Unlike most member countries of the Organisation for Economic Co-operation and Development (OECD), Canada does not have a national pharmacare program – that is, a single system of public insurance coverage for prescription drugs. Rather, Canadians obtain prescription drug coverage through a patchwork of public and private drug coverage plans. Within this current framework, it is estimated that more than one in five Canadians forgo taking their prescription drugs because of cost considerations.[1] Furthermore, Canada performs poorly in comparison to other countries in its ability to manage the costs of prescription pharmaceuticals. In 2015, Canada’s per capita drug expenditure ranked third highest among 29 OECD countries, behind the United States and Switzerland.[2] These challenges are only expected to continue with the increasing number of high cost specialty drugs being used to treat complex chronic conditions.

Recognizing the critical importance of this issue to Canadians, the House of Commons Standing Committee on Health (“the Committee”) agreed to undertake a study on the development of a national pharmacare program as an insured service under the Canada Health Act and to report the findings to the House.[3] During its study, the Committee heard from witnesses that Canada’s patchwork of private and public prescription drug coverage programs is in need of serious reform. Critical issues that need addressing include gaps in prescription drug coverage and variation among drug formularies both across the country and between public and private drug plans. Though Canada has some effective mechanisms in place to manage the costs of prescription drugs, including the pan-Canadian Pharmaceutical Alliance, the Canadian Agency for Drugs and Technologies in Health and the Patented Medicine Prices Review Board, the Committee heard that these bodies are not equipped to meet changes in the global drug market. More importantly, the cost-savings achieved through joint price negotiations through the pan-Canadian Pharmaceutical Alliance only benefit those obtaining coverage through public plans. Uninsured individuals and the 70% of Canadians who obtain drug coverage through private insurance are left out. The challenges posed by the rising costs of pharmaceuticals also means that the sustainability of private plans has come into question.

It is clear to the Committee that it is time to move forward. Witnesses proposed two main policy options that were carefully considered by the committee:

1. a universal single payer public prescription drug coverage program;
2. reform of the existing system of public and private prescription drug coverage through closer collaboration between the public and private sector and targeted efforts to address gaps in coverage.

The Committee believes that the best way to move forward in establishing a universal single payer public prescription drug coverage program is by expanding the Canada Health Act to include prescription drugs dispensed outside of hospitals as an insured service under the Act. A study by the Office of the Parliamentary Budget Officer, which was commissioned by the Committee, examined this approach and found that it has the potential to reduce total annual prescription pharmaceutical expenditures by $4.2 billion, based upon prudent estimates.[4] Such an approach would also ensure that all Canadians have equitable and affordable access to life saving prescription drugs. In short, it will save money and lives.

The Committee has concluded that merely addressing coverage gaps will not lead to better health outcomes or better cost control. In the words of Dr. Marc-André Gagnon, Associate Professor, School of Public Policy and Administration, Carleton University, “In trying to preserve the fragmented system while filling the gaps, we end up thinking of the public system as some sort of trash can for bad risks.”[5] High-risk, high-cost patients, the elderly, the poor, and those bordering the cut-off to those distinctions are pushed out of private plans and onto public plans where ever they exist. The result is a system “based on the commercial needs of the private plans, not the health needs of Canadians.”[6] 

However, the Committee recognizes that in moving towards a single payer universal publicly funded prescription drug coverage, governments will be assuming significant costs from the private sector in the order of $10.7 billion before potential savings are realized.[7] Given our federated state, the Committee believes that the program should be cost-shared between federal, provincial and territorial governments. It will also be necessary for the federal government to undertake consultations with employers, unions, private drug plans and Canadians at large to identify the best possible approaches towards financing this new program. Change is difficult, but it is necessary. It will require leadership from the federal government and collaboration from provincial and territorial governments, health care providers, patients, private health insurance companies, unions, and businesses to move forward. This report contains 18 concrete recommendations that the Committee believes will lay the framework for the provision of pharmacare to all Canadians.