National pharmacare advisory council’s report leaves many unanswered questions

Nigel Rawson | CHP | 24 JUL 2019

The 2019 federal budget announced that the government will take initial steps towards implementing national pharmacare to improve the affordability and accessibility of prescription drugs across Canada. The government’s plan includes the development of “three foundational” elements – a national Canadian Drug Agency (CDA), a comprehensive national drug formulary, and a national strategy for high-cost rare-disorder medicines.

The CDA will assess the cost-effectiveness of new prescription medicines and negotiate prices on behalf of public drug plans to recommend those that represent the best value-for-money. In other words, it will merge the present health technology assessment (HTA) agencies – the Canadian Agency for Drugs and Technologies in Health (CADTH), and INESSS, Quebec’s equivalent – and the pan-Canadian Pharmaceutical Alliance (pCPA), which currently negotiates prices for all public drug plans.

The government intends the CDA to be a powerful tool in reducing drug costs. Cost reduction aligns with the government’s commitment to provide affordable, accessible and appropriate prescription drug coverage for all Canadians.

As these documents usually are, the federal budget was long on generalities and short on details. The final report of the Advisory Council on the Implementation of National Pharmacare is consistent with the federal budget in the three foundational elements. The Council’s numerous recommendations provide greater insight into what is being proposed.

The CDA would not only bring together CADTH, INESSS and the pCPA but also resources and expertise from Health Canada, the Patented Medicine Prices Review Board (PMPRB), which currently regulates patented drug prices, and the Canadian Institutes for Health Research. The national formulary would start with “essential medicines” and only become a comprehensive list by January 2027. The national strategy for high-cost rare-disorder drugs would have a “distinct pathway” for the consideration of these medicines and a national expert panel “working with patients” to determine which drugs would be funded and which patients would receive them.

The most fundamental recommendation of the Advisory Council is that national pharmacare should be publicly funded and administered, eliminating the need for most of the current private and all the public drug insurance programs. The Advisory Council suggests that Canadians could purchase private insurance to cover the cost of copayments or provide extra benefits. However, since a totally public program is proposed, the federal government would probably tax employment-based health benefits as income, which would likely eliminate demand for private insurance.

Both the federal budget and the Advisory Council’s report leave important and concerning questions unanswered. These questions must be answered before such a sea change in the country’s pharmaceutical environment is allowed to occur.

Being part of national pharmacare would not be mandatory for the provinces and territories. They would have to choose to opt-in. Will they do this because they would be surrendering part of their autonomy over their prescription drug budgets and allowing the federal government to say which drugs they should fund? In particular, would Quebec relinquish its current comprehensive drug coverage programs for something potentially less inclusive, and would the province relinquish its jurisdiction by allowing INESSS to be combined with CADTH? Without a sufficient proportion of the Canadian population in the system, the bargaining power for pharmaceuticals needed to achieve the savings anticipated by the Advisory Council are unlikely to be realized.

The budget conspicuously did not mention the PMPRB, but the Advisory Council report recommends that  the substantial changes proposed by the federal government in 2018 to the PMPRB’s guidelines to further reduce drug prices should be implemented. The proposed changes could have far-reaching impacts for drug manufacturers that could delay or prevent the timely introduction of new medicines, which would deny Canadians with unmet pharmaceutical needs access to innovative therapies. The proposals have led to some serious concerns among patients. However, since the pCPA has achieved prices lower than the legal maximum for a growing number of drugs, the PMPRB’s pricing role has become less relevant to government drug plans. The question here is, is the PMPRB still needed?

Other questions relate to what is meant by a “comprehensive” national formulary and how it would be implemented across Canada. According to the budget, the development of a comprehensive, evidence-based list would “provide the basis for a consistent approach to formulary listing and patient access across the country.” Does this imply that the formulary would include the several thousand of medicines that many private insurance plans cover? Or would it be restricted to, for example, the 125 so-called essential medications proposed by some academics? Or, perhaps, it would resemble New Zealand’s formulary which, excluding vaccines, diagnostic products and oncology drugs, includes approximately 550 medicines (the often-criticized Ontario public plan has about 750 medicines)?

Provincial governments are protective of their autonomy in deciding which medicines are listed in their formularies based on perceived needs and priorities of residents and provincial budgets. Having provinces list all the medicines recommended for reimbursement by the CDA would likely be interpreted as federal interference and resisted, unless the federal government provided funding for the coverage of additional medicines. However, until all drug coverage plans are required to include every drug in the national formulary, inequity is likely to continue across Canada.

national strategy to regulate high-cost rare disorder medicines is long overdue. Some CADTH staff recognize that the current rigid methods of the HTA do not work for rare disorder drugs and that a unique approach to assess their value is required. A relevant question here is, will a national strategy include more flexible HTA methods for these types of drugs? If so, will public and private drug plans accept the recommendations, or will they continue to impose restrictive clinical criteria that limits drug access to highly specific patient types?

How will the federal government pay for national pharmacare? The usual method of federal transfers provides provincial and territorial funding based on the size of their populations. Some provincial drug plans are less comprehensive than others and would need greater funds to bring their plans up to a national standard. Moreover, some of the same province have a higher proportion of elderly residents who frequently require more drugs. If equity is to be achieved, disproportionate funding would be required. Would provinces with better current drug plans accept this?

Different estimates of the cost of national pharmacare have been put forward. Given the federal government’s notorious under-estimating of spending on large-scale projects and the time required to implement them, can Canadians trust the Advisory Council’s estimate? The Phoenix pay system and plans to purchase planes and ships for the armed forces raise the question, can Canadians trust the federal government to introduce national pharmacare without large tax increases and much delay?

The national pharmacare program recommended by the Council seems designed primarily to reduce out-of-pocket costs from copayments and deductibles under existing public drug plans and safety-net programs. Canadians who have public or private insurance should be concerned about whether it would reduce their benefits and increase their expenses. Without answers to the questions raised here, Canadians will not know whether the plan is to create the truly comprehensive program the Advisory Council proposes or a tight cost-containment system with limited access and options.

Nigel Rawson | CHP | 24 JUL 2019