Equity and Canada’s Drug Coverage System

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Lauren FischerToday’s guest post comes from Lauren Fischer, Vice President, Corporate Affairs at Lilly Canada.

How can we ensure every Canadian has access to the medicines they need without affordability standing as a barrier?

A key piece of the puzzle is drug pricing. We’ve looked at this topic from other perspectives: we’ve talked about Health Canada’s proposed changes to our drug pricing system, and the differences between price, value, cost-effectiveness, and affordability. To address the pricing debate, we must ask a series of additional questions: How does the Canadian drug coverage system work? What does it mean for resources to be “preferentially directed”? And how can we continue Canada’s legacy of equitable healthcare?

Canada’s Drug Coverage System

Let’s start with an overview of the drug coverage system for prescription medicines in Canada. Over the years, our system has grown organically to meet evolving needs. The current system includes federal and provincial public drug plans that are government-funded, as well as private drug plans. Each of these plays a unique role. For example, the public system has a robust value and negotiation framework tailored to inform drug formularies that serve our most vulnerable populations, including seniors, people receiving social assistance, and people with high drug costs in relation to their income. Meanwhile, private insurers offer drug plan benefits to their members, largely through employers, which are uniquely designed to fit their needs.

In October 2017, the Health Minister released a mandate letter stating that Canada is “committed to provide direct help to those who need it by giving less to those who do not.” This concept is the foundation of equity. Since Canada’s drug coverage resources are finite, it makes sense to preferentially direct as many of them as possible to the people who need them most.

This practice is in place in other areas of government policy as well. An example is education funding in Ontario, where the government has put in place preferential support for families with fewer resources.

Working Together to Preferentially Support People Who Need It Most

We share governments’ desire to preferentially support people who need it most. Companies that make medicines negotiate substantial discounts for government-funded drug plans. In fact, these discounts now amount to $1.3 billion every year. We do this to help governments get the most out of those resources, which support the health of the vulnerable citizens they have chosen to cover.

Governments have fixed budgets, and it is crucial that they use the funds they have efficiently. The federal government pays for 70% of all healthcare in Canada, supporting countless individuals and families. Preferentially directing resources to Canadians in need is of great importance, and any policy changes should be made with that goal in mind.

Health Canada is proposing changes to the way the prices of medicines are regulated. The proposed changes would lower the list or “sticker” price for innovative medicines. Since there are already substantial discounts in place for government-funded drug plans, the benefits from this potential policy change would flow to private insurance drug plans. The change could thus act counter to the principle of equity in the sense that it may jeopardize the ability of government-funded drug plans to secure best value for the populations that need that help the most.

We support the government’s desire to increase the affordability, accessibility and appropriate use of prescription medicines. However, we are concerned that the proposed changes will not create meaningful progress toward these important goals. We see different ways to keep our healthcare system working for Canadians, and we are eager to engage with government and stakeholders in an evidence-based dialogue on solutions.