Public Values

Private drug insurers don't take cost effectiveness or safety of drugs into account

Canadians have little reason to trust the health care system to private operators.

Cassels: Private drug plans are managed by insurers paid a percentage of the cost of prescriptions.by Alan Cassels

Victoria, BC, May 19, 2011: You're sitting there, waiting, as the doctor's pen is poised above the prescription pad. He pauses a second, looks up, and asks, "Do you have private insurance?"

Thus the game begins, and your response to that innocent query contains the answer to where Canada's publicly funded health system is heading. Without being too dramatic, the sustainability and comprehensiveness of our universal healthcare system relies on governments' collective response to a simple question: who will pay for what?

If your doctor makes different decisions based on who is paying for the drug you'll swallow, he's perhaps unaware of how he's inserted himself into Canada's raging "public vs. private" healthcare debate. On one side of that debate are those such as the former president of the Canadian Medical Association, Dr. Anne Doig, who recently called for more federal involvement in how our provincial health systems are managed. Her comments received a swift rebuke from the folks down at the Fraser Institute, who said that reforming Canada's monopolistic universal health system is like rearranging the Titanic's deck chairs.

Let's look at how pharmaceuticals work

Like many proponents of private health care, the Fraser Institute claims the "economics" problem of Canada's health system is due to a government monopoly over how medical care is funded and allocated. They argue that consumers need to be "sharing" the cost of health care to make it sustainable. This means more money directly from your pocket. But how would that actually work?

The closest thing we've got to a system of public/private sharing of health care costs in Canada is around pharmaceuticals, where about 60 percent of our $30 billion annual prescription drug market is paid out of private insurance or directly from your pocket. Since many Canadians are covered for pharmaceuticals through their employment-based drug plans, it's worth taking a closer look to see how that's working.

When you put the private drug plans under the microscope, instead of seeing efficiency and cost effectiveness in prescribing — compared to public drug plans — you often find the opposite. A few years ago, my colleague Dr. Joel Lexchin and I published an analysis of the top 10 most expensive drugs paid for by private drug plans in Canada and we found that the plans were spending about 25 percent more than they needed to, compared to a basket of equally effective, but less expensive, medications.

The main difference between public and private plans is that private drug plans generally don't restrict what they pay for. Public plans do and usually those decisions come down to issues of safety and comparative cost effectiveness. For example, some public drug plans in Canada appropriately restrict the use of a very new diabetes drug called Januvia, which, at about $150 per script (a 30-day supply of the drug), is no more effective than the cheaper, older metformin, which sells for about $22 per script. Januvia also comes with warnings of acute pancreatitis, which can be fatal.

Another restricted drug is the sister drug to Vioxx, the pain medication Celebrex, which is nearly three times the price of equivalent generic pain relievers. The blood pressure-lowering drug Diovan is at the top of the charts in private plans, and at about $75 per script there is no evidence that it is more effective or safer than generic ramipril, which costs about $25. In fact, according to a recent study in the Canadian Medical Association Journal, if drugs in the same class as Diovan (drugs known as ARBs) had been restricted by drug plans in favour of drugs like ramipril (a class of drugs known as ACE-Inhibitors), then the Canadian health system would have saved more than $77 million in 2006 without any adverse effects on cardiovascular health.

Your private plan automatically covers drugs like Celebrex, Januvia, and Diovan, no questions asked. Me? I'm glad that public drug plans appropriately keep coverage of those drugs limited to only those people who need them.

It's clear what is going on here: employees who get private and unrestricted drug coverage are facing escalating costs. According to the Canadian Institute of Health Information, private plans are growing at about twice the rate of public drug plans. Private drug plans are often managed by insurers who get paid as a percentage of the cost of the scripts they process, so there is no incentive to seek "value-for-money" arrangements. In the end, employers absorb those rising costs while denying the workers raises. Don't believe me? Ask any public servant in BC what kind of raises they are being offered lately. Their wage future has a lot of zeros in it.

Do we trust our health care system with private operators?

At the end of the day, people might say: "I don't care: I want to have access to whatever drug my doctor prescribes (and my private insurance pays for)."

Automatically covering whatever the doctor prescribes is a great idea if Canada's doctors were well versed in the comparative costs, safety, and effectiveness profiles of the various drugs on the market — but they're not. Private insurance programs in Canada don't manage the formulary — the basket of products worthy of coverage — and have no real interest in promoting coverage of the most effective, affordable, and safest drugs.

So at the end of the day, do we want more of that? Do we really want to trust more of our healthcare system to private operators, as groups like the Fraser Institute are suggesting? Do we want less public involvement or more in our drug decision-making?

Those are a few questions worth pondering the next time you're facing a doctor poised to write that new prescription.

Alan Cassels is a drug policy researcher at the University of Victoria and an expert advisor with EvidenceNetwork.ca.

Links and sources
  Do we really want to trust more of our health to the private sector?

Posted: June 08, 2011

Categories:
  Health care
  Public services

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