GroupNews Extra – June 2019

Advisory Council on the Implementation of National Pharmacare Calls for Universal, Single-Payer Public Pharmacare in Canada

 June 18, 2019

On June 12, 2019, the Advisory Council on the Implementation of National Pharmacare (Council) recommended in its final report that the federal and provincial governments establish “a universal, single-payer public system of prescription drug coverage in Canada;” and a Canadian drug agency that would be responsible for developing a national list of prescription drugs, with an initial list (formulary) of common or essential medicines in place by January 1, 2022.

The Council was first announced in the 2018 Federal Budget with a mandate to outline options and key issues for consideration with respect to introducing a national insurance program for prescription drugs. The Council has recommended that national pharmacare be delivered by the provinces and territories but be governed by new federal legislation, with federal funding linked to agreed-upon national standards. Recommendations for the national formulary include:

• An initial formulary should be introduced that includes essential medicines covering most major conditions by January 1, 2022;
• A detailed national strategy for funding and access to more expensive drugs for rare diseases should be implemented by January 1, 2022, with a fully comprehensive formulary covering essential medicines and medicines for more complex, serious illnesses in place by January 1, 2027;
• Copayments should be limited to $2 per prescription for essential medicines and $5 per prescription for all other drugs on the national formulary, with an annual limit of $100 per household; and
• The federal government and provincial and territorial governments should work to implement a national pharmacare strategy and new financing arrangement as quickly as possible. Recommendations on funding include:
  1. The federal government provide long-term, adequate and predictable funding to the provinces and territories to cover the incremental costs of national pharmacare;
  2. Funding for national pharmacare be delivered through a new targeted transfer, separate from the Canada Health Transfer;
  3. Intergovernmental financing arrangements for national pharmacare be determined through mutual agreement between the federal, provincial and territorial governments; and
  4. Federal contributions to national pharmacare be financed in a manner similar to Medicare.

Statement from the Government of Canada

In response to the final report of the Council, the government of Canada stated it would carefully review the final report and consider next steps in collaboration with the provincial and territorial governments.

Impact: The Council has concluded that the introduction of a national pharmacare strategy will reduce economic inefficiencies, increase negotiating power, lower administrative costs, and allow for more Canadians to receive the prescriptions they need – with the potential to reduce healthcare costs and time spent off work.

Information about where funding for the national pharmacare strategy will come from has not yet been addressed. Small business owners in particular could be affected if funding is to be raised through the implementation of payroll taxes or an increase in the GST. There are concerns that individual taxpayers could also incur financial impact if funding is raised through increases to personal income taxes. Proposals for funding through cost-savings from negotiated lower drug prices, reallocated government funds, or cutting existing spending could offer some alternatives but could also result in costs being passed on in different ways. It remains to be seen if the still-to-be proposed strategy for funding will alleviate concerns about potential funding measures before implementation.

There will be many questions as this unfolds, including the extent of coverage for drugs currently not included in provincial drug plans. Plan members and sponsors will need to carefully review the government’s plan to ensure that access to necessary coverage is maintained. GroupNews will continue to keep you informed as new details emerge.