Health Committee on April 18th, 2016

[Rob Oliphant, Liberal, Don Valley West, ON]

This is an issue I care a lot about.

I want to dig down a little bit and start with a case. A nurse in Vancouver called me a year and a half ago. She was on a drug called Xolair, which is a biologic medication for asthma. BC PharmaCare decided to, I call it, bureaucratically substitute. It took the drug off the formulary. She was forced to actually move to Alberta, as a nurse, because the nurses' plan mirrored the B.C. pharmacare plan. There was a cost saving which BC PharmaCare was required to do, but she was actually forced to move.

On the good side of your report is a national patchwork-free kind of pharmacare system where every Canadian would have the same. On the downside, how do we ensure that Canadians have the drugs they need and that they are provided in an affordable way?

I'm not sure who wants to answer that.

[Dr. Danielle Martin]

Maybe I'll start from a clinical perspective. Of course, I can't speak to the specifics of that individual's case.

One important thing that we always have to ask ourselves is whether the prescribing that's going on is actually based on the best available evidence and whether the formularies are based on the best available evidence. Nobody wants a situation in Canada in which we make decisions purely based on cost. You're not going to hear anybody advocating for that from any realm.

What we do want is to make sure when we are paying for a drug that it is the right drug, and it is a drug that has been shown to be maximally effective.

[Rob Oliphant, Liberal, Don Valley West, ON]

So it's not cost. I was just a little concerned. In your presentation, it sounded like it was mostly about cost.

Can a pharmacare system give Canadians the best health care?

[Dr. Danielle Martin]

I really appreciate the question.

Not only can a pharmacare system give Canadians the best health possible, but a pharmacare system could give them much better health care than they currently get.

To me it's incredibly important that this message come across clearly in this afternoon's discussion, that giving everybody access to every drug all the time is not good health care. It leads to inappropriate prescribing, which causes real harm to people's health. What we need is to push ourselves and to push Canadians to understand that what they need access to, what they deserve access to, are drugs for which there is good, solid medical evidence.

This is why I think the notion of depoliticizing the formulary compiling process, moving those decisions out of the reach of industry, out of the reach of politicians—with the greatest of respect—and into an area that is entirely based on the best medical evidence.... You're still going to have really difficult conversations about cost-effectiveness, about clinical effectiveness, about how many of the me-too drugs within a given class. There are going to be lots of important conversations to have about what goes on the formulary.

What goes on the formulary should be the drugs for which there is solid evidence, and then there should be a transparent and fair appeals process. If this nurse has been through 14 different drugs that are covered on the formulary, and she has some unusual variant of asthma that responds only to this specific drug, and there is a process by which she can make her case and her physicians can make her case, then there needs to be a method for us to assess that. But we shouldn't be paying for the fifth-line therapy that costs ten times the price of the first-line therapy for every single person. It makes no economic sense, and it makes no sense from a health perspective as well.

[The Chair, Liberal, Bill Casey]

Thanks very much.

Dr. Carrie, you're up.

[Colin Carrie, Conservative, Oshawa, ON]

Thank you very much, Mr. Chair.

First of all, I want to thank the witnesses today. When we started this study, I think all of us thought that where the system was.... After hearing from witnesses, we're starting to paint a bit of a picture out there. At first, I thought Canadians weren't getting access to pharmaceuticals and that was the biggest problem. But in hearing the witnesses who were here last week, and then using Mr. Google, I've found out that Canadians are the number two consumers of pharmaceuticals in the world.

I like what Dr. Martin said. We rank in the top 10% of countries that use benzodiazepines, opioids, and stimulants. We're number four with respect to antidepressants, number two with respect to opioids. That in itself is costing taxpayers a lot of money. And with all due respect, Dr. Martin, it's not just which drugs you choose, but at the end of the day, somebody is writing prescriptions for these things.

I know we're trying to get our heads around what the role of the federal government is. I know that different governments have taken different approaches, and I remember a controversial one for the opioids. I remember Deb Matthews in Ontario a few years ago, the frustration.... She was out there urging all provinces and territories to band together to convince Health Canada to block generic forms of opioids. She's on the ground as a politician. She's a lot closer than we are. She said that Ontario had the highest rate of prescription narcotic abuse in the country, two to four times higher than any other province. She mentioned the challenge with first nations communities, where the federal government does cover prescriptions. She said it has devastated many first nations communities, including one small northern reserve where 85% of residents are addicted to opioids. When we hear stuff like that, it just tears our hearts out, because you want to do the best. All Canadians want to have access to the pharmaceuticals and treatments that they need. She was quoted as saying that we simply don't need easily abused long-acting oxycodone drugs to achieve better care.

My question would be, how far do governments go? Dr. Martin, you're on the ground. Do you agree with Deb Matthews and her analysis with certain segments of the pharmaceutical prescriptions?

[Dr. Danielle Martin]

Thank you for the question.

A have a couple of observations. The first is that you're absolutely right. It's not government that's writing prescriptions for patients primarily in our country; it's doctors. As I'm sure the committee can appreciate, the decision to pick up one's pen and write that prescription is the culmination of a whole lot of complex factors.

What do we know works with respect to improving the appropriateness of prescribing? There's no single silver bullet.

What you want is a system in which, first of all, you can provide the best possible guidance based on evidence. We know that having an evidence-based formulary does work. Physicians are going to write prescriptions by and large for drugs that are covered for our patients. Patients are going to demand that we write prescriptions for the drugs that are covered for them. The use of an evidence-based formulary.... There are examples of formularies even in Canada that are tiered so you know that if your patient has failed the first-line therapy, for example, then you can move to the next therapy, which is more expensive, etc. Using the formulary to shape prescribing is an important way that governments—whether at the provincial level or at the pan-Canadian level, or because we collectively decide to hand those decisions over to an arm's-length agency—can shape prescribing among providers.

[Colin Carrie, Conservative, Oshawa, ON]

Should governments go as far as banning certain drugs, do you think?

[Dr. Danielle Martin]

It's interesting. One thing that government can do...I certainly don't think it's the role of government to make the individual decisions. I would rather have the government get out of the business of making decisions, because we've seen there can be influences on those decisions that can go either way.

What I do think government should do is to abide by the decisions made by an arm's-length entity or agency where the best evidence is used and there's a transparent process for making those decisions.

[Colin Carrie, Conservative, Oshawa, ON]

I thought we had a system in place where there was some oversight in that. These statistics that we're seeing here—

[Dr. Danielle Martin]

We have a system in place where among our private plans pretty much anything that is prescribed is covered. That's the open formulary plan. If you think about what the incentives are for a private insurance plan—the more I prescribe, the more prescriptions churn through the industry, the more money gets made—it's the reverse incentive of the incentive one would want or hope for. There's no incentive for appropriateness in that way.

[Colin Carrie, Conservative, Oshawa, ON]

Maybe I should move on to another question, because I have a few here, but thank you for those answers.

Mr. Morgan, with your ideas moving forward you talk about this agency, or this one government plan, negotiating with pharmaceutical companies. If you look at the pan-Canadian Pharmaceutical Alliance and they've been functioning, it would probably take years for the government to negotiate thousands of contracts with drug companies. Have you estimated what you expect the initial cost would be that the government would have to absorb on day one if the government were to undertake a national pharmacare program? What would those costs be on day one?

[Dr. Steven Morgan]

We haven't estimated the specific administrative costs of ramping up, in part because Canada, probably to the surprise of this committee, has dozens of public drug plans across the country in each province, territory, and at the federal level. All of them manage their own formularies; all of them make their own decisions, and all of them, should they participate with the pCPA, have to sign their own contracts. We have a tremendous amount of redundant infrastructure in the contract negotiations with drug manufacturers. Every drug listed on any provincial formulary in this country has to go through the formal listing process and increasingly requires a product listing agreement, or a utilization management agreement as they're known in Manitoba.

We are already doing this in large scale, but we are not doing it on behalf of the entire population. We are doing it on behalf of the select segments of the population that are beneficiaries of the existing public drug plans.

I think the pCPA is a tremendous example of the provinces voluntarily coming together to work together in order to increase their purchasing power. They are hindered by a couple of things, one of which is that the provincial drug plans fund less than 40% of drug costs in each province. That makes them a minority payer in the market place. That means that if they say yes to a drug, about 40% of the market is covered under that pCPA negotiated deal.

[Colin Carrie, Conservative, Oshawa, ON]

If you had a negotiator, couldn't you, with the system we have now, allow the private companies to take benefit of negotiated prices as well? We had some witnesses here last week, and I think they said private payers take up, I think it's $10 billion, and then the copay is another $5 billion. So you're looking at $15 billion that the public systems don't pay now—

[Dr. Steven Morgan]

Yes. Overwhelmingly, there's—

[Colin Carrie, Conservative, Oshawa, ON]

—and if you ramp something up, that's obviously going to go on to a public payer, wouldn't it?

[Dr. Steven Morgan]

Two things hinder the provincial negotiation power. One is that it's a minority payer. The other thing is that no does not necessarily mean no, and yes does not necessarily mean yes. When a province actually says yes to a drug, then that's great; it's signed a deal if it's taken up the manufacturer's offer. When a province says no to a drug because the price isn't suitable for Canadian value-for-money expectations, private insurers often still fund the drug. So, in essence, they actually weaken the negotiation power of the pCPA process because, by default, the presumption by private insurers is that they'll cover it.

Now, if you had a system in Canada where you legally bound all insurers to say yes when the government says yes and to say no when the government says no, then you would have a system by which you could probably leverage universal purchasing power. Of course, under that situation, you've basically reduced the private insurers to claims-processing agencies, which they are in some provinces like Alberta and Nova Scotia. Private insurers run the claims-processing function of the public programs, and the government manages what's on formulary and what's not, and what the prices are.

If private insurers want to be claims processors under a universal pharmacare program that's publicly managed, that's great. But the deal is that you have to be all in or all out if you're going to get—

[Colin Carrie, Conservative, Oshawa, ON]

What about the drugs that aren't going to be covered? You could have some bureaucrat in Ottawa decide that, for example, they're only going to fund the generics. I brought up the OxyContin thing because it is kind of a political, controversial thing. You have one type of drug that is tamper-resistant anyway, and the other one is not and is easily diverted. That's just an example.

If you have a monopoly where patients can't get covered, you're going to need some type of private insurance, aren't you? Aren't there going to be shortages and stuff, if that occurs?

[Dr. Steven Morgan]

Well, no. I mean shortages are not a function of coverage decisions, per se. In markets that we would compare ourselves to, governments do make decisions about what will and what will not be covered under the universal drug plans. In a few of them, you can buy supplementary private insurance to cover those sorts of things. The United Kingdom has supplementary private insurance for health care. Very little of that actually goes to prescription drugs because, on the whole, people in the United Kingdom understand that they get access to the medicines they truly need, and the exceptions are rare where the medicines that they really need aren't available in some way on formulary.

You could have a supplementary or parallel private insurance system essentially, as I said earlier, for things like the copayments, which will likely happen in public pharmacare in Canada, and for things like the medicines that just don't make the list. Opioid drugs, for instance, may not be the first thing that public pharmacare would go for universal coverage for, in part because we are desperately trying to manage an epidemic of overuse of those medicines. Coverage decisions alone aren't going to solve that problem. That problem's root cause is about addiction and mental health, and it's going to require complex interventions. So it's not a reason not to move forward with pharmacare, but it certainly wouldn't necessarily be the priority one drug class for a pharmacare program.

[The Chair, Liberal, Bill Casey]

The time's up. I let you go a little longer because we went a little longer on this side, too.

Go ahead, Madame Sansoucy.

[Brigitte Sansoucy, NDP, Saint-Hyacinthe—Bagot, QC]

Thank you, Mr. Chair.

I'd like to thank the witnesses appearing before us today. This information is very helpful.

Dr. Prémont, your explanation of Quebec's experience over the last 20 years and the reasons why the program is so costly compared to regimes in other OECD countries were very clear. It was also clear that, in the case of a program like Quebec's, some shortcomings might be countered by a universal public program intended for all of Canada.

Dr. Gagnon, you said that there was no economic obstacle to implementing this program. Yet, in the context of this committee's work, the minister said last week that she thought a pharmacare program would be too expensive. So you can understand why cost is a concern for our committee.

I don't know if one of you could tell me how much the Government of Canada is already spending annually on tax credits to companies that offer their employees a drug coverage plan.

[Dr. Marc-André Gagnon]

That's a very interesting question.

It's important to understand that current private plans are in fact already generously funded in part by the government, by public budgets. For the Government of Canada, it is estimated that federal tax subsidies are 13% of overall spending for private plans. As for the provinces, although they don't all offer them, it's 7% or 8%. Overall, it is estimated that close to 20% of what private plans pay out are covered through tax subsidies by the various governments.

However, I would add one important thing. Keep in mind that 30% of spending by private plans is for coverage of public servants. So it's already being covered through public budgets, to maintain plans that are not very cost-effective.

So almost half of spending by private plans is funded by public budgets one way or another. In fact, private plans reimburse some $10 billion. Furthermore, an estimated $5.1 billion of private plans are directed toward what we call waste and toward establishing a universal public plan to ensure proper use and maximize therapeutic benefits in order to minimize waste.

It's important to understand something about the issue of economic costs. The population can be divided in two: the employed and the unemployed. For the moment, the provinces are already setting aside funds for people who don't work, including seniors and social assistance recipients. Every province provides public funding to cover those individuals. What about people who are working, so those who are covered by private plans? So when we look at the numbers and dig a little, we can see that public funding is essential for these private plans. I think we simply need to take this public money and use it more effectively to better serve the population's needs.

[Brigitte Sansoucy, NDP, Saint-Hyacinthe—Bagot, QC]

Thank you.

Would you like to add anything, Dr. Prémont?

[Dr. Marie-Claude Prémont]

Yes, I could add something, Ms. Sansoucy.

So, without getting into the numbers, there's something you need to understand. If a universal drug plan was set up, it wouldn't necessarily cost the government more. The public portion, as Marc-Andrée explained, is already largely subsidized or funded by the public. And for the private portion, as my two colleagues also explained, insured individuals make significant contributions, which isn't effective.

Before Quebec introduced pharmacare generally, a report was submitted to the government that stated that introducing a public plan would not cost a penny more if the premiums being paid to private insurance were collected and used not to generate benefits for drug or insurance companies, but to finance a plan for the entire country.

So it's wrong to say that setting up a universal public plan would cost anything. The huge amount of money that is currently being wasted in an open-format plan simply needs to be better used, as Ms. Martin explained.

[Brigitte Sansoucy, NDP, Saint-Hyacinthe—Bagot, QC]

Thank you.

My next question is for Mr. Morgan.

To what extent do coinsurance, co-payment or deductibles create barriers for people trying to access the drugs they need? Would you recommend coverage from the very first dollar spent?