Health Committee on Sept. 29th, 2016

[Don Davies, NDP, Vancouver Kingsway, BC]

Okay. Can we also provide the PBO with several different models for you to cost?

[Jean-Denis Fréchette]

Can you give us a couple of years to do it?

Certainly. We had that situation with other requests in the past, but not for a topic like pharmacare. Doing just one model of pharmacare would be really time-consuming.

[Don Davies, NDP, Vancouver Kingsway, BC]

It would be big enough. Okay, you'd suggest we stick with one.

Mr. Askari, I just want to correct one or two things.

You said savings are the objective. That's not necessarily the case, sir. One of the objectives might be universal coverage for all Canadians, and we may recognize that it might cost us more money.

Second, Dr. Carrie was talking about a $17-billion deficit, but once again, not necessarily. Universal pharmacare might cost more money, but it could be funded by any number of increased revenue sources if we wanted to, so it doesn't necessarily add to a deficit. Is that not correct?

[Mostafa Askari]

That's correct. As I said, the funding all depends on the choices you make.

[Don Davies, NDP, Vancouver Kingsway, BC]

I have a final question, if I have time. What is a sensitivity analysis?

[Mostafa Askari]

Obviously these are estimates and not precise. Normally when we cost something, we look at the key factors—the key cost drivers, for example—and then we provide sensitivity relative to changes in the assumptions we have made in doing the costing.

For example, if you make an assumption that by providing a pharmacare program there will be a reduction in the price of prescription drugs because there is power to negotiate better, that's unknown. That's an assumption that you have to make. We can change that assumption and see how the result will change relative to the different assumptions, from high to low and through the range.

[Don Davies, NDP, Vancouver Kingsway, BC]

The bottom line—for me, anyway—is to find out how much a universal pharmacare program would cost and how much and where the savings would be from such things as streamlined administration, bulk buying, cost-related nonadherence, etc. Those are the two main things: what it would cost and where our savings would be.

That's the bottom line, I guess. Is that something the PBO could do?

[Jean-Denis Fréchette]

It would be part of the result of the costing, as long as we have all the parameters from this committee.

As I said before—and I will repeat myself—I don't want to develop a program for a committee and cost the program. I don't want the media to say that the PBO developed this policy. I'm not elected, as Mostafa said, and we are not in that kind of business. If you have an idea, we will present your idea. If it's your idea, fine. We will discuss it and we will most likely include all these topics.

[Don Davies, NDP, Vancouver Kingsway, BC]

I understand. Thank you.

[The Chair, Liberal, Bill Casey]

Mr. Kang, you're up.

[Darshan Singh Kang, Liberal, Calgary Skyview, AB]

Thank you very much, Mr. PBO and panel, for appearing before us. I used to read about you in the papers, but it's nice to see you personally.

I was looking at Mr. Morgan's study from 2015. That model says that it's going to save us $7.3 billion. I think there will be savings on top of that, because people who don't have the coverage now are costing health care a lot of money too. I would like you to look at that number for people who are not covered right now by health care and don't have coverage for prescriptions. How much savings would there be?

Mr. Carrie was saying that it's going to cost us about $17 billion more. Right now, somebody's paying for that. I believe that money will be going into the pharmacare pool, and I don't think that it actually will cost the government $17 billion more. Maybe we could have copayers or taxpayers or something to recoup the money that we're going to lose.

I would like to see the study.... If we were to go with Mr. Morgan's model, we would save $7.3 billion. How much money are the people who don't have that coverage now costing the system? That will be a saving for us too, in other words. I would like your thoughts on that.

[Mostafa Askari]

One thing I can say with some confidence is that if there is a pharmacare program, demand for prescription drugs will increase, because obviously there will be people who are not covered now, and they will be covered by that program. That cost will increase, and it will put more pressure on the budget or the cost of the program.

As to whether there will be savings, as I said, that's a critical assumption, and there's a critical issue in regard to how much savings you are going to have from a pharmacare program, both from the fact that there is a possibility of negotiating prices that are lower than the current prices and also because there will be more discipline in the way people consume prescription drugs.

Those assumptions are critical, and we cannot really say what we are going to get right now. In Steven Morgan's model, they have made certain assumptions and they came up with those results. We have to do our own kind of work and come to some kind of conclusion at the end as to exactly what that is. If it is significantly different from their estimates, then we'll have to explain exactly why that is the case, and we will do that as part of our report.

[Darshan Singh Kang, Liberal, Calgary Skyview, AB]

Thank you.

In your presentation, you mentioned that each province has its own pharmaceutical plan, with some similarities between them. What are some of the fiscal levers available to the federal government to help optimize pharmacare costs across the provinces in using these similarities? Can we use those similarities?

[Mostafa Askari]

Well, the provincial programs, as far as I know.... One thing I should say, actually, is that it's a new area for us. We haven't really worked in this area before, so whatever I'm saying is based on the very casual read of the literature that we have done over the past few days.

What I know about the provincial programs is that they are significantly different. The Ontario program, for example, is an age-based program, so only the seniors can use the program. Alberta and British Columbia have completely different programs. British Columbia's is an income-based program, so that once your income is above a certain level, the costs you have to cover yourself go up significantly.

There are significant differences between these programs. I don't know exactly how the federal government can play a role in bringing all those together, if I understood your question correctly.

[Darshan Singh Kang, Liberal, Calgary Skyview, AB]

We heard from previous witnesses that other countries in the OECD use the copayment model of pharmacare but that it has proven to be a fiscal failure. Does your office have the capacity to conduct comparable research on this subject for use by the committee?

[Mostafa Askari]

We can certainly look at other countries' programs and see exactly how they are implemented, what the costs are, and those kinds of things, if that's what you mean. Certainly that would be part of our background research to doing this kind of costing work, because we have to look at what is available out there.

Benchmarking from other jurisdictions is always an approach we take when we are doing costing. Especially if there is not enough domestic information available, then we have to benchmark from other countries, certainly.

[Darshan Singh Kang, Liberal, Calgary Skyview, AB]

We had Professor Flood here, and she was saying that in New Zealand drugs are much cheaper than here, so can you do some comparable study on why they are negotiating cheaper prices and why we can't get cheaper prices with the pharmaceutical companies?

[Mostafa Askari]

That's a completely different project, actually. We can look at how pricing is done in different jurisdictions and see whether it's cheaper or not cheaper, but why that is the case is extremely difficult to ascertain, because there are many different factors with regard to how different governments negotiate with pharmaceutical companies and how pharmaceutical companies behave. That's a completely different issue.

[Darshan Singh Kang, Liberal, Calgary Skyview, AB]

I asked that question because we are after savings, so maybe we can fit that in. That could be part of the puzzle to make an argument for pharmacare. If we do it one way, it will cost us $29 billion, while some studies say we can save $7 billion. If we took negotiation into consideration, maybe it would save us more money. That was the reason I was asking that question about whether you could fit that in there in your terms of reference or mandate.

[Jean-Denis Fréchette]

Certainly we'll compare, for example, New Zealand and two different federal-provincial systems. That's certainly a factor that we'll have to include in our costing model.

[The Chair, Liberal, Bill Casey]

Okay. That completes our first cycle.

Now we're going to go to five-minute questions, starting with Dr. Carrie. Welcome back.

[Colin Carrie, Conservative, Oshawa, ON]

Thank you very much. To our witnesses, thanks again.

One of the things Canadians want us to look at is why we are doing this and what the problem is. Mostafa, you were saying there are a lot of assumptions being made. We're doing this so that hopefully we can see some savings. That would be the main reason.

We're looking at the taxation system, the fiscal situation. We've just received your most recent report, and it states that after three months the federal government expenditures in 2016-17 total $62.9 billion, which is 5.7% higher than the $59.5 billion spent over the same interval in 2015-16. That's the largest increase in at least five years, so before we start spending more money, that first assumption has to be clear.

In your answer last time, Mostafa, you did state that you as a group could give us a snapshot or a benchmark of where we're at today. Is that correct?

[Mostafa Askari]

We have to look at the data that's available. Ideally that would be a part of the final report, but if you want from us sort of a preliminary report only on what is available just to date on this and some preliminary analysis of it, it would be a separate report that we can provide.

One thing on which we'd like to be clear is the way that our work is done. We can provide a report. First of all, anything we produce will have to go on our website, so if the committee wants us to do a preliminary report on what is available, then we can certainly do that. We'll go look at it and provide a report back to the committee and put it on our website, and then we'll go to the second stage, which will include more detail and will actually cost the pharmacare program.

[Colin Carrie, Conservative, Oshawa, ON]

I think that would be helpful to us, because as you were saying before, you don't give advice on the policy side of things, but if we could have a snapshot....

I was wondering if we could amend Mr. Kang's notice of motion to put something in that says, “that the PBO first declare if current statistics available allow for thorough and comprehensive analysis, as has been requested below, and as soon as possible report to the committee the viability of accurately completing the request below”.

If we put something in front of the motion as a friendly amendment, it would allow you to give us that snapshot ahead of time before we pick one route. It's as though we're being asked to make a policy decision without knowing where we stand today. That's all I'm saying. Would that be helpful?

[Jean-Denis Fréchette]

When you mention the snapshot, are you talking about the current situation?