Single-payer pharmacare recommended

But experts mixed on implications for employers
By Marcel Vander Wier
|Canadian HR Reporter|Last Updated: 08/19/2019
Pharmacy
A universal, public pharmacare system brings an opportunity for savings and efficiencies, according to the advisory council. Credit: Jacob Lund (Shutterstock)

The conversation surrounding a universal pharmacare framework in Canada ratcheted up a level in June, when a national advisory council recommended the implementation of a single-payer system.

The six-member council urged the federal government to work in partnership with provincial and territorial governments to establish a public system for prescription drug coverage, while also establishing a national formulary of prescription drugs, beginning with an essential list by Jan. 1, 2022 — with full implementation scheduled for 2027.

At present, Canada’s prescription drug coverage model consists of dual public and private coverage, while provinces and territories each adhere to individual formularies.

Canada spent $34 billion on prescription medicines last year, according to the government.

A single-payer model in which all Canadians receive prescribed medications through a single entity represents an opportunity for savings and equality of coverage, says Eric Hoskins, chairman of the Advisory Council on the Implementation of National Pharmacare.

“The time for universal, single-payer public pharmacare has come,” he says. “The biggest advantage may be the savings and efficiencies that you find with the single-payer model that you can’t with the other models — often described as ‘fill in the gaps.’ By keeping the current system of mixed public and private in place as it is, you don’t get those savings.”

The advisory council explored a variety of pharmacare models over a 12-month period, and each pointed to a single-payer conclusion, according to Hoskins.

The council travelled to each province and territory to hold in-person discussions through roundtables, and it also met with Indigenous governments and representative organizations.

Through consultations with 32,000 Canadians, members came to realize a shared belief that all citizens should have access to prescription drugs, based on need — not their ability to pay, he says.

The June recommendation marks the completion of the council’s mandate. Universal pharmacare is now expected to go before the people by way of the federal election process this fall.

“The only way we’re going to fix a system which is near the breaking point… is to transform it,” says Hoskins.

“The time has come, and hopefully there’s sufficient political will. Canadians have indicated that they want it, and we think that this is the best model to achieve it.”

‘Significant savings’

If implemented, a universal pharmacare framework’s improved negotiating power and lower administrative costs could save Canadians $5 billion per year, says Hoskins.

In addition, employers providing drug coverage to staff could save hundreds of dollars per employee while earning relief from the costs of prescription drug insurance, he says.

“We estimate that employers, on average, will save $750 per employee, per year, which is a significant savings.”

The council recommended that employers able to purchase supplementary private drug insurance for workers continue to do so, even as the nature of private insurance participation will change.

Savings expected through a single-payer plan would give employers an opportunity to reinvest in the company, staff salaries and various health benefits, says Hoskins.

Employees are also being asked to contribute more to benefits plans in terms of premium contributions, co-payments, deductibles and increased annual limits.

“Cost-related non-adherence is actually a significant problem and a growing problem,” he says.

At present, Canada trails only the United States and Switzerland in terms of prescription drug spending, says Hoskins.

But savings isn’t the only driver of the recommended pharmacare overhaul. It’s also about uniformity, equity and fairness, he says.

One in five Canadians is currently uninsured or underinsured when it comes to prescribed medicines, says Hoskins.

“Absent a single-payer model, it’s difficult — if not impossible — to achieve that important goal of fairness and equity and uniformity and consistency across the country.”

Lower insurance costs

Canadian employers should get behind the national pharmacare plan, as it would solve many challenges around access to prescription drugs, says Doris Grinspun, CEO of the Registered Nurses’ Association of Ontario.

“When you have national pharmacare, you also get better drug pricing on prescription medicines,” she says. “There are so many different angles that one can look at from an employer’s perspective.”

Lower insurance costs would put Canadian employers in a better position, compared to international competition at a time when a shortage of labour is a growing concern, says Grinspun.

“They should get behind the plan — and the sooner, the better — because then they also have more influence power and they can work collectively [to] help influence and push for the issue of bulk purchasing… and proper prescribing.”

From workers’ health to financial outcomes, universal pharmacare would aid all aspects of the workplace, she says.

“It’s not just for employers or employees. It’s for everybody... I have no fears, I only see benefits.”

Pharmacare funding

The proposed pharmacare plan would be phased in over an eight-year period, beginning with a formulary covering essential medicines, according to Hoskins.

“Part of the reason why we phased it was because it’s enormously complex,” he says. “It requires a lot of negotiations — not only with provinces and territories but also with drug manufacturers, in terms of lowering the prices… But it also gives significant runway to both employers and insurance providers to adjust to a new approach.”

If implemented, the plan would be funded through general revenue streams, says Hoskins.

“There are many examples in the past where significant national investments — new investments — have been made without it resulting in an added or new cost to Canadians,” he says.

“We’re offering a model that will reduce [prescription drug] costs… and we’re recommending that it be funded as we do health care generally.”

Forty-seven per cent of small and medium-sized employers support a single-payer pharmacare framework, while 27 per cent are opposed, according to a 2019 Canadian Federation of Independent Business (CFIB) survey of 2,837 business owners.

“We really don’t want to see the burden placed on the shoulders of small and medium-sized business owners, because already the costs associated with drug coverage is a concern,” says Emilie Hayes, senior policy analyst at CFIB in Ottawa.

“The smaller the business, the more expensive and the harder it is for them to even have the option to provide it to their employees.”

In theory, the opportunity to negotiate lower drug prices and provide universal care is supported by employers; cost issues remain the main source of concern, she says.

“What we really don’t want to see is the funding basically in the form of a payroll tax or increased GST,” says Hayes.

The single-payer framework will level the playing field for workers with no employer-funded benefits, says Hoskins.

“The idea that if you’re working you are covered is a bit of a myth,” he says. “Because if you’re precarious or contract or part-time or working for a small business or self-employed, chances are you’re not going to have coverage.

“We did look at that very carefully and explicitly to make sure that what we were proposing would address that as well.”

No ‘free ride’ for employers

But employers expecting a free ride are in for a rude awakening, says Brett Skinner, CEO of the Canadian Health Policy Institute in Toronto.

“Employers who think they can offload their costs on to the public sector and not pay anything for it are dreaming in Technicolor... The tax bill is going to flow back at them somehow.”

The current system — while pluralistic — is adequate, says Skinner. The gap occurs when Canadians are required to purchase drugs that are unlisted on their formulary.

“The single-payer model of pharmacare — all it does is shift costs from the private sector to the public sector and from the provinces to the federal level. It does nothing to close the actual gap that people face,” he says.

“There’s 23 million Canadians who are privately insured who are going to have to accept inferior benefits under a universal plan.”

The council’s recommendation was “totally predictable,” says Skinner.

“The fix was in. They certainly did not genuinely consider contrary advice or give a fair shake to any other alternative option, like filling the gaps in the current system.”

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