Backgrounder: Final report of the Advisory Council on the Implementation of National Pharmacare

June 2019

Canada is the only country in the world with universal health care that does not provide universal coverage for prescription drugs. Instead, we rely on more than 100 government-run drug insurance programs designed to serve people in vulnerable groups, and more than 100,000 private drug insurance plans that largely provide employment-based coverage. The way Canada manages and pays for this vital part of 21st century health care is critically flawed. For example:

• Approximately 20 per cent of Canadians, representing 7.5 million people, have inadequate drug coverage or no coverage at all and must pay out of pocket.
• A recent study found almost 1 million Canadians had cut their household spending on food and heat to pay for medication.
• Another found that one in five households reported a family member who, in the past year, had not taken a prescribed medicine due to its cost.

Recent research found that removing out of pocket costs for the medications used to treat just three health problems—diabetes, cardiovascular disease and chronic respiratory conditions—would result in up to 220,000 fewer emergency room visits and 90,000 fewer hospital stays annually. This has the potential to save the health care system up to $1.2 billion a year—for those three diseases alone.

That is why the Council recommends that Canada implement universal, single payer, public pharmacare. More specifically, the Council recommends that:

• The federal government work with provinces and territories to create a national pharmacare program that works like medicare: universal, comprehensive, accessible, portable and public. Treating drugs in a similar way to hospital and physician services would keep pharmacare in line with the values and principles that went into creating medicare in Canada.
• National pharmacare be delivered by provinces and territories, governed by new federal legislation and supported by federal funding linked to agreed-upon national standards. This will ensure that all Canadians, regardless of where they live, their employment status or their income, receive a consistent standard of prescription drug coverage.
• Federal, provincial and territorial governments collaborate to create a new arms-length Canadian drug agency to oversee national pharmacare. The Canadian drug agency's first task should be to create a national formulary—the list of drugs to be covered by national pharmacare. The agency will determine, based on evidence, which drugs should be included on the national formulary and the conditions for their use.
• A comprehensive national formulary be developed to include drugs for common conditions, as well as those for more complex, serious illnesses. It should also include a limited number of medical devices and supplies associated with the administration of drugs on the formulary, such as aerochambers for inhaled medication. All Canadians with a valid health card will be eligible to receive any medications listed on the national formulary.
• Because it will take time to choose the right drugs and negotiate prices for them, the initial formulary should be a carefully chosen list of essential medicines covering most major conditions and representing about half of all prescriptions. This initial list of drugs should be available through national pharmacare beginning January 1, 2022.
• A detailed national strategy and distinct pathway for funding and access to expensive drugs for rare diseases should be implemented by January 1, 2022, as well. The federal government has already committed $500 million per year for this critically important initiative.
• Copayments under national pharmacare 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 $100 per year per household.  Individuals with disabilities, those receiving social assistance and low-income seniors should be exempt from copayments. These measures will save the average Canadian household $350 annually in prescription drug costs.
• The federal government work collaboratively and in partnership with provincial and territorial governments to begin the implementation of national pharmacare as soon as possible. A new financing arrangement should be developed jointly by governments and the federal government should pay for the incremental costs of national pharmacare.

National pharmacare is not only good for Canadians—it is good economic policy. It will reduce the economic inefficiencies that come with tens of thousands of private plans. The annual savings that will come from strong negotiating power, lower administrative costs and the other efficiencies of pharmacare will save an estimated $5 billion per year by 2027.

The delivery of the Council's final report marks the completion of the Council's mandate. The Council looks forward to the next steps that the federal government will take.