of her $514 net monthly income for drug premiums. There's also a systemic issue of institutional skimming between good and bad risks: seniors, people on social assistance, or the unemployed end up on the public plan, while those with a good job—the wealthier and healthier population, generally—end up in the private plans.
I am forming a conclusion that here in Canada we have an example of the hybrid model whose virtues, Mr. Blomqvist, you were extolling, and it's not one that we should copy.
Madame Forcier, do you have an opinion on that?
Thanks very much. That completes our time.
I want to thank the panel very much, because we had a couple of firsts today. We had never talked about bunions before on this panel. It's the first time.
It's also the first time I know of, Mr. Blomqvist, that a presenting person asked a member of the panel a question, and he answered. It was very enlightening and very helpful. I learned a lot today; I can tell you that.
I want to ask a quick question of Mr. Elkins.
You stated in your presentation that nearly 94% of employees earning more than $100,00 receive health benefits, compared with 32% of those earning $10,000 to $20,000 and 17% of those earning $10,000 or less. Do you see a trend? Are employers moving away from providing health benefits or adding health benefits?
Again, I want to make sure I'm clear. I don't understand the PBO to be coming here to be testifying about anything. The PBO is coming here, at our request, for us to discuss questions and methodology. We're really giving the PBO instructions, I guess in consultation with the PBO, about the information that they can go and study and then come back. If that's the case, then I think the analysts are quite right.
When I think about it, John, maybe the half-hour should come afterward. We pass this motion, we put it to the PBO, and each of us has a chance to talk to the PBO about methodology and questions. I think it gives us a couple of days to see if there's something here that we might want to add. It looks pretty comprehensive to me, but there might be one or two things that we would like to put to the PBO.
Then after the PBO leaves, we can decide if there are any modifications to this that we may want to make, and then we send it off.