Yes, I will, sir.
Good morning, Mr. Chair, vice-chairs, members of the committee, and ladies and gentlemen. I'm pleased to be here today on behalf of Veterans Affairs Canada to discuss the drug component of the department's health care benefits program. As the chair mentioned, my name is Michel Doiron. I am the assistant deputy minister for Veterans Affairs in the service delivery branch. With me today are my two colleagues, Libby Douglas, director general of the service delivery and program management branch, and Fiona Jones, manager of strategic priorities.
Honourable members, as you know, Veterans Affairs Canada focuses on the health and well-being of our veterans, and we provide many services and benefits to those veterans. While those benefits include covering the cost of prescription drugs, it should be noted that VAC plays a limited role in the provision of drug coverage in Canada. Of the total Canadian population. VAC estimates the total veteran population to be approximately 670,000 veterans. Of these, approximately 48,000 of our veterans received prescriptions in 2015-16. This is approximately 0.1% of the Canadian population. The total expenditures for the drug component of the VAC treatment program for fiscal year 2015-16 were approximately $92 million.
The authority for VAC drug benefits comes from the Department of Veterans Affairs Act and the veterans health care regulations. The treatment benefits authorized under these regulations are provided into groups called “programs of choice”. We call them POCs for short. POC 10 is the prescription drug program, and it refers to the drug products and other pharmaceutical benefits that are available to our veterans who have a medical need and who have a prescription from a health professional authorized to write a prescription in that province.
The eligibility of veterans for this program depends on factors such as their military service, income status or disability. Some veterans are eligible for coverage for drugs prescribed to treat their medical problems. Other veterans are eligible for prescription drug coverage for any illness as long as the benefits are not available as an insured service under a provincial health care system.
It is very important to note that VAC does not prescribe or dispense drugs. Veterans obtain the prescription drugs in the same manner as other Canadians. When a drug has been prescribed, the veteran presents the prescription and the VAC health identification card to a pharmacist, who will dispense the product. If the product is on VAC's formulary and all the criteria are met, then VAC pays the cost of the drug directly to the pharmacy, or in some cases it reimburses the eligible veteran who chooses to pay out of pocket.
Veterans Affairs Canada's drug coverage relies on a formulary developed and maintained through ongoing assessment of drug effectiveness, safety and cost-effectiveness.
The department operates a formulary review committee that makes decisions regarding drugs on the formulary. New drugs are added based primarily on recommendations from the common drug review process of the Canadian drug expert committee. This committee is an advisory body to the Canadian Agency for Drugs and Technologies in Health, and it is composed of individuals with expertise in drug therapy. I think my colleague from Health Canada described that quite well, so I will save you that component. This committee makes recommendations to participate in federal, provincial, and territorial publicly funded drug plans, and our VAC formulary categorizes drugs as standard benefits, specialized authorization benefits, or non-formulary products, based on their recommendations.
Standard benefits include many over-the-counter drugs and prescription drugs that Veterans Affairs Canada considers essential therapies. Approximately 80% of all drug benefits included on the Veterans Affairs Canada formulary fall under this category. All standard benefits are readily available to eligible veterans with a valid prescription.
Special authorization benefits are listed on the formulary with clinical criteria or with conditions that must be met before the drug is approved. They are higher-level or higher-cost therapies. To be approved for payment of these benefits, veterans have to demonstrate that the clinical criteria, or conditions established for the drugs, have been met. For example, a trial with a less expensive drug may be required before a more expensive drug would be approved. Non-formulary products are products that are considered not to provide therapeutic value or to provide insufficient additional therapeutic value, as compared with the cost of a comparable product.
Even so, VAC may approve these items on an exceptional basis. To be alert to potential issues with drug components of the treatment benefit program, VAC uses a drug utilization evaluation process to identify veterans who may be at risk through inappropriate use of drugs.
For example, pharmacists receive warning messages through a computer system to alert them to the potential of duplicate drugs, duplicate therapies, drug interactions, overuse or abuse.
VAC is committed to ensuring that our programs continue to meet the needs of our veterans. We were pleased that the Office of the Auditor General carried out a comprehensive review of our drug benefits in 2015 and 2016. The Auditor General's report, which was tabled in May of 2016, included recommendations to improve the program.
The Standing Committee on Public Accounts also reviewed the Auditor General's report and tabled its own report with additional recommendations on October 17, 2016.
This deep examination of VAC's drug benefits has provided the department with an opportunity to introduce changes that will result in positive outcomes for the department, Canadians, and more importantly, for our veterans.
Both reports provided recommendations on the process, management and monitoring of the Veterans Affairs Canada's prescription drug program.
As indicated in both reports, Veterans Affairs Canada has accepted all the Auditor General's recommendations and we have taken immediate steps to begin implementation.
Specifically, in response to the recommendations, Veterans Affairs Canada relies on its partnerships with other federal departments and other jurisdictions to ensure that it is effective and that it provides cost-effective solutions for veterans. This could include working with our federal partners to participate in price negotiations with drug manufacturers, and reaching agreements on selling products at lower prices.
Additionally, the department has taken advantage of this opportunity to revise and refine the operation and composition of the formulary review committee, including standard operating procedures, which formalize the decision-making process and how evidence is considered. We are also developing a framework to enhance the drug utilization evaluation monitoring.
In closing, Mr. Chair, I would like to reiterate that VAC's role in national pharmacare is limited to that of a payer for the drug benefits for a small, specialized portion of the Canadian population, our veterans. While we have experience with benefits as a result of working with partners, Veterans Affairs top priority is the provision of services for the health and well-being of our Canadian veterans.
Mr. Chair, this concludes my opening remarks. We would be pleased to answer any questions the committee may have.
Thank you.