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Delivering Community Power CUPW 2022-2023

Prospects for Canadian pharmacare

As a reform in a capitalist economy, the Trudeau government’s pharmacare plan is meek and hesitant—so far

Canadian PoliticsCanadian BusinessHuman Rights

Any federal pharmacare program will be judged by how complete, accessible and efficient it is, argues Ken Collier. Photo from Wikimedia Commons.

Until February 2024, Canada did not have a pharmacare program. Even then, proposals for a universal pharmacare program were remarkably vague in political parties, media reports, and campaigning groups. Earlier federal interest in a universal drug program seemed to be fading, ostensibly on cost grounds.

Just in time, the Trudeau government announced a rather weak and diluted pharmacare proposal a few days before the March 1, 2024 deadline to save the supply-and-confidence agreement between the Liberals and New Democrats, averting a possible election neither party wanted.

The new minimal pharmacare plan is to be administered by the provinces and territories. It will only offer diabetes and contraception medicines. A long-term plan for growth of the programs into other fields of medication gives faint hope of expanded benefits very soon. Until the new proposal actually bears fruit, provincial pharmacare plans, where they exist, partially pay for drugs sold in local drug stores or online. The customer “co-pays” some portion of those costs.

These fragmentary existing programs mostly hinge around insurance as a method to pay for prescription drugs. Insurance is based on risk calculated by a private company such as a bank or formal insurance corporation. The insurer is betting that customers will not need drugs, while the customers fear they will. Insurers know the risk statistics (well or poorly). Universal pharmacare of quality, as experienced in many advanced economies around the globe, including the UK, Germany, New Zealand, and France, is based on needs rather than risks. But judging those needs is hit-and-miss. It’s often an exercise in “let the market decide” thinking.

Any pharmacare program’s value will rest on certain indicators.

Corporate profits on drugs in Canada range from 16-22 percent, in some cases much more. A federal pharmacare program can perform all the functions of drug provision and manage them with far less overhead. Ample room to cover administrative and other costs can be found through preventing huge profits flowing to the corporations, a good many of which are not even based in Canada.

It is disappointing that the pharmacare proposal of early 2024 did not include setting up formularies. Formularies may be little more than lists of accepted drugs and prices, while others add places to warehouse the drugs and establish a means of circulating them. Program administrators negotiate bulk purchases from drug manufacturers on much more favourable terms than if local drug stores or even their large and very profitable franchise companies go it alone.

When government legislates programs, regulations define funding and detail who is supposed to do the work, and set up a means of measuring success and responsibilities of different levels of government.

Research and development to improve pharmacare currently rest almost totally in corporate labs and offices. Small and usually underfunded sectors of R&D also live in publicly-funded universities and hospitals. In order to make sense of all the data, statistics and other information, centralized research and analysis aims to avoid duplication and repeated trawling for the same materials. Otherwise, disjointed and periodic funding increases cuts and delays, accompanied by market-driven supply and transport problems, which contribute to chaotic episodes of forward strides, crawling along and even retreating from achievements.

Drug quality and efficacy tests are done these days by private corporations pursuing patents in order to sell for profit, thus funding the next round of drugs. It is rather scatter-shot and subject to the market. Even ‘wonder drugs’ may never see the light of day if they don’t sell well. And selling well may rest largely on prices the public can afford, rather than quality and efficacy. Another cost factor in the private prescription market is costly promotion efforts. We need only briefly watch TV or read media to experience drug sales advertisements. We all help to pay for them.

A workable pharmacare program draws together and consolidates government-run testing. That should lead to access to drugs based on quality rather than corporate sales effort.

Management of an effective pharmacare program requires that it be part of a government department, reporting at least to a minister and in some cases to the legislative body. Arms-length administrative bodies sound fair—supposedly dispassionate, unbiased, away from undue outside influence. Experience tells us otherwise. Pharmacare could function best and act on its mission and principles using goals and targets chosen when responsive authorities receive messages about wants and needs through public discussion, elections and, regrettably, lobbying. Note that current legislation in Canada takes a stab at requiring transparency, revealing lobbying topics, who is doing it, the extent and time of lobbying, and how much is spent on it. Avid readers may use up entire weekends devouring that material.

The United Nations-based World Health Organization (WHO) and certain other bodies provide related global information as much as possible. The WHO influences policymakers to use science, data, comparisons and available resources. A well-grounded Canadian pharmacare program could only be effective in fulsome co-operation with the WHO and by paying our fair and timely share of the budget to make this happen.

A notable component should include drug coverage for mental health and treatment. Prescription drug coverage for the military, the Royal Canadian Mounted Police, Canada’s First Nations and special cancer programs will benefit if they are folded into any pharmacare plan. Unique drug needs for “orphan diseases and conditions” should probably be included.

Any federal pharmacare program will be judged by how complete, accessible and efficient it is. Programs could be as simple as the current BC PharmaCare model, which only provides some coverage for prescriptions, or it could include all the features noted above.

Running a pharmacare program

Fact is, pharmacare is a reform in a capitalist economy. Another fact is that the economy is dominated by finance capital, resulting in potential for profit steering a lot of the decisions. And not just profit. These days, that potential also must include prospects for more profit than before, and more profit than competitors in the system. Pharmacare is aimed in part at preventing money from being removed from the prescription drug system in the form of profits, especially excessive ones, whatever that may mean in the minds of planners and politicians.

When the minority-governing Liberals negotiated the supply-and-confidence agreement with the NDP and started discussing pharmacare, they sought consultation via a commission of experts, stakeholders and certain others, resulting in the Hoskins Report. While national media focused on a key central question “Can we afford it?”—a nod to their viewers and readers, the beleaguered taxpayers—it’s a fair question if asked the right way.

Where could the money come from? The Hoskins Report recorded signs of debate about it:

  • Government should seek to capture and redirect all or part of that stream of funding.
  • Increase specific taxes, such as the GST.
  • Creating a new tax or premium that everyone would pay.
  • Use general taxation to pay for pharmacare in much the same manner medicare is funded.

Leaving aside the details and arguments, it is not surprising that the general taxation choice was made. Dr. Eric Hoskins chaired the council. He had been a cabinet minister in a previous Ontario Liberal government and the majority thought it a fine idea that members of Parliament get to decide how to spend tax dollars, because they have far less influence over how revenues from manufacturing and circulating drugs get split up if left to the private market.

One very public result of that path portrayed pharmacare as a cost to taxpayers, rather than an accounting ledger line about administrative and operational overhead. A huge corporate budget item like prescription drug sales to the public is much less subject to cuts and increases than would be the case for deciding tax and spending policies in Parliament.

So, we have a proposed program, yet to be legislated, with essentially two items to be played out in a form that those of us who muse about social policy call “disjointed incrementalism.” As a reform in a capitalist economy, it is meek and hesitant.

Ken Collier is a retired professor of social work, social policy and economics who recently moved to North Bay, Ontario. He is active with the Council of Canadians, the Ontario Health Coalition and others. He researches and writes for progressive activist and research publications.

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