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Universal drug coverage in Canada could save more than 30% annually
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Despite public perception to the contrary, the introduction of universal prescription drug coverage in Canada would not require significant tax increases, but instead could reduce the country’s total spending on prescription drugs, according to recent findings published in the Canadian Medical Association Journal.
“A long-time barrier to the implementation of universal prescription drug coverage in Canada has been the perception that it would necessitate substantial tax increases,” Steven G. Morgan, PhD, professor of health policy at the University of British Columbia School of Population and Public Health, said in a press release “Our analysis shows that this need not be the case.”
Morgan and colleagues used data published in the Canadian Rx Atlas to estimate the total cost of implementing universal public coverage of prescription drugs, accounting for prescribing patterns and costs by drug type, as well as the funding source — including private drug plans, public drug plans and out-of-pocket expenses. Their analysis covered about $22 billion in Canadian drug purchases during the fiscal year 2012-2013. The researchers analyzed the cost-impact to the government based on a range of assumptions representing the best- and worst-case scenarios, as well as a base scenario, or expected outcome.
They estimated that total spending would be $15.1 billion annually, a decrease of $7.3 billion (32%). The worst-case scenario would be a decrease of $4.2 billion, while a best-case scenario would save $9.4 billion. Private spending on prescription drugs would be decreased by $8.2 billion in the base scenario, with a worst-case scenario of $6.6 billion and a best-case scenario $9.6 billion.
The total cost to the government would be $958 million, with a worst-case scenario being an increase of $5.4 billion in spending vs. a best-case scenario of $2.9 billion in net savings. The bulk of the anticipated increase in government costs would come from a small number of drug classes, according to the researchers, including biologics for inflammatory conditions such as rheumatoid arthritis, antibiotics and hormonal contraceptives.
According to study researcher Danielle Martin, MD, vice president of medical affairs and health systems solutions at Women’s College Hospital and assistant professor at the University of Toronto, governments in Canada already spend significant amounts of money on prescription medications.
“They do so through public drug plans which cover seniors or people on social assistance, but they also do so by spending on private drug coverage for public-sector employees,” Martin said during a podcast.
The researchers found that in Canada, $9.7 billion annually is currently spent directly on public drug plans, and $2.4 billion is spent annually on private drug plans for public-sector employees.
Martin said the three major drivers of potential change and savings in Canada would be the increased use of generic drugs where appropriate, lowering generic drug prices through bulk purchasing and lowering brand-name prices through more effective negotiations.
“Our analysis essentially suggests that if you take each of these three factors, each would overall reduce spending in Canada by 11%, for a total savings of about 30%,” Martin said.
Disclosure: Martin is a volunteer member of the board of Canadian Doctors for Medicare. Law reports receiving fees from Health Canada outside of the study.
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