Public Values

CETA a "bad drug trip", Pharmacare a salve

CETA would add $2.8 billion to annual drug expenditures.

Yalnizyan: We need a government that is on-side; helping us contain costs, not driving them Armine Yalnizyan

Boomers are getting blamed for an awful lot of fiscal problems these days.

But blaming an aging population for healthcare costs spiralling out of control is misplaced. Missing opportunities to manage and contain costs is the real culprit.

Take, for example, our spending on prescription drugs. Costs in that part of the healthcare system have been rising by almost 10 percent a year, on average, since 2000.

We spent almost $30 billion on prescription drugs in 2009, and the share of pharmaceuticals in total health expenditures has surged from 9.5 percent in 1985 to 16.5 percent nation-wide.

Drugs are now the second biggest ticket item in healthcare, second only to the amount we pay for hospitals (which accounts for 28 percent of all healthcare spending).

  "Canadians pay more for each pill than almost every other advanced industrial nation except Switzerland."

One in four Canadians had no insurance to cover their drug costs before the recession even began, and hundreds of thousands more have lost coverage since. The attack on retirement benefits has meant that thousands of pensioners are having more difficulty getting the medicines they need.

Out-of-pocket expenditures doubled from $2.3 billion in 1999 to $4.6 billion in 2009, and a growing number of Canadians are simply not filling in prescriptions because of their cost.

In fact, Canadians pay more for each pill than almost every other advanced industrial nation except Switzerland, and 30 percent more than the average cost in the OECD nations. When you spend $30 billion a year on something, why pay retail?

We can do better. In fact we can improve access and contain costs.

Sound impossible? A few months back, Professor Marc-Andrép Gagnon published a ground-breaking report with the Canadian Centre for Policy Alternatives outlining how Pharmacare could meet these twin goals by flexing our collective muscle in how we buy and getting smarter about what we spend on.

It all comes down to the power of a single, public program.

One that manages costs through four levers that decision-makers have been talking about for decades:
1) universal public insurance
2) a national formulary of essential drugs
3) independent evidence-based drug evaluation
4) bulk-purchasing

One that identifies best practices. Wouldn't it help to know which drugs and patterns of use are most effective?

One that could save us a stunning $10.7 billion in annual costs. Imagine what other things that kind of money could buy.

For this to happen we need our governments to work with us, not against us.

Instead, the federal government seems more intent on escalating costs rather than reducing them.

CETA versus Pharmacare

The government of Canada is in the process of negotiating a free trade agreement with the European Union — the Canada-EU Comprehensive Economic and Trade Agreement (CETA) — which it hopes to have concluded by the end of 2011.

One of the things the Europeans hope to get from this deal is changes to our drug patent laws and regulations. Specifically, they'd like to see an extension to the exclusivity of patents on top-selling drugs. Pharmaceuticals account for 15.6 percent of total exports from Europe to Canada, with a value of more than $5 billion annually.

In early February, a study by Professors Aidan Hollis and Paul Grootendorst, two of Canada's top academics on pharmaceutical policy, showed that the changes sought by the European Union would add $2.8 billion to our annual expenditures on drugs.

The federal government is calling the shots, but it won't shoulder the costs. Almost all the cost impact of the new rules will be borne by provinces, private insurers, and individuals paying directly.

The Premiers come together at their annual Council of the Federation meeting in British Columbia next July. The topic of how to manage the rising costs of healthcare will likely come up.

Pharmacare should be on that agenda. Potentially huge savings are available for governments if they work together.

These savings could be reinvested in a program that provides first-dollar coverage for medicines, reduces waste, improves utilization, and ensures better access to life-saving and life-enhancing treatments.

The sooner we act, the sooner we save. The more we save, the more we can do.

But we need a federal government that is on-side; helping us contain costs, not driving them up.

From psychedelic drugs in the 60s to prescription drugs in their 60s — boomers are poised to have their consciousness raised once again.

And if the grey tsunami finds out what Pharmacare could accomplish (and what CETA could undo), we might all be able to avoid a really bad drug trip.

Armine Yalnizyan is a senior economist at the Canadian Centre for Policy Alternatives.

Posted: March 09, 2011

  Health care
  Public services

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