Health Committee on Oct. 17th, 2017

[Jason Jacques, Senior Director, Costing and Budget Analysis, Office of the Parliamentary Budget Officer, Library of Parliament]

No, we haven't. We have done work with respect to our economic and fiscal outlook and do regular work on an ongoing basis, particularly in looking at the accuracy of those forecasts five years out.

With respect to more comprehensive costing reports, we haven't done anything on a comprehensive basis, although I would hasten to add that for us we always like to place the emphasis not on the numbers themselves, but on the planning framework that we're actually providing to parliamentarians. For us, we know that at the end of the day the numbers will always be wrong, as a matter of fact.

More important, of course, is the question of the assumptions that go into those numbers and, more importantly, the planning framework, those levers that we're identifying in terms of the cost drivers and that we highlight to parliamentarians, so that when parliamentarians are developing policy they have a good sense of how those are actually connected to the policy outcomes. I think that in that regard we've done an excellent job.

[Jean-Denis Fréchette]

If I may, we can give you a couple of examples. On costing the ships for National Defence, for example, we were pretty accurate. The same thing can be said about the F-35 with regard to my predecessor. We do have these kinds of examples where we do the costing.

In costing, fiscal measures are easier to measure, because after the fact you know exactly that Finance will come with its own numbers and we can compare. Costing a model like that is totally different because we have some factors that.... It's always a balanced approach that we have for these kinds of projects. Measuring how precise it could be can be very difficult.

[Len Webber, Conservative, Calgary Confederation, AB]

Yes. I was told when I first came here to Ottawa that for any number the government budgeted for, you could basically double that to be accurate, and that for anything that involves IT, it can be tripled.

You did answer what my next question was going to be by giving me some examples of where the federal government accurately budgeted and delivered a large program. I'll move on, then, to my province of Alberta. As you know, in Alberta there's a growing number of people who are upset with the equalization program. I have talked to a lot of people who tell me that Alberta would be able to offer more services, such as pharmacare, if they didn't have to pay so much in equalization.

Quebec has been the largest beneficiary of equalization payments over the years. This was the model chosen for this study, if I'm correct. Why did we pick Quebec as the foundation for this study? Was that something that we did as a committee to instruct the PBO? Can you talk a bit about why we chose Quebec?

[Jean-Denis Fréchette]

Yes. Thank you for the question.

After the first motion from this committee, we came back and asked for some specific measures or models that we could use. After the second meeting, the model of Quebec was used, because it's very comprehensive. As we mentioned, it covers about 80% to 90% of the expenditures of all provinces. It is comprehensive. It is an expensive program, believe me. I live in Quebec, so I know how much it costs. That was the committee's decision to use Quebec's RAMQ model.

[Len Webber, Conservative, Calgary Confederation, AB]

Okay.

How much time do I have, Mr. Chair?

[The Chair, Liberal, Bill Casey]

You have two more minutes and a bit.

[Len Webber, Conservative, Calgary Confederation, AB]

Okay. Here's another question. If the federal government starts covering drug costs, why would the insurance industry not just stop paying for those same drugs they currently cover? Really, they are a business and would love to off-load their costs, of course.

How did your costing model take this scenario or effect into account? Does your model assume that the private sector would voluntarily continue to cover all the costs that they currently do?

[Carleigh Malanik]

Consistent with what was asked of us and how the pharmacare plan would look according to the committee, it was our understanding that this public plan would supplant all other insurers for those particular drugs. Inherently, we assumed that this $3.9 billion that's not included in the formulary would continue to operate, but we made no further assumptions as to whether the private sector would continue to provide insurance for that or not.

[Len Webber, Conservative, Calgary Confederation, AB]

Shouldn't we assume that any drug the government is willing to pick up for those without coverage currently would be delisted by private insurers? If this were to happen, what additional costs should we expect to be added to your model?

[Mostafa Askari]

It shouldn't really have any impact on the costs from the model, because we are assuming that those drugs will be replaced and will be paid for by public insurance. There isn't really any additional cost.

[Len Webber, Conservative, Calgary Confederation, AB]

All right.

Do you have any questions you can add here, Marilyn?

[Marilyn Gladu, Conservative, Sarnia—Lambton, ON]

When we look at the total cost of the plan to cover all Canadians, we come to $19.3 billion, if everything goes as planned. In looking at your report, it looks to me as though today about 12% of Canadians don't have full coverage, with 2% who don't have any coverage, and 10% who have partial payout, which I think you reference in your report.

If we look at these numbers and that 12% of $19.3 billion, which is about $2.3 billion, does that mean how much it would cost if we just wanted to cover people who aren't covered today? Is that a fair assumption?

[Carleigh Malanik]

I would say that it would be a real ballpark estimate. You would have to know what drugs in particular those patients are not buying or not buying as much of. There could be much higher costs or much lower. It's hard to say.

[The Chair, Liberal, Bill Casey]

Thank you. The time is up.

Mr. Davies, please.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you, Chair.

Thanks to all of you for your fine work. You've done groundbreaking work that I think will form the basis for what I think should be the next expansion of a national social program in this country.

I want to start with a basic description. I read the totality of your report, and here's the proposition I would like to put to you. It seems to me that you took prudent assumptions—let's call them conservative assumptions—you ignored certain cost-saving measures, you used perhaps one of the widest formularies in the country, if not the widest, which is Quebec's, and your net conclusion was that, using that approach, we would have, as a nation, saved about $4 billion in 2015-16. Do I have that correct?

[Carleigh Malanik]

Yes, you do.

[Jean-Denis Fréchette]

I would just say that it's a balanced approach, not only prudent, but balanced in terms of what we saw in the literature and so on.

[Don Davies, NDP, Vancouver Kingsway, BC]

Right, and I congratulate you on that approach, too, because there are a lot of assumptions that we make in these costing premises.

I want to go through some of these cost savings that have been identified throughout our study and by other stakeholders that I think you did not include as savings measures in your report. One of them I think you've already identified. Am I correct in assuming that potential savings from a streamlined administration system are possible but were not costed in your report? Is that correct?

[Carleigh Malanik]

Yes, and it is something that we did indicate in our report.

[Don Davies, NDP, Vancouver Kingsway, BC]

Okay.

Second, many have identified the current cost in our system of what's called “cost-related non-adherence”, which is the technical term for what happens when patients get more seriously ill from not taking their medication. Is that an area of potential savings that you did not put a savings figure on in this report?

[Carleigh Malanik]

Yes, that is correct.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thanks.

With regard to a fixed dispensing regime or a disciplined formulary, I think you've identified that in your report as another source of potential savings for pharmacare, but you also didn't put a number on that in terms of reducing the cost of pharmacare to Canadians. Do I have that right?

[Carleigh Malanik]

I'm sorry, but I'm not familiar with the term “fixed dispensing” fees.

[Don Davies, NDP, Vancouver Kingsway, BC]

I think you commented on dispensing fees. There was another term you used—

[Mostafa Askari]

Markups.