No, we did not.
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.
4:05 p.m.
Financial Analyst, Office of the Parliamentary Budget Officer, Library of Parliament
No, we did not.
4:05 p.m.
Liberal
Doug Eyolfson Liberal Charleswood—St. James—Assiniboia—Headingley, MB
Okay. If that were looked at and were less expensive, would it be a reasonable assumption that this would increase the savings in this model?
4:05 p.m.
Financial Analyst, Office of the Parliamentary Budget Officer, Library of Parliament
Yes, the total dollar value would be lower.
In our sensitivity analysis, we used P.E.I. as an example of a different formulary since we could already map it in our data. You can see there that the nominal value does decrease, but the savings are still roughly around $4 billion.
4:05 p.m.
Liberal
Doug Eyolfson Liberal Charleswood—St. James—Assiniboia—Headingley, MB
Okay. Thank you.
I was going to ask another question, and I will have to expand on it, because again my friend Mr. Davies asked it before I could. This is in regard to the secondary costs of non-compliance. We've discussed that at length. People who can't afford their medications become ill and present to the hospital system. Depending on the nature of their illness, that cost can be quite substantial. For diabetics who go into renal failure, dialysis is going to cost about $70,000 a year per patient.
The Morgan paper “Pharmacare 2020”, by Steve Morgan, says that with the system we have now, without the checks and balances of a national plan, we have “underuse, overuse, and misuse”. The best estimate is that it costs about $5 billion a year. Could we safely assume that if we had this in place and it prevented that, we might encounter savings that would be additional to the savings that you're suggesting?
4:10 p.m.
Assistant Parliamentary Budget Officer, Office of the Parliamentary Budget Officer, Library of Parliament
Typically in our costing of any program we do not take into account the secondary impacts like the one you mention. The reason for that is that it's very difficult to actually measure those things and come up with an estimate that is reasonable and acceptable to everybody. That's why. Those kinds of health effects are extremely difficult to identify and measure. Because of that, we don't really go there, typically, so we can't really say that the estimate of $5 billion is accurate or reasonable or not. We don't really look at that at all.
4:10 p.m.
Liberal
Doug Eyolfson Liberal Charleswood—St. James—Assiniboia—Headingley, MB
Okay. If at any time we were to ask that question at a future date, is that the kind of question we could ask?
4:10 p.m.
Assistant Parliamentary Budget Officer, Office of the Parliamentary Budget Officer, Library of Parliament
Well, as I said, typically we don't do that because it's extremely difficult and you're getting into the area of cost-benefit analysis of a policy. We don't really do that. We only look at the direct financial cost or benefits of any program in that form.
We're trying to be more objective in this, simply because once you get into those areas you're going to have to make huge assumptions, and it becomes somewhat subjective as to what the benefits are of something like that, for example.
4:10 p.m.
Liberal
Doug Eyolfson Liberal Charleswood—St. James—Assiniboia—Headingley, MB
Just to clarify, you said that you had savings of $4 billion if you used the Quebec model. What were the savings if you used the P.E.I. model?
4:10 p.m.
Financial Analyst, Office of the Parliamentary Budget Officer, Library of Parliament
It was just under $4 billion, I believe.
4:10 p.m.
Financial Analyst, Office of the Parliamentary Budget Officer, Library of Parliament
Yes.
4:10 p.m.
Liberal
Doug Eyolfson Liberal Charleswood—St. James—Assiniboia—Headingley, MB
Okay. Thank you.
That's all I can think of for now, except to say this, just as a follow-up to something my friend Mr. Webber said. He said that the assumption is that if anything in the government comes up with a figure, you can double it. I hope that's true in regard to the projected savings and that we could double it.
4:10 p.m.
Voices
Oh, oh!
4:10 p.m.
Liberal
The Chair Liberal Bill Casey
Thanks very much.
Now we go to our five-minute round, starting with Ms. Gladu.
4:10 p.m.
Conservative
Marilyn Gladu Conservative Sarnia—Lambton, ON
Thank you, Chair.
Thank you to all our witnesses here today for the work you've done on this great report.
The first question I have has to do with the $5 copay for the brand name. What portion of the $400 million savings in going to the generic is that $5?
4:10 p.m.
Financial Analyst, Office of the Parliamentary Budget Officer, Library of Parliament
I'm not sure I understand the question.
4:10 p.m.
Conservative
Marilyn Gladu Conservative Sarnia—Lambton, ON
I think the $5 copay is part of the total in going to the generic plan. In the cost estimate, it looked like the generic substitution was $20.4 billion. It brought the cost down to $20.4 billion from $20.8 billion, so that would be a difference of $400 million. Out of that $400 million, how much is that $5...? It just sounds like a really small amount if I think about the differential between what we pay for brands versus generics.
4:10 p.m.
Financial Analyst, Office of the Parliamentary Budget Officer, Library of Parliament
Those two items you point out are actually separate. The $5 copayment is revenue generated to the federal government. That's what we subtract at the end there, I believe, to get down to $20 billion in our presentation. The generic substitution we speak of is the cost of moving from a higher-priced brand to a lower-priced generic.
4:10 p.m.
Conservative
Marilyn Gladu Conservative Sarnia—Lambton, ON
Okay. Very good.
When we go to the total replacement of what's in place privately and publicly, is the intent to pick one provider company? The federal government today has one provider company. My concern is that if you get into a monopoly situation and everybody across the country is provided the same service by one company, the price usually goes up. I don't see that included in your analysis.
4:10 p.m.
Financial Analyst, Office of the Parliamentary Budget Officer, Library of Parliament
That is mostly outside our scope because we don't know how this program would actually be implemented. The cost estimate just reflects what the government would be paying, assuming that these drugs would be purchased at a pharmacy and then patients would seek reimbursement. The federal government would pay for that.
4:10 p.m.
Conservative
Marilyn Gladu Conservative Sarnia—Lambton, ON
You may not know this because it might not be part of the study, but was there any information about what the impact will be for pharmaceutical companies in Canada? How many jobs are involved in pharmaceutical companies in Canada that produce brands versus generics? Did you get any information on that?
4:15 p.m.
Financial Analyst, Office of the Parliamentary Budget Officer, Library of Parliament
Unfortunately, you are correct. We did not look at that in our report.
4:15 p.m.
Conservative
Marilyn Gladu Conservative Sarnia—Lambton, ON
All right. Too bad.
What has the reaction been to your report from the media and the stakeholders?
4:15 p.m.
Assistant Parliamentary Budget Officer, Office of the Parliamentary Budget Officer, Library of Parliament
I don't think we have had many reactions. We have seen positive reports, and we are seeing a lot of questions from the public in terms of how this program is going to be implemented. A lot of people are interested in the implementation of the program rather than just the cost, and the implementation is something that we did not really look at.
4:15 p.m.
Conservative
Marilyn Gladu Conservative Sarnia—Lambton, ON
I'm late getting to the dance on this whole study, but can you give me some information about the difference in drug formularies across the provinces? How different are provinces from Quebec? Is it a 10% different list or are they hugely different?