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WHAT DOES THE LIBERAL MINORITY GOVERNMENT MEAN FOR PHARMACARE?

February 13, 2020

In the July/August 2018 edition of The Inside Story, we described the background and possibilities for national pharmacare in Canada. At that time, any movement on this issue seemed far down the road – as far as the recent federal election. Now that the postelection pieces are falling into place, let’s see where we are...

Promises, promises…

After an unruly and nasty campaign, Canadians elected a minority Liberal government on October 21, 2019. So what does this result mean for national pharmacare? Before we delve into that question, with three of the four national parties offering some version of a prescription drug program, let’s review the platforms.

The Liberal Party, led by Justin Trudeau, promised to be “guided” by the recommendations of the Hoskins report – which endorsed a drug program that is universal, comprehensive, accessible, portable, and public – and to negotiate with the provinces and territories regarding the design and implementation of universal
pharmacare. However, it was unclear whether this would be a completely universal scheme or a hybrid involving private insurance. A $6 billion “down payment” spread over four years was allocated for a number of health initiatives, including pharmacare.1

The Liberals also committed to starting a Canada Drug Agency to negotiate drug prices with a goal of making medication purchasing more effective and efficient, and to bring down the cost of high-cost lifesaving drugs through a rare-disease drug strategy.2 They already moved in that direction in August 2019 via changes to Patented Medicine Prices Review Board regulations for reviewing new drugs coming to the Canadian market.

The New Democratic Party (NDP), under Jagmeet Singh, promised a national, universal, public pharmacare program. This was to cover a comprehensive national formulary developed by an arms-length agency that would also negotiate drug prices – which seems similar to the Liberals’ Canada Drug Agency.

The NDP program was not to be subject to co-payments, deductibles, or premiums except for a $5 co-payment on brand-name drugs when a generic is available. An annual pharmacare transfer was to be provided to the provinces and territories on the condition that they would provide universal coverage and adhere to the national formulary. This program was estimated to cost $10 billion annually, and the NDP suggested implementation would happen by the end of 2020. Under the NDP plan, private insurance
would cover the $5 co-payment for brand-name drugs as well as drugs not included on the national formulary.3

Elizabeth May’s Green Party of Canada also promised national, universal pharmacare – without co-payments or deductibles – through expanding the Canada Health Act to include prescription drugs dispensed outside a hospital. The program was to be implemented by the end of 2020 with $26 billion allocated for the first year. The federal government was to pay the full cost for the first two years, then share costs with the provinces. As well, the Green Party would have created a bulk drug purchasing agency
and reduced drug patent protection periods to bring drug costs down.4, 5

The Conservative Party of Canada, led by Andrew Scheer, didn’t offer a universal pharmacare plan in its platform. Instead the Conservatives intended to focus on those who aren’t covered provincially or by employee plans to address gaps in order to improve access, but did not propose any strategies.6 They also pledged to maintain health care transfers to the provinces and increase funding by three per cent per year.7

Now what?

The new Liberal cabinet was sworn in on November 20, 2019, with Patty Hajdu as minister of health, Chrystia Freeland as minister of interprovincial affairs, and Bill Morneau as minister of finance. When it comes to pharmacare, these three departments will have to collaborate if a program is to come to fruition.

Regardless of what was said during the campaign, the development and implementation of any kind of pharmacare program presents huge challenges for the federal government. While Canadians appear to support the idea of national pharmacare, it’s unclear whether they consider it a priority. Many are perfectly happy with their workplace drug benefit plans, so a program that covers those who do not have access to a private plan may be an acceptable, and certainly less expensive, option for Canadians to embrace.8 And Bill Morneau has plainly stated that he favours a “fill in the gaps” option.9

In the speech from the throne on December 5, 2019, the Liberal government offered little detail on their plans for pharmacare, promising only to take “steps to introduce and implement national pharmacare.”10 The speech did not say what a federal drug plan would look like or provide a timeline. Will more information be forthcoming in the next federal budget? Time will tell.

Challenges (and then some)

The cost

By any account, the cost of providing national pharmacare is multibillions of dollars. Back in 2017, the Parliamentary Budget Officer assessed what was needed to implement such a program. At that time, the endeavour was estimated to come at a net cost of $19.3 billion to the government, and this amount was expected to grow by 2020-21 to $22.6 billion.11 This is higher than the Hoskins report’s estimate of $15.3 billion per year by 2027, and is significantly higher than Trudeau’s $6 billion promise.12 As a reality check, the Liberal government’s December economic update noted that the federal deficit is $7 billion greater than predicted, posing further challenges to implementing pharmacare.13

On January 13, 2020, Bill Morneau was asked whether he was open to pledging more than the $6 billion Trudeau had promised for pharmacare in his budget for 2020. The finance minister replied that the pharmacare effort’s precise financing would “be related to the ability to work together” with Canada’s various provinces and territories. “It’s premature for me to tell you what the exact approach from a financial standpoint will be, until we’ve made progress with the provinces in this regard,” Morneau said.14

The provinces

National pharmacare has always been an issue that pits the federal government against the provinces regardless of the players involved. Currently the provincial drug plans are all different, but are all limited in what they cover, especially when it comes to new products. This creates inequality in drug coverage from province to province.

Despite all the promises made by the federal parties during the campaign, nothing can be implemented without provincial cooperation, and both Ontario and Quebec have spoken out against a national pharmacare program.15 Ontario Health Minister Christine Elliott has publicly stated she doesn’t want a full pharmacare overhaul. Rather, she says the focus should be on rare diseases.16 This leaves Newfoundland and Labrador Premier Dwight Ball as the only premier vocally supporting national pharmacare.17

At the premiers’ meeting in early December 2019, pharmacare was discussed with all provinces agreeing that they should be allowed to opt out of any federal program. However, they also requested a 5.2 per cent increase to the Canada Health Transfer regardless of the status of pharmacare.18

And let’s not forget that Premier Doug Ford scaled down OHIP+ immediately after taking office in Ontario. This program was initiated in 2018 by the previous Liberal government and provided universal drug coverage for all children and youth age 24 and under, regardless of family income. OHIP+ acted as the primary payor (whether or not private coverage existed) providing full reimbursement of eligible drugs. In April 2019, Ford’s Conservative government changed the program to cover only children and youth under age 25 who do not have private drug plans available. Meanwhile the premiers of British Columbia, Alberta, Saskatchewan, and Quebec contend that they already provide adequate pharmacare programs for their residents.

Working with the opposition

With a minority in parliament, Prime Minister Trudeau has to seek cooperation from the opposition parties to proceed with any priorities and will likely solicit support case by case. Since the NDP platform included pharmacare as a key promise, it’s likely that the Liberals will rely on the NDP to support any national pharmacare plans, and Singh has affirmed that national pharmacare is still a priority for his party.

Since the NDP presented far a more specific and immediate plan for pharmacare as
part of their platform than the Liberals, it remains to be seen what influence Singh has regarding details of any legislation. The Liberal and NDP platforms differed in several areas, especially around timing and scope. It also remains to be seen whether the Liberals remain committed to using the Hoskins report as a guide. While the Liberals may prefer a “gap-filling” program, the NDP is not likely to be on board without concessions, and the Bloc Québécois won’t agree to interfering with the provinces’ grip on health care.19

Push back from big pharma and insurance

Clearly Canadian pharmaceutical companies could not be happy at the prospect of losing profit and are expected to launch intense lobbying against any form of pharmacare or further strategies to contain drug pricing. It has been reported that universal drug coverage could result in a decrease to big pharma’s revenue by as much as $4.8 billion a year by 2027.20

The pharmaceutical industry group, Innovative Medicines Canada, has stated that they “believe that any national pharmacare program must ensure Canadians maintain access to at least the same range of cutting-edge medicines they rely on today.”21

As well, insurance companies will also lobby against any plan that cuts private coverage out of the equation. While Stephen Frank of the Canadian Life and Health Insurance Association expressed support for the previously announced changes that address drug costs, he also said that his organization continues “to believe strongly that any reform should use government resources wisely and build on what works well today.”22

And there is some indication that politicians may be coming around. The Atlantic premiers discussed the federal government’s commitment to national pharmacare at the Council of Atlantic Premiers in early January 2020. The premiers agreed that any federal program must be fully funded, long-term, sustainable, and provide a comparable level of pharmaceutical coverage, including drugs for catastrophic illnesses. The premiers also want to ensure that a federal national pharmacare program recognizes current private sector insurance systems and that all Atlantic Canadians have coverage.23

So… what’s next?

With a list of competing priorities and deals to make, the government is not likely to make pharmacare its top priority for the next legislative session. By most accounts, climate change and pipelines, including appeasing the western provinces, probably will take the top spots. In sum, this will be a tough file for Trudeau’s Liberals. Their budget is tighter than expected, but the real barrier will be from the provinces. So, while some form of a national drug program will likely be passed, we may have to wait a while longer for the plans to be revealed.

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