Health Committee on Sept. 27th, 2016

[Mélanie Bourassa Forcier]

Since Quebec joined the pan-Canadian Pharmaceutical Alliance, there have not necessarily been more negotiations that have driven the price of generic medications down. We have followed the schedule of negotiations as planned. However, since Quebec joined, more product listing agreements with innovating companies have been reached. Those agreements are concluded, of course, with the representatives of the various provinces that are part of the alliance. Now Quebec is coming to those agreements too, meaning that more medications are on the reimbursable lists. Without those agreements, the medications would not have been on the lists because they are not considered cost-effective.

When you use quality-adjusted life years, QALYs, an economic mechanism used to determine which medications are reimbursable, you often come to the conclusion that a drug that is too expensive vis-à-vis its accrued effectiveness on the market should not be reimbursed.

I'd like to take this opportunity to mention something about QALYs.

There has been a lot of talk about access to medications for people aged 65 and over. In Quebec, a number of consequences have been threatened. The Government of Quebec uses QALYs, and it has been alleged that this is not fair for older people. You will understand that, with QALYs, they use the gain in the number of life years and the improvement in quality of life after a medication is taken. Of course, the older you are, the fewer life years are gained and the smaller the improvement in quality of life. So the cost-effectiveness ratio can be reduced because QALYs are used. Seniors' representatives allege that this limits their access to the medications.

That is something to bear in mind when you want to focus on a value-based use when listing medications.

[Len Webber, Conservative, Calgary Confederation, AB]

Madam Flood, you mentioned the four million inhabitants in New Zealand and the fact that they negotiate hard on their prices. You were basically saying that bulk numbers don't necessarily mean lower prices. Can you elaborate on that?

I would say that Quebec would beg to differ because of the fact that they've now joined this alliance here in Canada.

[Colleen Flood]

If provinces wished to do so, in my view they could negotiate a lot harder than they do with pharmaceutical companies to extract better benefits, but it does help if you have a universal plan that everybody's part of so that you're not shifting the cost from from public to private. The mission of the government, then, is very clear. We're buying pharmaceuticals for our health care system.

My husband actually ran PHARMAC in New Zealand. He was the chief executive officer until I imported him to Canada, and he's just down the road if you need him.

He gave me an example: in 2013, for simvastatin, which is a cholesterol-lowering drug, New Zealand paid 2.4¢ compared to 62.5¢ in Ontario. This is just by hard bargaining, basically commercial bargaining. The New Zealand public insurance plan negotiates hard, just like an HMO in the United States. HMOs in the United States do not pay anywhere near the prices you see as the list prices. They are negotiating hard to get commercial deals for very low prices.

The Canadian way has basically been to cross-subsidize pharmaceutical companies. That gets to your point, because we think we're creating jobs. If we want to subsidize pharmaceutical companies, we should do that in a transparent and open way, and not through high prices that patients have to pay at point of service. If we want to give them transfers, let's do that if we think that's important, but on the same basis we think about automobile companies and all that kind of stuff. It should not be hidden away in prices people have to pay out of pocket to get needed health care.

We can do a lot better. We could do it in a Canadian way, if that was what the provinces wanted to do. I think that's perfectly acceptable. Otherwise, the provinces could do it themselves. There may be a problem with whipsawing, with deals being done between different provinces. That would have to be monitored to watch for drug companies trying to take advantage of that situation. The better way to go would be a Canadian approach, but it would have to have voluntary provincial agreement.

[The Chair, Liberal, Bill Casey]

Dr. Eyolfson is next.

[Doug Eyolfson, Liberal, Charleswood—St. James—Assiniboia—Headingley, MB]

Thank you, Mr. Chair, and thank you all for coming. This has all been very informative. I agree with our chair that we've been doing this for a very long time and we're still getting new information.

Mr. Blomqvist, there was something in a statement you made that I wanted to put a wrinkle in. You said that under a large universal plan, there would not be a lot of control over doctors' prescribing practices, but Madame Forcier actually just made a reference to something in that connection.

If you had an evidence-based formulary of drugs that were covered by the plan that stipulated the drugs you could prescribe, would that not apply that measure of control that was needed on prescribing practices?

[Ake Blomqvist]

Obviously having formulary restrictions would help, but at the same time, we don't believe formularies are the best way to make doctors take cost-effectiveness more into account when they write prescriptions. Under systems of managed competition, there are ways in which you can, for example, delegate to primary care practices responsibility for part of the cost of the drugs that are prescribed for given patients.

That emphasizes the idea that I referred to: we think that unless you have a system that clearly defines which decision-maker is in charge of all aspects of the health care costs—including physician services, hospital services, and pharmaceuticals—the system is unlikely to work well.

However, of course you are right that formulary involves some partial degree of control over prescription decisions.

[Doug Eyolfson, Liberal, Charleswood—St. James—Assiniboia—Headingley, MB]

I'm familiar with how hard it is to tell doctors what to prescribe. I'm a physician myself. I've practised medicine for 20 years. I routinely see children come into the emergency room for an ear infection for which Amoxil would have worked, but they're on some very expensive gorillacillin, and I cannot understand why they are on this drug. I would love to see some sort of control that would have prevented that from being prescribed to this patient.

[Ake Blomqvist]

If I may ask, do you sympathize with the idea of drug budgets for primary care practices?

[Doug Eyolfson, Liberal, Charleswood—St. James—Assiniboia—Headingley, MB]

I would be more a fan of formularies that simply say what you must prescribe, so that if someone wanted to prescribe this very expensive drug and it wasn't indicated, the formulary would just say no, you can't prescribe that.

I work in a hospital-based practice, and that happens all the time. I write medication orders and the pharmacy says, no, you can't prescribe that; this is what's on our formulary.

[Mélanie Bourassa Forcier]

Can I add something, just to complete the answer?

I am in favour of establishing a formulary to inform doctors about good prescription practices, as I stated before a parliamentary committee in Quebec that was studying the implementation of Bill 81. However, that must not prevent doctors from prescribing another medication not in the formulary if they consider that a patient must have it. I did not mention it just now but Quebec has just passed a bill that allows tenders for medications.

An administrative stage is doubtless required in order to consider the cost and the value of a medication. However, I am not in favour of reducing doctors' ability to prescribe what they consider the appropriate medication for their patients.

[Doug Eyolfson, Liberal, Charleswood—St. James—Assiniboia—Headingley, MB]

I understand, although I will say again, as a doctor familiar with doctors' prescribing practices, that I'm very much in favour of it because there's just not enough education on what doctors prescribe. I think that there needs to be more control on that.

[Mélanie Bourassa Forcier]

You know that doctors have no training about how the pharmacare programs in their provinces work.

They don't receive any training regarding the coverage that exists in their provinces.

[Doug Eyolfson, Liberal, Charleswood—St. James—Assiniboia—Headingley, MB]

I agree.

I only have 30 seconds left and I have a very quick question for Madam Flood.

You mentioned that you had an estimate of $5 billion. Again, that's an estimate. Is that gross expenditure, or would that be a net expenditure that takes into account the potential savings due to improved outcomes, such as not coming to emergency—

[Colleen Flood]

That's just gross. That's a back-of-an-envelope thing that a few health economists and physicians and folks who have been talking about public medicare have come up with that they think could cover 150 essential medications. It doesn't include whatever you may be able to extract by thinking about the tax subsidies that go to private health insurers and it doesn't include the other benefits.

On your last question, I would note with respect to integration and controlling or attempting to moderate physicians' prescribing budgets that private health insurers don't have the ability to do that at present.

[Doug Eyolfson, Liberal, Charleswood—St. James—Assiniboia—Headingley, MB]

No, I should clarify: it doesn't say what you can prescribe, but it will say what's covered.

[Colleen Flood]

Right, and provincial health insurers, I would say, haven't done a very good job on it anyway, so it's not as though we have this perfect nirvana that we're about to wreck in terms of better control of what physicians are doing. I think that expanding coverage to include very vulnerable people who don't have coverage is going to help. Full stop.

[Doug Eyolfson, Liberal, Charleswood—St. James—Assiniboia—Headingley, MB]

And I agree. Thank you.

[The Chair, Liberal, Bill Casey]

Mr. Davies, you have three minutes.

[Don Davies, NDP, Vancouver Kingsway, BC]

I want to come back to Quebec, because that is an example of a public-private hybrid system in Canada. I want to quote from an article by Marc-André Gagnon. He said:

In 1997, Quebec created a drug-coverage system where it is mandatory for workers to enrol in private plans when they are available. Those for whom no private plan is available end up on the mandatory public plan. Thus, all Quebeckers are covered by some form of drug insurance.

Then he said:

What has been the result of Quebec’s hybrid model? Access to medications improved when the plan was implemented, but by keeping a fragmented system based on multiple public and private plans, Quebec has not developed the needed institutional capacity to contain costs. Canada has the world’s second-highest per-capita costs for prescription drugs (only after the United States), and Quebec has the highest costs per capita among all provinces.

He said:

Twenty years ago, Quebec’s system was a great step forward, but it is certainly not a model for the 21st century. While it did provide better access to prescription drugs, the system remains inequitable, inefficient and unsustainable, according to a recent official report by the Commissaire à la santé et au bien-être.

He said:

Inequity persists in the Quebec system because the prices of drugs vary between the public and private plans (...) So who pays? Employers and employees end up paying steep premiums. This increases labour costs and reduces the competitiveness of Quebec’s businesses.

And he said: “Mandatory private coverage is also not related to income, so the costs can be substantial for some—especially the working poor.”

He points out that a student working part time told him she had to pay $190 of her $514 net monthly income for drug premiums. There's also a systemic issue of institutional skimming between good and bad risks: seniors, people on social assistance, or the unemployed end up on the public plan, while those with a good job—the wealthier and healthier population, generally—end up in the private plans.

I am forming a conclusion that here in Canada we have an example of the hybrid model whose virtues, Mr. Blomqvist, you were extolling, and it's not one that we should copy.

Madame Forcier, do you have an opinion on that?

[Mélanie Bourassa Forcier]

Yes, exactly.

I find that it is not the hybrid model that is problematic, but what it includes. I feel that we must have a model under which everyone is covered and can take advantage of pharmacare. In my opinion, it is all very well to have a public insurer and private insurers, as long as we are certain that there is positive and effective competition between the private insurers and that there are limits to any inequalities and injustices between those insured by the public sector and the private sector.

I have been making exactly the same case as my colleague Marc-André Gagnon for years. However, I would not go so far as to say that the model is certainly not an example to follow. I feel that it has a lot of things that need to be corrected. At the moment, the fact that the obligations of private insurers are limited under our program gives rise to a number of injustices, and that has to be corrected. However, I am not in favour of the system being completely reformed. We must first proceed with incremental changes. If that turns out not to work, we will have our answer as to whether the system is inefficient. At the moment, I am not at all convinced that it is.

[Don Davies, NDP, Vancouver Kingsway, BC]

Ms. Pasma, do you have a quick answer?

[Chandra Pasma]

I'm going to respectfully disagree with Madam Bourassa Forcier. I think the Quebec model is actually an example of bad competition. It allows the different players to make their profits by passing the cost on to the public.

The public system negotiated a decrease in the cost of generics. How did the pharmaceutical companies recoup their costs? They did it by passing those prices on to the private insurers. The insurers didn't really care, because they could just pass those costs on to employers and employees who were paying their profits anyway.

I think what we need is a model that gets rid of the profit motive and just focuses on good outcomes for patients. Fifty years of experience with the Canadian health care system shows that public delivery is the model that delivers that.

[The Chair, Liberal, Bill Casey]

Thanks very much. That completes our time.

I want to thank the panel very much, because we had a couple of firsts today. We had never talked about bunions before on this panel. It's the first time.

It's also the first time I know of, Mr. Blomqvist, that a presenting person asked a member of the panel a question, and he answered. It was very enlightening and very helpful. I learned a lot today; I can tell you that.

I want to ask a quick question of Mr. Elkins.

You stated in your presentation that nearly 94% of employees earning more than $100,00 receive health benefits, compared with 32% of those earning $10,000 to $20,000 and 17% of those earning $10,000 or less. Do you see a trend? Are employers moving away from providing health benefits or adding health benefits?

[Victor Elkins]

In my experience at the bargaining table, employers are definitely trying to move away from adding benefits. We're constantly negotiating and fighting for what we have and have had very little chance of trying to improve the benefits at the table for our members. The costs keep skyrocketing, and of course our bargaining skills at the table have to keep improving and sharpening, because we need to fight to protect what those members have.

[The Chair, Liberal, Bill Casey]

That statistic really strikes me as an unfairness in the system, that's for sure.

Thank you very much. We appreciate your contribution a lot.

We're going to take a short break, and then we have some committee business we have to deal with.