Ontario’s new Progressive Conservative government is rejigging OHIP+, a modest but promising pharmacare policy introduced by the previous Liberal government, allegedly to make more efficient use of tax dollars. Where the short-lived program covered most prescription drug costs for people under 25, OHIP+ will now only cover people without individual or workplace-linked private insurance plans.
On the surface, it may sound reasonable to expect that governments would direct social spending to those who need it more. However, surfaces can often hide what lays beneath. In this case, a surface-level argument for efficiency in the immediate use of tax dollars hides rather important ideological differences between universal and pay-as-you-go services, and obscures some of the large benefits (including extensive efficiency gains) of all-in pharmacare.
First, we must consider the idea of social solidarity, which says that if something bad happens to one of us, no matter who that person is or what their status, society will take care of them. Social solidarity explains (at least partly) why police and fire services are paid for out of the common tax pool, and entirely explains why hospital and doctor services are available to all patients regardless of income and without out-of-pocket payments. Why should payment for medicines be any different?
Second, with respect to the hidden bonuses of universal access, a side effect of having everyone in the same boat is that if something goes wrong, or services aren’t being delivered properly, it’s easier to rock the boat. The wealthy and the privileged have better access to those who control the services and will make sure that their concerns are heard and corrections are made. This only scratches the surface of the myths and misconceptions about public payment for medicines that are concealed below the surface of “efficiency.”
For example, is it actually more efficient to have multiple payers for prescription drugs? It’s true that a national pharmacare plan where everyone would be covered, either run by the federal government alone or by a combination of federal and provincial/territorial governments, will mean more public spending. But it’s also true that overall spending will drop substantially, by as much as $4 billion a year according to the 2017 report from the Parliamentary Budget Office.
That decrease in overall cost is largely because a single payer has much more bargaining power with drug companies than hundreds of private payers and the current public plans. We are already paying for our medicines, the question is whether we want to continue to pay more than necessary through multiple payers or less through a single payer?
When it comes to money, we also need to realize that public insurance is much more cost efficient than private insurance. Overhead for public health insurance in Canada is about 2-3% of outlays, whereas, as of 2011, there was a 28% gap in private insurance plans between what they take in as revenue and what they pay out in benefits. The difference is in the amount spent on advertising and the profits of the companies.
Private insurance plans are less efficient. They are less likely to bargain on prices or require generic substitution, and the price that they pay for drugs is not transparent. Private plans are also not uniform. Some have yearly or lifetime caps on benefits, or different requirements for copays (patients pay a fixed amount per prescription), coinsurance (patients pay a percentage of the cost of each prescription) and deductibles (the amount that patients have to pay before they receive any benefits).
Finally, a variety of critics of pharmacare often bemoan the fact that not all drugs that have been approved by Health Canada will be covered. It’s fair to say there will be some expensive drugs or drugs for rare diseases (often the two are the same) that will be left off a national formulary. This speaks to the necessity to have a fair, rapid and evidence-based system to deal with these special circumstances.
But the main reason why most drugs are not covered is that they offer little to no additional therapeutic benefit over existing drugs. Out of the 564 new patented drugs evaluated by the federal Patented Medicine Prices Review Board between 2010 and 2016, only 37 (6.6%) were major advances and an additional 90 (16%) were moderate improvements.
Let’s dispense with superficial arguments about pharmacare and see what really lays below the surface.
Joel Lexchin, MSc, MD, is Professor Emeritus at the School of Health Policy and Management, York University, an emergency physician with the University Health Network, and a CCPA research associate.