National Pharmacare: Focusing Resources Where They're Most Needed

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Lydia Lanman

Today’s blog comes from Lydia Lanman, Senior Manager, Policy and Government Relations at Lilly Canada.

Much of the debate around national pharmacare focuses on a key question: who should a pharmacare program cover?

In my last blog, I looked at drug coverage in Canada. Overall, the news is good: most Canadians have some form of coverage. However, there are some Canadians who have no drug coverage, as well as some who have coverage but still face financial challenges in accessing the medicines they need.

Lilly is committed to finding solutions for Canadians most in need of support. That’s why we believe that any options for national pharmacare should focus on addressing this “gap” in coverage. An alternative model is one that provides ‘universal’ public drug coverage, where the government would cover the costs of drugs for all Canadians regardless of their individual circumstances.

This debate over who a national pharmacare program should cover ties into a broader, more fundamental question related to Canada’s social contract: where should governments focus their resources?

As part of Canada’s social contract, our governments preferentially support society’s most vulnerable individuals. All levels of government in Canada have developed various policies and programs, and have targeted public resources, to protect Canadians against an inability to pay. Publicly funded programs such as income assistance and child care subsidies are examples of Canada’s social contract in action. The federal government has reiterated this commitment in their Ministerial mandate letters, writing: “We committed to provide more direct help to those who need it by giving less to those who do not.”

As custodians of government resources, public drug plans work together with pharmaceutical companies like Lilly through the pan Canadian Pharmaceutical Alliance (pCPA) to negotiate drug prices. pCPA negotiations achieve $2 billion in savings annually for government-funded drug plans, allowing them to stretch their fixed budgets further. The magnitude of these savings is directly related to the difference in price between Canada’s public and private pharmaceutical markets. Through the pCPA, more resources are directed to vulnerable populations who require more support through government-sponsored drug coverage.

Companies that make medicines provide these rebates to governments based on the nature of the patients they cover, namely, seniors, people on social assistance and people with high drug costs in relation to income. Providing rebates to governments reflects the fact that governments absorb more than 70% of healthcare costs for all Canadians. This targeting of resources is essential to level the playing field for individuals who may suffer poorer health outcomes because of low income or an inability to pay. Data from the Canadian Institute of Health Information (CIHI) shows that people of the lowest income have the worst health outcomes. Acknowledging that it is a complex problem, CIHI concluded that to close the health care gap, we must preferentially target resources across the spectrum of health, income, and social services to people who need them the most.

A universal, single-payer pharmacare model would effectively eliminate drug coverage through the private insurance market. This would mean that the rebates currently provided to governments by drug companies would be spread across the entire population, rather than being targeted toward those Canadians with the greatest need.

National pharmacare options that focus on addressing the coverage gap – and allow public drug plans to obtain lower, preferential prices – are aligned with Canada’s broader social contract. Here at Lilly, we believe these models are the best way to continue providing access to new, innovative medicines to Canadians who need the most help.

To read Lilly’s full response to the pharmacare consultation, click here.