Evidence of meeting #6 for Health in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was costs.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Abby Hoffman  Assistant Deputy Minister, Strategic Policy Branch, Department of Health
Brent Diverty  Vice President of Programs, Canadian Institute for Health Information
Tanya Potashnik  Director, Policy and Economic Analysis Branch, Patented Medicine Prices Review Board
Brian O'Rourke  President and Chief Executive Officer, Canadian Agency for Drugs and Technologies in Health
Michael Gaucher  Director, Pharmaceuticals and Health Workforce Information Services, Canadian Institute for Health Information

5:15 p.m.

Liberal

The Chair Liberal Bill Casey

We have time for one more question.

Ms. Khera.

5:15 p.m.

Liberal

Kamal Khera Liberal Brampton West, ON

Thank you to all the witnesses for being here.

It's important that we look at other systems to evaluate our own. How do our pricing standards compare internationally to other countries with regard to drug costs? I know you've all touched on that, so if you can elaborate a little bit on that.

5:15 p.m.

Director, Policy and Economic Analysis Branch, Patented Medicine Prices Review Board

Tanya Potashnik

There are differences, certainly, from the federal regulator perspective as to how we look at prices. That's one of the reasons that we are looking at framework modernization and examining the best practices internationally.

I can tell you, for example, that one of the things we look at when we look at a new drug that comes onto the Canadian marketplace is other therapies in the Canadian marketplace that have the same indication. When we do that examination and identify those drugs that have the same therapeutic indication as the new drug, we then look at the prices of those drugs in Canada and we allow the new drug to price up to the level of the highest priced drug in the therapeutic class.

That's just an example of what we do at the federal level. Obviously, when the provinces negotiate prices through the pCPA they would be looking at all the prices in all of the drugs that treat that condition. At the federal level we really let the highest priced drug that's already on the market set the bar, if you will.

In other countries there's a much more sort of average look, so there's an identification of all the therapeutic classes or all the therapeutic drugs that are in that class, but if there are alternatives—in Germany for example—they will include potentially generics in assessing what would be the appropriate or acceptable price for that new therapy. That's one example.

The other example is the way we consider international prices. Again, after the introduction we allow prices in Canada to go up to the highest international price after some years, whereas other countries will look at reviewing their prices on a more regular basis and achieve cost savings through price decreases over time. As time goes on, even if Canadian prices are in line with international standards, over time the gap tends to increase, as the data shows.

5:15 p.m.

Liberal

The Chair Liberal Bill Casey

Thanks very much.

Mr. Davies, you can go over a little bit.

5:15 p.m.

NDP

Don Davies NDP Vancouver Kingsway, BC

I think it was Mr. Diverty who talked about the data? Yes.

Do you have any estimate how much money it would cost to provide accurate data to the government to model the various costs of universal pharmacare coverage in Canada?

5:20 p.m.

Vice President of Programs, Canadian Institute for Health Information

Brent Diverty

It's a question with many answers, I think.

The costs of improving the data relative to the costs of the program are quite small. In fact, our entire organization runs for $100 million. We're covering health data across all of the different domains of health care, health expenditure, health workforce, etc.

In terms of improving the data there's a small incremental cost. It may be in the small millions of dollars, sort of thing, to improve it. But there's also, more importantly, the non-monetary costs. It is the willingness of various organizations to provide data. I think that's a really important piece, and also the opportunity that we have through digital health, through eHealth, to capture data more naturally as services are being provided as opposed to as an administrative add-on after the fact. I think that's something we need to capitalize.

If we had national standards in the electronic health records across the country, and a requirement to capture all this data in one place according to one standard, the ability to look at the costs and the implications and the opportunities, I think, would be much greater around all of the issues we've talked about—health outcomes for people, waste duplication, inappropriate prescribing, all kinds of things. That's a real opportunity.

5:20 p.m.

NDP

Don Davies NDP Vancouver Kingsway, BC

Could it be done? If the government said there's $5 million or $10 million or $50 million and wanted you to specifically gather all the data you could possibly get and do modelling to tell us whether or not universal pharmacare would save Canada money...because there's different opinions. I've heard Ms. Hoffman's opinion, but we're also going to hear in this committee from other experts who will be adamant that adopting other systems will save us money in the long run. The only way to really anticipate that, I would imagine, is to get as accurate data as we can and model different things. At least it would give us a better idea. Could that be done?

5:20 p.m.

Vice President of Programs, Canadian Institute for Health Information

Brent Diverty

It depends on the question you're trying to answer, the extent to which how well it can be done. I certainly think there are opportunities to model and explore the implications of different options. The information base we have today, particularly for certain provinces, is pretty strong as well. If we can look at samples or opportunities in certain particular jurisdictions we may be able to apply those to a national model. I think it really depends on the questions we want to answer as to how easy or difficult or expensive it would be to answer them.

5:20 p.m.

NDP

Don Davies NDP Vancouver Kingsway, BC

I am going to read a little quote here, again, from “Pharmacare 2020“. It says:

In terms of drug prices, Canada’s multi-payer system is among the most expensive systems in the world, because it diminishes our purchasing power. The prices of generic drugs in Canada are nearly double (79% higher than) the median of prices found in other OECD countries and more than four times (445%) higher than the best available prices in the OECD. Similarly, the prices of brand-name drugs in Canada are 30% higher than in comparable countries like the United Kingdom.

The source for all those numbers is Ms. Potashnik's group, the Patented Medicine Prices Review Board. It says:

Take the blockbuster drug Lipitor, for example. A year’s supply of the brand-name drug in Canada costs at least $811; in New Zealand, where a public authority negotiates prices on behalf of the entire country, a year’s supply of the brand costs just $15. Even the generic version of Lipitor costs at least $140 in Canada, more than nine times more expensive than in New Zealand.

This report goes on and itemizes all the different aspects of a universal pharmacare system, where you contain costs, work with the prescribers, and do the bulk buying and negotiating. It takes all the pieces together to get an efficient system.

My final question—and I know I'm going to run out of time—is this: If some authors think that we clearly can, through a variety of approaches, make sure every Canadian gets the coverage they need at a cheaper cost than we are paying now, but there is a disagreement over whether that is possible, shouldn't we be exploring how to resolve that very important health policy question?

5:25 p.m.

Director, Policy and Economic Analysis Branch, Patented Medicine Prices Review Board

Tanya Potashnik

We recently published an updated study that looked at where Canadian generic prices are, relative to international levels, and I can say there is some good news on that front, in that the efforts of the pan-Canadian Pharmaceutical Alliance have closed some of those gaps.

The report that we do is fairly comprehensive, so it doesn't pick and choose those examples, because there are examples of both extremes.

I just want to caution that when we looked at New Zealand and compared prices in New Zealand with prices in Canada, we found that there was a much smaller sample of drugs with which we could compare. That suggests that there is potentially a lower supply of generic products, so there is potentially a risk that adopting a certain model could result in less choice.

What the impact of that is for therapies is a different question, but it is certainly something that needs to be looked at.

5:25 p.m.

Liberal

The Chair Liberal Bill Casey

Thank you very much.

We don't have time for another round, but we have one member who hasn't had a chance to ask a question. I wonder if we could give him three minutes. Is that okay with everybody?

Mr. Oliver, go ahead.

5:25 p.m.

Liberal

John Oliver Liberal Oakville, ON

Thank you very much for that.

I'll begin with a quick reaction to something Dr. Hoffman said. I understand there are many problems here, but for me coverage or access is fundamental. The costs and utilization are important but secondary, just in terms of fairness and equity, to think that some Canadians don't have access when others do. I think we solve the other problems on the way to solving access.

My questions are focused more to CIHI. There are 35% covered by private insurers. I would assume those are mostly employers. What is the advantage to employers if we move to a universal model? On top of the drug costs that you identified, they would have an admin fee with their insurers associated with that. Do you have any sense of the order of magnitude of that admin fee?

5:25 p.m.

Vice President of Programs, Canadian Institute for Health Information

Brent Diverty

No, that's not something that we have looked at. Offhand, I couldn't provide you with an answer to that.

5:25 p.m.

Liberal

John Oliver Liberal Oakville, ON

The 35% are generally employers, is that correct?

5:25 p.m.

Vice President of Programs, Canadian Institute for Health Information

Brent Diverty

Yes, it is employers' insurance, provided through employers. That's the majority of it.

5:25 p.m.

Liberal

John Oliver Liberal Oakville, ON

That would be about $10 billion that we.... Depending on how this progresses, we would be assisting private sector employers who are currently insuring the population.

5:25 p.m.

Assistant Deputy Minister, Strategic Policy Branch, Department of Health

Abby Hoffman

I think that it's fair to say, though, that at the end of the day it may be the employers who are actually paying the premium to the insurance companies, but this is all part of the calculation of the pay packet for employees.

I think the benefit to employers and to insurers is that drug coverage costs are escalating, and in these—I'll call them, for lack of a better term, non-managed—privately financed drug benefit systems, this is getting to be an increasingly heavy cost burden for employers. Insurers find it difficult to offer major employers good drug benefit regimes, because of the costs they are facing.

Some of the efficiencies in the public plan—the formularies, some oversight on prescribing practices, price negotiation, generic substitution, all of these things—I think employers would welcome. They could certainly imagine—I don't want to say readily—scenarios where they could be offering exactly the same benefits to their employees at considerably lower costs. Even with no change, you could argue this might allow them perhaps to extend benefits to some of their part-time or non-unionized workers.

Anywhere there are savings opens up at least the potential that some of the coverage gaps.... You quite rightfully say—

5:25 p.m.

Liberal

John Oliver Liberal Oakville, ON

If we went to universal coverage, there would be a major advantage to employers, because that cost would transfer from their costs to public purse costs, is that right? That would be a way to talk about that.

5:25 p.m.

Assistant Deputy Minister, Strategic Policy Branch, Department of Health

Abby Hoffman

Yes, but not necessarily.... Again, just to hark back to those two theoretical models that I put on the table, and I think it's worth looking—

5:25 p.m.

Liberal

John Oliver Liberal Oakville, ON

That's what triggered me, to be honest.

5:25 p.m.

Assistant Deputy Minister, Strategic Policy Branch, Department of Health

Abby Hoffman

Yes.

In some of these other countries where we use the term “universal coverage” rather loosely, it does mean that everyone has coverage, but it does not mean that public authorities pay the full cost. Public authorities have oversight of the parameters for drug coverage, and it is useful for the committee to look at the range of these models that are out there that all have, at the end of the day, universal coverage.

5:25 p.m.

Liberal

John Oliver Liberal Oakville, ON

With regard to a formulary across Canada, is there an organization in Canada that would be positioned to think about a national formulary and what would be included in that?

April 13th, 2016 / 5:30 p.m.

President and Chief Executive Officer, Canadian Agency for Drugs and Technologies in Health

Dr. Brian O'Rourke

Yes, and we would be very pleased to try to take that on.

5:30 p.m.

Liberal

The Chair Liberal Bill Casey

Thank you.

On behalf of all the committee, we want to thank the panel. You have given us a wealth of information, and I suspect we'll be inviting you back because I think you have most of the answers we need.

We are going in camera for a few minutes to discuss some budgets and issues, so we'll take a little break. The meeting is suspended.

[Proceedings continue in camera]