Thank you, Mr. Chair.
The Canadian Life and Health Insurance Association represents life and health insurance companies accounting for 99% of the life and health insurance in force across Canada, and the industry provides supplemental health benefits to roughly 27 million Canadians.
I would like to congratulate the federal government for re-engaging in the health care system in Canada.
Let me congratulate this committee also for conducting hearings into this critical issue of how Canadians access their needed prescription drugs.
I want to very clear that Canada's insurers do not believe that the current system is working as well as it should, and we strongly support fundamental reform. No Canadian should have to choose between putting food on the table and their needed medication.
The good news is there are a number of simple policy measures that will make a significant positive impact with very little cost to either government or employers.
The best solution will be one that leverages the strengths of both the public and private sectors and brings them together in a coordinated way for the benefit of all.
As the committee is aware, the responsibility for prescription drug coverage is shared between the public and private sectors. In 2014, our industry directly reimbursed over $10 billion in drug costs. When you add in those amounts paid by individuals directly, over half of all the costs for prescription drugs are paid for privately.
Canadians place a high value on their private drug coverage, and for good reason. Private sector plans have been shown to have significant advantages over the public ones. Let me elaborate on this.
First of all, 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 public plans. This is a critical point because, contrary to what many advocates for reform suggest, nationalizing prescription drug coverage will result in a material pullback in coverage for the majority of Canadians.
Second, Canada's insurers have also introduced some of the most important patient-centred innovations over the past several years. For example, in 2013 the industry introduced the Canadian Drug Insurance Pooling Corporation. This pooling arrangement covers all fully insured drug plans and helps small and medium-sized employers maintain their drug benefits even in the face of recurring high drug cost claims.
It is also now standard for insurers to offer a full range of innovative solutions to plan sponsors that incorporate clinical evidence into plan formulary designs while also improving patient outcomes and reducing costs. A good example of that is what we refer to as case management.
I'd like to provide a couple of examples. Let's look at Mary. Mary has a prescribed biologic drug that needs to be injected. She was having trouble injecting herself, and as a result was not compliant with the new therapy. The case manager identified that Mary was having issues and worked with her to find resources and training to help her become more comfortable with the injections. As a result, Mary was able to administer her medication and comply with her therapy.
A second example is John, who is on Humira, but the medication was not achieving good results. The physician then increased the dosage by four times the recommended dose, which increased the potential for side effects and significantly increased costs. The case manager worked with the physician to suggest an alternate medication that had the added benefit of being lower in cost. John was prescribed the new medication and started to improve, a good example of improving patient outcomes while reducing cost.
There is no similar case management program support for those on public plans in Canada.
Finally, I would highlight that we take our responsibilities to reduce inequities in access to drugs seriously. For example, just last year, private insurers worked closely with rheumatologists from across Canada and agreed to a common national clinical standard for access to biologic drugs for patients with adult rheumatoid arthritis.
In our view, however, neither governments nor Canada's insurers can independently solve the long-term challenges facing the system. The best solution for Canadians will be the one that leverages the strengths of both the public and private sectors and brings them together in a coordinated way.
I will now provide some specifics.
Broadly, we believe there are two major issues that need to be addressed. The first relates to putting the system on a more sustainable path financially, and the second relates to greater equity around access.
The good news is that there are already solutions to both of these challenges that could be implemented quickly, with minimal changes to the structure of the system and with minimal costs. As the committee is aware, the provinces, and recently the federal government, work together through the pan-Canadian Pharmaceutical Alliance, or pCPA, to jointly negotiate lower drug prices. The pCPA helps reduce drug prices not only for new patented drugs but also for generic drugs and subsequent entry biologics, or SEBs. The difference in pCPA's approach for generics and SEBs versus patented drugs is instructive and, we believe, points us in the right direction going forward.
With respect to generics and SEBs, the pCPA leverages the government's buying and regulatory power to reduce prices for all Canadians equally. Regardless of whether individuals get their generic or SEB drugs reimbursed by the public or the private sector, everyone pays the same lower price. This has been enormously helpful in reducing the costs for all Canadians over the past number of years.
Unfortunately, the pCPA's approach to lowering prices for new patented drugs does not follow this approach. Rather, for patented drugs, the pCPA negotiates confidential lower prices that apply only to the minority of Canadians covered under the government plan. Those with private coverage or paying out of pocket are left to pay the much higher list prices. This is not an equitable or sustainable approach.
There is a very simple solution to this: namely, allow private insurers to join the pCPA. Having Canada's insurers in the pCPA would allow negotiators to leverage the volumes of the entire Canadian market when negotiating lower patented drug prices. Critically, this will ensure that all Canadians are paying the same lower price and improve the financial position of all plans over time. It is important to note that this would not require any incremental cost to governments and could be accommodated within the current system. There is really nothing holding us back from doing this.
Another important issue we would like to see addressed with respect to pricing is reform of the Patented Medicine Prices Review Board, or PMPRB. This is particularly germane to this committee, given that accountability for the PMPRB falls exclusively within federal jurisdiction. The PMPRB has a mandate to act as a consumer protection agency by capping prices of new drugs at levels that are deemed “not excessive”. Unfortunately, the way in which the PMPRB does this has resulted in list prices in Canada that are among those of the top handful of countries globally, and certainly well above the OECD average.
We believe the PMPRB's mandate needs to be reformed. It should be to establish price ceilings that are as low as possible, rather than simply “not excessive”.
Finally, we acknowledge that access to drugs remains unacceptably uneven across Canada. Different drugs can be available to patients depending on their province and/or the plan design chosen by their employer. This may be particularly pronounced for new and expensive drugs. We need to do better. The industry supports the establishment of a common national minimum formulary. Such a national minimum formulary would ensure a baseline of coverage for all Canadians and would reduce some of the existing complexity in the system. This approach would still allow those provinces, plan sponsors, or individuals who want additional coverage to have it.
With respect to very rare drugs, or “orphan drugs”, we equally believe that governments and private insurers need to work together to develop a common approach to providing access to these medications. If there is one area where a common approach is critical, it is for those drugs that have very small patient populations, yet have very significant costs associated with them.
In conclusion, any long-term solution will require both governments and private insurers to make adjustments to their programs and to work better together going forward.
The good news is that there are a number of simple policy measures we can take in the short term that will have a significant positive impact, with little to no cost to either governments or employers.
We look forward to the continued dialogue on this critical issue and would be pleased to answer any questions you may have.
Thank you.
Thank you very much.
