Health Committee on May 9th, 2016

[The Chair, Liberal, Bill Casey]

You have 47 seconds left. Use them wisely.

[Ramez Ayoub, Liberal, Thérèse-De Blainville, QC]

You talked about changing the fee structure as opposed to capping prices. While it may seem like a straightforward option, would you mind explaining the difference between the two?

[Stephen Frank]

The PMPRB has a mandate to ensure that prices are not excessive. We believe, however, its mandate needs to be changed so that the board can work to establish the lowest prices possible for Canadians.

Given how the market works, price ceilings are going to stay, but the level they should be set at needs to be determined. We believe it could come down if the PMPRB's mandate were changed so that the board could really work to achieve the lowest possible prices for Canadians.

[Ramez Ayoub, Liberal, Thérèse-De Blainville, QC]

Thank you.

[The Chair, Liberal, Bill Casey]

Dr. Carrie.

[Colin Carrie, Conservative, Oshawa, ON]

Thank you, Mr. Chair.

I thank the witnesses for being here.

Mr. Swedlove, in your opening statement on page 2, you actually say, “...private insurers generally provide Canadians with access to far more drugs than public plans and we allow access to new drugs much more quickly than the public plans.”

Some of the witnesses we heard earlier don't think the same way as you do on that. Do you have any numbers to support that statement?

[Frank Swedlove]

Well, there was some work that was done by researchers with the Canadian Health Policy Institute, which is a health think tank. They did a survey of drugs in 2012, and of the 36 new drugs that were approved by Health Canada, 92% were covered by at least one private drug plan in that year, compared to only 11% that were covered by at least one public plan.

In terms of time, the private drug plans took about 143 days to approve a new drug on average, while the public plans took 312. That's significantly faster approval of new drugs than the public plans managed to do.

[Colin Carrie, Conservative, Oshawa, ON]

You mentioned as well your experience with the pCPA, and basically we've heard that it does take them a long time to approve and negotiate these things. It seems it would take years for a government pharmacare agency to renegotiate these thousands of drugs and thousands of contracts out there with drug companies. If my memory serves, they said they've done about 100 now, or something along those lines.

Can you tell us what you would expect the initial cost the government would have to absorb would be, say, on day one, if the government were to undertake a national pharmacare program? How much more would this cost the Canadian taxpayer if the government just decided unilaterally to implement something like this?

[Frank Swedlove]

Some of the advocates who have supported the concept of a public plan talk about the significant savings associated with having one national plan. The concept there is, of course, that you'd have one bargaining unit that would significantly reduce the cost.

Our view is that the concept of having one unit negotiate the cost with the drug companies is a valid one, and we would support that. We believe that could be done through the pCPA. However, if you were to establish tomorrow or next year or whatever date you choose for establishing a single entity that would do the pharmacare, they would still need many, many years to negotiate the thousands of drugs that are in place. It would take maybe 10 or 20 years to negotiate all the drugs, so the savings that one thinks you might get by establishing this new national pharmacare would take a very, very long period.

On day one, what would have to occur is that the federal and provincial governments would have to pay essentially what the private sector now pays, less, maybe, the fact that they don't cover some, plus some generic substitutions that would take place. If you take those two elements out, we figure we would be still left with about $13 billion that would have to be covered by the government on day one.

[Colin Carrie, Conservative, Oshawa, ON]

That's not quite what we've heard from other witnesses, so I wanted your opinion on that.

In your opening remarks you talked about the pCPA and how their pricing could be applied to all Canadians, private and public, and Canadians would benefit from cost savings. I think some other witnesses said that wouldn't be the case, because you guys would simply eat it up in profits and stuff like that, because you're the big, bad corporation. I'm quite curious about what benefits Canadians would get. Would they be guaranteed to get better prices?

[Frank Swedlove]

Well, it's a highly competitive industry. I believe we have roughly 30 companies that are involved in the business, and they compete very actively for that business. There's not a lot of excess profit in that business. We have been aggressively pushing for lowering the cost of drugs for a long time now, and we want to see that because we want to see that money being reinvested in other health opportunities. I think that's a very important part of it.

[Stephen Frank]

Maybe I can spend a quick second explaining how the flow-through of costs works on the private side.

The majority of Canadians would be covered in the type of plan that we would call administrative services only, which means the employer pays the cost of the drug and the insurer provides administrative services. In that scenario, which would apply to the vast majority of people, any reduction in price gets passed immediately through to the consumer on day one, the first time they present at the pharmacy.

For those plans that are insured, insured plans are repriced on an annual basis, and they get a price based on the trend. If the trend has come down in the previous year because of price reductions, that would get reflected in their premium increases. There would be a lag there for those who have insured plans, but you're probably talking maybe 12 months before that would be reflected in their premiums.

The message is that the cost of the drug is sort of an input to the service we provide to employers, and it's a direct pass-through for the majority. For the rest it's not, it's an indirect one, but it's certainly a very quick follow-on.

To the nub of your point, there's no chance that the insurers are going to be absorbing any of those benefits. Those would get passed through to our plan members and plan sponsors.

[Colin Carrie, Conservative, Oshawa, ON]

Some people talk about some monopoly type of system. I'm sure some Canadians wonder if the government-run monopolies always work all that well, and coming from Ontario, I can tell you that is our experience.

With regard to issues in other countries that have these monopolies, as we've heard in relation to the U.K. and New Zealand, do you have any data from those countries in which they have a different system? I know it's hard to compare apples to apples and to oranges and that type of thing, but with these systems that are more of a monopoly type of system, what are we seeing on the ground there?

[Stephen Frank]

I think it's fair to say that those two countries in particular have done a good job of controlling cost. I think the bottom line is that the way you tend to control cost is by restricting access. That's the trade-off you have to balance in these things.

When you look at the U.K., particularly with some of their.... We're getting some interesting data around cancer survival rates in the U.K., which are slipping and falling behind, and they've been slower than other countries to approve new cancer drugs. There's a link there, to the point that the government in the U.K. has just had to introduce a completely new program to start re-funding cancer drugs again so that they can do a catch-up. They may have overreached there.

New Zealand is a very low-cost environment but has an extremely restricted formulary. Polling of doctors there suggests that 75% of them in the last year have wanted to prescribe a drug that they've been unable to prescribe because it's not on their closed formulary.

So this is a trade-off. We could design a system in Canada that would be very cheap, but it would come at the expense of access. That has outcome consequences and implications for patients.

I think the New Zealand and U.K. examples are often used, but I think we need to be a little cautious as to what direction they point us in.

[Colin Carrie, Conservative, Oshawa, ON]

If I could ask you an opinion question—

[The Chair, Liberal, Bill Casey]

I'm sorry, but your time is up.

Mr. Davies.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you to the witnesses for being here.

Mr. Swedlove and Mr. Frank, you represent the Canadian Life and Health Insurance Association. Would I be correct in thinking that your members make money from the administration of private health care plans? Is that right?

[Frank Swedlove]

Well, yes, they could make money; otherwise, I assume they wouldn't be in the business.

[Don Davies, NDP, Vancouver Kingsway, BC]

Would it be the case, then, if Canada were to move to a public, single-payer, first-dollar-coverage system, that your members would not make money? Would that hurt your business interests?

[Frank Swedlove]

They would redirect the capital into other businesses.

[Don Davies, NDP, Vancouver Kingsway, BC]

Right.

Ms. Huberman, the number of employers offering health benefits to new employees has fallen from 62% in 2002 to 49% in 2011. We already know that one-third of Canadians who are employed full-time have no drug coverage, that three-quarters of Canadians employed part-time have no drug coverage, and that one in 10 has difficulty paying for drugs even if they do have drug coverage.

My question is, why are employers no longer offering these kinds of benefits to their employees?

[Anita Huberman]

Well, really it's the bottom line. The cost of drugs is really eroding their bottom line, in small and medium-size enterprises especially.

Surrey is a small and medium-size business community, and they have to take a look at what they're spending their money on. That's why we're advocating for a universal pharmacare program in which the provincial governments and the federal government work collaboratively towards a solution whereby workers can have access to the drugs they need so that they can continue to be productive in the workplace.

[Don Davies, NDP, Vancouver Kingsway, BC]

Let me have a follow-up to that question. Many of the criticisms I hear today, some that you're hearing actually at this meeting, expressing why a universal first-dollar single-payer system won't work say that it's too expensive, that there will be reduced choice for consumers, that they won't be able to get the drugs they want. These are exactly the arguments that were made in the 1960s as to why Canada couldn't have a universal health care system—exactly the same arguments.

I'm wondering. A Canadian today can walk into a doctor's office, can get the treatment they need for whatever it is, from a broken finger to treatment for depression to treatment for psoriasis or whatever—literally thousands of different possibilities are treated by the doctor—and can walk out and not pay a penny. That service is paid for administratively under the single-payer system.

Is there any reason, in your view, Ms. Huberman, that a person couldn't walk into the pharmacy, hand over the prescription, get the prescription pills they need, and then that the pharmacist submit the bill, just as the doctor does in the health care system? Is there any reason we couldn't extend pharmacare under the same sort of principle and model that we already have for universal health care?

[Anita Huberman]

I think there's an opportunity right now for Canadians of today, in concert with business and government, to reduce the silos, to reduce the fragmentation. That type of model is definitely something that could be doable.

[Don Davies, NDP, Vancouver Kingsway, BC]

Mr. Swedlove, I'll come back to you.

Again, I'm going to quote some of the same figures. You just heard that under the private sector model, most Canadians who have coverage have it through their employer. About one-third of Canadians employed full-time, or 20% of Canadians, have no drug coverage whatsoever. That's seven million Canadians with no coverage whatsoever, or poor coverage. There is a reduction in the number of employers who are giving coverage to their employees today. Clearly, more and more Canadians are going without prescription drug coverage.

What would be your answer to that? How can we ensure that 100% of Canadians get access to the medicine they need?

I'll just add one more thing. You commented on strategies that might reduce the price of drugs, but that doesn't do anything for a person who has no coverage.