Health Committee on May 2nd, 2017

[Sonia Sidhu, Liberal, Brampton South, ON]

Mr. Golja, could you please explain the different classifications of prescription drugs and how the classification impacts how much will be reimbursed? Can you explain those?

[Aldo Golja]

What do you mean exactly by the different classes?

[Sonia Sidhu, Liberal, Brampton South, ON]

Could you explain the different classifications of prescription drugs and how these classifications impact how much will be reimbursed?

[Aldo Golja]

Do you mean the clustering of the products?

[Sonia Sidhu, Liberal, Brampton South, ON]

Yes.

[Aldo Golja]

Okay. By having clusters of products that have equal benefit, with the health technology assessment showing that there is equal therapeutic benefit between, for instance, two active substances, the person will receive the maximum reimbursement in this cluster. The prescriber has the freedom to prescribe either one of those products. But when there is a copayment of one product—let's say, the maximum price is $100, and there is one product that has a maximum price of $100, and one that goes above that, so $120, for instance—then you will often see a tendency for prescribers to prescribe the drug that has no copayments, that has no additional contribution by the patient. You do see some movement towards that.

When there is a generic product in that market, basically the generic has the same maximum reimbursement level as the originator. But because it's a generic, as soon as there is competition in generic markets, and we see for the majority of products there is competition, we will see that price drop really low because the insurance company actually determines what it will pay for this product. Based on the expected volume within the insured population, often the larger insurance companies, with a larger patient population of sometimes one or two million, will be able to negotiate a lower price for a specific generic supplier. Then, because it's ascribed an INN, 96% of the population almost immediately goes to the generic product that's been handed over.

Is that a sufficient answer to your question?

[Sonia Sidhu, Liberal, Brampton South, ON]

Yes, thank you.

[The Chair, Liberal, Bill Casey]

Okay, thanks very much.

Now we'll go to our five-minute round, starting with Dr. Carrie.

[Colin Carrie, Conservative, Oshawa, ON]

Thank you very much, Mr. Chair.

I want to thank the witnesses for being here and helping us with our issues with pharmacare programs.

I realize, too, that in every country things pretty much evolved a little differently and that you've come up with your own solutions. But, Mr. Golja, looking at your system in the Netherlands, I see that in the 1990s you basically had a system similar to Canada's, where you had, really, public and private health insurance plans. Then you began to unite them both into what you're calling this managed competition model, in which every person is basically obliged, if they can, from their own pocket, to buy private insurance, but the benefits would be specified by law. That's been going on since 2006. Because that seems to be similar to what Canada had, I wonder if you could enlighten us on what challenges the Netherlands faced in transforming its health insurance system from this mixed public/private health insurance model into a single-managed competition model.

[Aldo Golja]

There were many challenges, we could say. I specialize a bit more in the pharmaceutical area, but in general you could say that one of the big challenges after 2006 has been for the different stakeholders to grow into their roles. For instance, insurance companies came from a non-competitive environment, where they had more or less a set population of insured persons. They were not used to purchasing or contracting care. They had to get used to this role in which they had to find ways to contract care efficiently, but also make sure that the quality of care was up to standard and that the insured patients were also happy with the care they received. This has been a long process. Over the past years, if you look at the interaction between prescribers on one hand, and the insurance companies on the other hand, and also the pharma companies, you see that finding the right optimum between costs and care at the same time is something that has taken a long time to evolve. Still you see challenges within the insurance companies, especially when it comes to insuring the best possible care. When you talk about appropriate use, for instance, or when you talk about cancer care, you want to make sure that it's the biggest bang for your buck, as the Americans say. Trying to find that scientific or unbiased way of contracting that, I think, is one of the most important challenges at this point.

[Colin Carrie, Conservative, Oshawa, ON]

We've had a number of witnesses who would like Canada to move to the single-payer public health care system and more of a monopoly type of system. You guys picked this competitive model. Could you explain why the managed competition model was chosen over the single public health insurance system? In your view, what are the advantages and disadvantages of these two approaches?

I see you're smiling. This is a fun question.

[Aldo Golja]

Yes, that's a very interesting question.

Sometimes things evolve based on political decisions or motivations, so that might also have an effect.

We came from a situation where there was more or less a clear distinction between the insurance companies. They were more regionally organized. They were not self-sufficient but they were relatively self-standing organizations. They were non-governmental organizations, so the thought behind that was to hand them the tools to create a system that was a non-centralized system, or a non-monopoly system, to create sort of a market system, because of the position of the insurance companies and the care providers that were already there. The mechanism was already there, and it had to be regulated in the right way....

[Colin Carrie, Conservative, Oshawa, ON]

All right, I'd just like to finish off by saying I'm very surprised that politics took on such an important role over there. That would never happen here.

Thank you.

[The Chair, Liberal, Bill Casey]

Thank you very much.

Now we'll go to Mr. Oliver.

[John Oliver, Liberal, Oakville, ON]

Thank you very much.

Thank you for your presentations.

Both countries are using a copay model, either a first dollar and then a copay, or a straight copay. I'm wondering if there was a public policy you were pursuing with the copay decision, or is it simply affordability and trying to take those front-end dollars off the government's cost?

Second, we've been cautioned against using copay if we were looking at a model, because of income disparity and the belief that low-income people would have greater difficulty accessing it and would not fill prescriptions because of affordability in that case.

So, first, was it just a matter of affordability, or why do you have copay? And second, have either of you seen barriers for the poorer people in your economy?

[Sofia Wallström]

I would say that in Sweden we have had this copayment system for a very long time, so I don't think I can really answer what the motives were in the beginning. Of course, the thresholds have been changed over time, so it's higher now than it was in the beginning, naturally.

I would say it's mainly a political ambition of affordability and equal access, but I would also say that it is clearly stated that it shouldn't be zero. It should be a copayment and it should be somewhat substantial, and that is because we can see that patients have a tendency to take out too much of the medicine if it's at no cost, and it's not used properly, so there are problems with compliance and medicines being thrown away. That's also a problem for the environment and so on.

[John Oliver, Liberal, Oakville, ON]

What is the Dutch experience?

[Aldo Golja]

Traditionally we've had a system with relatively low copayments. This is our tradition. I believe some time ago there was an experiment with copayments specifically for drugs, but this was withdrawn after it was shown that many people were opposed to that, so in the new system, effective as of 2006, there is general copayment of 385 euro, which I was talking about earlier. This basically goes for all care that people take up in a year, except GP care. Basically everyone is free to go to a GP. They are the gatekeepers in our system to make sure that, when people need care, they can go, so there is no threshold to meet—

[John Oliver, Liberal, Oakville, ON]

Neither of you has seen inequitable access because of affordability then? There has been no evidence of the poorest in your economy having difficulty accessing pharmaceuticals?

[Sofia Wallström]

I would say the Swedish system's threshold is fairly low, and very low compared to other countries'—

[John Oliver, Liberal, Oakville, ON]

So you're not seeing an access problem, then?

[Sofia Wallström]

For specific groups, there probably is a kind of access problem. As for how big it is and the best way to solve this kind of problem—whether is it specifically related to access to pharmaceuticals or a more general problem—I would say that it's a political question. The reforms that I mentioned earlier when it comes to children, and young women when it comes to contraceptives, is one kind of response by the political system in adjusting the thresholds.

[John Oliver, Liberal, Oakville, ON]

Okay. Thank you.

The last question I had was for the Dutch. What's the value add of the insurance companies? If, on the pharmaceutical side, the doctor writes a prescription and the patient fills it, what's the value add of the insurance company in that model?

[Aldo Golja]

Basically, if an insurance company is able to maintain low expenditures on pharmaceuticals, they can spend more of the premiums toward other forms of care.

[John Oliver, Liberal, Oakville, ON]

So the insurance companies negotiate the price of the pharmaceuticals?