Was it markups?
Evidence of meeting #73 for Health in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was drugs.
A recording is available from Parliament.
Evidence of meeting #73 for Health in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was drugs.
A recording is available from Parliament.
4 p.m.
Financial Analyst, Office of the Parliamentary Budget Officer, Library of Parliament
Was it markups?
4 p.m.
Financial Analyst, Office of the Parliamentary Budget Officer, Library of Parliament
Oh, I see. We assumed they would remain as currently observed.
4 p.m.
NDP
Don Davies NDP Vancouver Kingsway, BC
Right, so here's my question about it. I think you've identified that as a potential area of further cost savings that could exist, but you didn't put a figure on it.
4 p.m.
Financial Analyst, Office of the Parliamentary Budget Officer, Library of Parliament
For this one, I'll put a point of caution on it. It could be that you could negotiate these lower, or it could be that pharmacists may need to negotiate a higher fee in order to offset any other rebates they might have been receiving from the drug companies. On that one, we're not exactly sure about which way it would move.
4 p.m.
NDP
Don Davies NDP Vancouver Kingsway, BC
Okay.
On existing tax subsidies, your report indicated the fact that because “the federal government does not include benefits received” by employees from employer-sponsored health care plans in an employee's taxable income, it is an indirect tax subsidy. I think you estimated that at about “$2,605 million in 2016”.
Would I be correct in assuming that if we went to a system that cancelled those existing tax subsidies under national pharmacare, it could be a source of additional savings to the government? Do I have that right?
4 p.m.
Financial Analyst, Office of the Parliamentary Budget Officer, Library of Parliament
Again, it should, but it would depend on whether wages and salaries would be moved to compensate for that loss of benefit.
4 p.m.
NDP
Don Davies NDP Vancouver Kingsway, BC
Right. That's assuming that it would no longer be necessary, but that could be a source of potential savings.
4 p.m.
Financial Analyst, Office of the Parliamentary Budget Officer, Library of Parliament
Potentially, yes.
4 p.m.
NDP
Don Davies NDP Vancouver Kingsway, BC
Yes.
With regard to something that was touched on by Mr. Oliver, you also used what I will call a conservative discount rate of 25% on a truly national bulk-buying program. We've heard references to the pan-Canadian pharmaceutical alliance, but my understanding is that it's a public purchasing plan. It's not buying all the drugs for all private and public plans in the country.
My information is that the U.S. veterans association pays about 50% less than the Canadian public plans pay for generic drugs, and 40% less than current Canadian list prices. A study in health care policy found that New Zealand paid 51% less than British Columbia for four large established classes of drugs. A recent study by the Patented Medicine Prices Review Board, in comparing the prices of prescription generics in Canada to other industrialized countries, found that for most programs potential cost savings of 40% to 50% seemed feasible.
Would I be correct in assuming that your 25% assumption is probably prudent and it is possible that we achieve savings beyond 25% over current prices from bulk buying?
4 p.m.
Financial Analyst, Office of the Parliamentary Budget Officer, Library of Parliament
It's certainly a possibility. Again, it would all depend on how well the federal government is able to negotiate for reduced prices for this particular list of drugs.
4 p.m.
NDP
Don Davies NDP Vancouver Kingsway, BC
Of course, but it seems that international experience as well puts you directly.... In real life, what other countries and jurisdictions are experiencing are savings of 40% to 50% when they go to national bulk buying, but you used a figure of 25%. I'll put it to you again. Would you agree with me that 25% is likely a prudent estimate of the savings that may come from national bulk buying?
4 p.m.
Financial Analyst, Office of the Parliamentary Budget Officer, Library of Parliament
I'll go this far: 25% is our best guess. We really don't know more of what was in the literature in Canada.
4 p.m.
NDP
4 p.m.
NDP
Don Davies NDP Vancouver Kingsway, BC
We passed a motion at this committee, which said:
That, in relation to the study of the Development of a National Pharmacare Program, the Chair contact the Parliamentary Budget Officer to:
a. request that his analysis be finished by May 1st, 2017; and that, if not feasible, the Parliamentary Budget Officer be invited to appear before the Subcommittee on Agenda and Procedure to negotiate a schedule; and
b. request that his analysis include the World Health Organization formulary.
Obviously, the first part of it, May 1, came and went, but I'm just curious. Were you ever contacted by the chair to include in your analysis a comparison of the World Health Organization formulary, in addition to the Quebec formulary? I notice that it's not in your report to cost out.
4:05 p.m.
Parliamentary Budget Officer, Library of Parliament
No. We had a meeting following the motion, when we discussed the motion with the chair, and it was decided that we would do exactly what the motion said about the RAMQ, and it was the beginning of our study. We told the chair that we may have a follow-up to do eventually on this report.
4:05 p.m.
NDP
Don Davies NDP Vancouver Kingsway, BC
My question is, were you ever contacted to then include also the World Health Organization formulary?
4:05 p.m.
Parliamentary Budget Officer, Library of Parliament
At the beginning...?
4:05 p.m.
Parliamentary Budget Officer, Library of Parliament
Not that I remember during the meeting.... When we had the meeting just to discuss what we would do and so on, we gave the chair the procedure that we have for all our reports: when we deal with a committee or an individual, we will present the methodology, what will be the approach, and then there's an agreement that we will follow it. At the end of that, if there is some follow-up to do, or additional information, we will be happy to do it. The World Health Organization was discussed in the context of follow-up eventually.
If I may, Mr. Chair, I want to come back to one thing.
You mentioned the 25%. Yes, it is prudent. It is a balance. I can tell you, for example, that the Quebec government already negotiated something else with its own suppliers, which is much higher than that. It is not yet in force in Quebec, but they reached an agreement of almost a 38% reduction on generics. You can see that with the purchasing power, if it's there at the national level, certainly you can go way beyond the 25%.
Thank you.
4:05 p.m.
Liberal
The Chair Liberal Bill Casey
Thanks so much.
Mr. Davies, as I recall—and I stand to be corrected—when we first gave the criteria for the study and the parliamentary budget officer came back and said he couldn't meet the May 1 deadline, we agreed, I think as a committee, to accept the Quebec formulary, instead of the WHO formulary. I might be wrong, but that is my recollection. We went with the Quebec formulary.
4:05 p.m.
NDP
Don Davies NDP Vancouver Kingsway, BC
It's my understanding, Mr. Chair, that initially we did give the parliamentary budget officer the Quebec formulary and later on passed another motion that said we would also like to see a costing of the WHO formulary so that we'd have two. It's not a big deal. I'm just trying to find out why it's not there.
4:05 p.m.
Liberal
Doug Eyolfson Liberal Charleswood—St. James—Assiniboia—Headingley, MB
Thank you, Mr. Chair.
My friend Mr. Davies is very adept at stealing my questions today—not deliberately—and I would like to go further on that. We do know that the World Health Organization formulary is a fair bit less inclusive than the Quebec formulary. At any time, did you have access to the expense of the WHO formulary relative to the Quebec formulary? I know that it wasn't included in this.