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.
4:30 p.m.
Liberal
Ramez Ayoub Liberal Thérèse-De Blainville, QC
Would I be wrong in assuming that the provinces could save quite a bit if they came together to increase their purchasing power, but without offering the exact same coverage? Would that sort of set-up be possible?
4:30 p.m.
Parliamentary Budget Officer, Library of Parliament
It's already the case now. There is an alliance that brings together all the provinces in negotiations in order to establish a national price. We could go even further.
4:30 p.m.
Liberal
Ramez Ayoub Liberal Thérèse-De Blainville, QC
According to the study that you've presented to us, to go further would mean that we would save more. Is that right?
4:30 p.m.
Liberal
Ramez Ayoub Liberal Thérèse-De Blainville, QC
There was another study published in 2015, the Morgan study.
Could you explain to us the differences as to methodology or cost analysis? There is a difference in savings between $7.3 billion in the Morgan study and $4.2 billion in the study you presented here today. Could you expound on that?
Many studies contain different figures. Obviously, the methodologies and analyses used aren't necessarily the same. How can we trust one study more than an other?
We would like to be able to quickly move ahead, because we desperately want to save money and offer the best service possible to Canadians when it comes to drug accessibility.
4:30 p.m.
Parliamentary Budget Officer, Library of Parliament
Thank you for the question.
I will give Ms. Malanik a minute to prepare her answer to your question.
While we are waiting, I can state that the authors of the Morgan study, which was done in 2015, used a different formulary. The analysis is therefore not the same. They also used data that was older than ours. We spent money in order to obtain the most recent data possible and this is exactly what allowed us to develop the model which we've presented today.
I don't know, Carleigh, if you want to add something.
4:30 p.m.
Financial Analyst, Office of the Parliamentary Budget Officer, Library of Parliament
In particular, if you're speaking about his 2015 article that came out, you're exactly right: the differences stem mostly from methodology and a little bit from scope. It's our understanding that we're using a formulary, whereas his 2015 article didn't use a particular formulary. It was even more encompassing.
Beyond that, it was the assumptions around, for example, an increase in volume due to lower costs to the patient. Generic substitution effects in our database were targeted based on what we observed nationally, whereas in Professor Morgan's report he used rates observed in public plans and targeted a specific rate. The prices themselves as well were targeting other nations, as opposed to using a 25% price discount, and they varied by the drug class.
Finally, I believe that we were able to calculate—more or less—the pharmacists' fees and the markups together, whereas Professor Morgan was only able to estimate them and try to guess at what they were.
4:30 p.m.
Liberal
4:30 p.m.
NDP
Don Davies NDP Vancouver Kingsway, BC
Thank you.
I just have some quick snappers.
You said your report was peer reviewed. Who reviewed it?
4:35 p.m.
Financial Analyst, Office of the Parliamentary Budget Officer, Library of Parliament
We do have a list that is provided on the cover. We had two academics. I'm sorry, but I don't have the latest draft.
4:35 p.m.
NDP
4:35 p.m.
Financial Analyst, Office of the Parliamentary Budget Officer, Library of Parliament
Yes.
4:35 p.m.
Financial Analyst, Office of the Parliamentary Budget Officer, Library of Parliament
We had the academics and then the representatives from the Patented Medicine Prices Review Board and the Canadian Institute for Health Information.
4:35 p.m.
NDP
Don Davies NDP Vancouver Kingsway, BC
Thanks.
On cost-related non-adherence, it seems to me that you wisely didn't try to estimate, because of the reasoning you gave, Mr. Askari, but was there any research already done by independent sources that have attempted to estimate what the savings might or might not be from cost-related non-adherence? I know you couldn't do it, but could anybody else do it?
4:35 p.m.
Assistant Parliamentary Budget Officer, Office of the Parliamentary Budget Officer, Library of Parliament
I'm sure there are others who can do it and have tried to do it. I am not aware of any in a specific study.
Jason, have you?
4:35 p.m.
Senior Director, Costing and Budget Analysis, Office of the Parliamentary Budget Officer, Library of Parliament
Yes, there was one paper in particular in a Canadian context, but it was going back to the mid-1990s. It was a very small sample size. It was very targeted to one single organization. It was over 20 years old. Even by PBO standards, we thought that it was probably precarious to base an assumption on that.
4:35 p.m.
Senior Director, Costing and Budget Analysis, Office of the Parliamentary Budget Officer, Library of Parliament
We did. It was an exhaustive literature review.
4:35 p.m.
NDP
Don Davies NDP Vancouver Kingsway, BC
I'm just going to put a very blunt question to you. This is my conclusion from your report. Using your conservative assumptions, leaving out certain cost drivers and using a wide formulary, you came to the conclusion, even in that context, that Canada would have saved $4.2 billion in 2015-16. Am I correct that it's likely the savings would be more than that? Isn't that the logical conclusion from leaving out five or six different cost savings that you've identified as cost savers but are things that you didn't put a number on?
4:35 p.m.
Assistant Parliamentary Budget Officer, Office of the Parliamentary Budget Officer, Library of Parliament
It is likely to be less than that. It's also likely to be more than that, because we are also making assumptions about increasing consumption, which again is an estimate, based on the numbers that we have in the literature. The consumption may actually be higher than that. That's a possibility.
4:35 p.m.
NDP
Don Davies NDP Vancouver Kingsway, BC
Yes, but Mr. Askari, you put a number on increased consumption and you get an estimate. I'm talking about five different areas—and there are actually a few more—that you identified in your report as cost savings, but you didn't attribute a dollar to them. Your own report says, “Here are other places where we could save money, but we don't want to put any cost savings on that.”
I'm making the assumption, which is what I'm putting to you, is that it's likely that if there are cost savings, that $4.2 billion, there would likely be even more savings. What am I missing there?
4:35 p.m.
Senior Director, Costing and Budget Analysis, Office of the Parliamentary Budget Officer, Library of Parliament
The reason that the parliamentary budget officer identified our number is that we call it a “balance number”. On the other side, of course, we end up having, for the 2015-16 savings estimate, a complete immediate phase-in of the actual negotiated savings with respect to negotiation around drug pricing. I think for most people in this room imagining that tomorrow the Government of Canada will go out and negotiate an immediate 25% savings.... It's simply not something that's going to happen overnight. As well—
