Thank you very much, Mr. Chair.
My thanks also to all the members of the committee for this invitation.
My name is Marc-André Gagnon. I am an associate professor at the School of Public Policy and Administration, Carleton University, Ottawa. Today, I will talk to you about the problem, the solutions and the way in which a public system could be funded.
My colleagues have already talked about the Canadian anomaly. Canada is the only country in the OECD with a universal public health insurance system that does not include prescription drugs, as if drugs were not an essential element of health care in Canada. Our system is fragmented and it relies first and foremost on the primacy of private plans, as the public sector must look after those who have no access to private plans.
This system is becoming very costly. In 2012, prescription drug expenditures in Canada were $771 per capita. The average of OECD countries is $498. In Canada, we pay 55% more than the OECD average. Not only do we pay more, but there is also a more pronounced increase in costs in the long term. Between 2000 and 2012, the costs per capita in Canada have increased by 96%. They have almost doubled, whereas in countries like the U.K. and France, which have universal public drug insurance plans, the growth was around 55%.
Some countries have spent a lot of time on the issue of appropriate usage. For instance, Denmark's growth was 36%. In the U.S., which remains the model of waste and inefficiency, the increase was 87%, which is still lower than what was observed in Canada. To give you an idea of the scope, if Canada had been able to limit the increase in expenses, the way the U.K. and France had done, right now there would be savings of $5.8 billion per year. If we could measure up to Denmark, we would be saving $8.3 billion annually. For that, we would have had to equip ourselves with the institutional capacity needed to better contain costs, while ensuring that the prescriptions were more appropriate and the health results better.
Other systems are more effective because they are public systems structured in such a way to maximize the therapeutic value for the people, which is clearly lacking in Canada. The cost growth in Canada is not sustainable in the long term, meaning that major reforms will have to take place one way or another. The issue is determining what types of reforms will be put in place. A possibility would be to transfer the risks to patients, by increasing premiums, co-insurances and deductibles. The other possibility would be to start preparing reforms by drawing on the best practices of other countries.
The problem with the current system is that it is fragmented. When you have a fragmented system, it is always easier to shovel the costs to other parts of the system instead of trying to set up a way of containing them. In Canada, private plans have priority. By definition, those plans are far less effective in containing costs. That is normal because private plans are built on the logic of benefits negotiated under collective agreements that seek to have conditions that basically please employees. Our logic is one based on privileges provided by employers to employees. We are not using a logic that strives for the best results in terms of public health care.
The result is this sort of culture in Canada where a good drug insurance plan covers everything at any cost, which leads to a huge waste in many respects. Let me quote Express Scripts Canada, the largest provider of private health benefits management services in the country. Keep in mind that private plans reimburse about $10 billion per year. Express Scripts Canada tells us that the amount wasted in private plans is estimated at $5.1 billion. That is money spent without obtaining any additional therapeutic benefits compared to what we might have paid had there been less costly alternatives.
In 2013, the Canadian Life and Health Insurance Association published a very interesting report.
The report indicates that there are problems of fairness and that the plans are not sustainable in the long term. We need government intervention. Private plans alone do not have the tools for self-reform. We need government intervention. Unfortunately, the proposed solutions go in directions that are sometimes problematic.
If we are trying to think of solutions based on the current fragmented system, we end up thinking that the public system is some sort of trash can for bad risks. This means that, if private plans are not able to handle something, the public system will get it. The Canadian government should therefore look after those without coverage and perhaps provide coverage for expensive treatments or for some more problematic drugs that private systems are not able to cover, such as those related to oncology.
If we do that, the public system is based on the commercial needs of private plans, not on the health needs of Canadians. The typical example is the Quebec model, which is sometimes held up as a model. That should not be the case because the Quebec model simply makes the ineffective structure of private plans mandatory for everyone. It institutionalizes a system that is defined by its ineffectiveness in containing costs. When all is said and done, it is not surprising that, if we compare the costs per capita in Quebec to the costs per capita in the rest of Canada, Quebec spends on average 20% more per capita than in the rest of Canada.
What do the employers have to say about that?
They say some interesting things. Last December, Benefits Canada, the largest publication on private benefit plans, published a survey for its members, over 200 managers of private benefit plans. Employers were asked what had to be done to ensure greater sustainability of drug insurance plans. Respondents were asked whether they would support the idea of establishing a universal public prescription drug insurance plan. Thirteen percent of respondents were opposed to the measure, 33% were undecided or unsure and 53% were in favour. We can therefore see that employers feel that a universal public prescription drug insurance plan would be an interesting solution for businesses as well.
The respondents who were in favour were also asked whether they would support the idea of universal public prescription drug insurance even if that meant additional fees for companies to fund the plan, such as an increase in taxes for companies. Seventy per cent of them were in favour of that measure, since the increase in fees would still be lower than what they are paying now for ineffective plans.
We need a public solution based on best practices. What form should a universal public system take? We must pay attention to that. We must not think of a universal public system solely in terms of transfers of funds. A public system must not be an open bar. If the idea is to reimburse everything at any cost, I am opposed to that type of system. We need to set up a system that is structurally built around evidence-based data in order to maximize the therapeutic value of each dollar spent.
Take blood services, for example. The Canadian Blood Services is an independent agency funded both by the provinces and by the feds. With its budget, it must coordinate blood services across the country by maximizing the therapeutic benefits of each dollar spent. A universal public prescription drug system could be built on the same basis. We could have a depoliticized independent agency that would rely on evidence. For instance, we could merge the Canadian Agency for Drugs and Technologies in Health and the pan-Canadian Pharmaceutical Alliance. This agency could manage the national formulary, meaning the list of covered drugs, but always with a view to maximizing the therapeutic value of each dollar spent.
People might think that a national formulary of this kind would reduce the choices for patients, but that is not at all the case, because waste would be reduced. If patients still wanted treatment that is not based on evidence in terms of its effectiveness or if they wanted more expensive treatments when a less expensive alternative was available, they could do so by paying out of their own pockets.
They would not rely on the solidarity of other taxpayers or work colleagues.
I would like to address how a program like this can be financed. I'd be happy to talk to you about that if you like. If you ask me for my opinion as an expert, I will tell you that a universal public program is not only the best way to improve access to medical treatment at a lower cost for Canadians, but would also help significantly reduce the labour costs in Canada, which would in turn increase the competitiveness of Canadian businesses.
As for financing, I would like to speak a little more on that, but let's say that there is no real economic obstacle to putting a program like this in place. All we need is a little political will.
Thank you very much.