Health Committee on Oct. 19th, 2017

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

I have one quick question about out-of-hospital drugs.

For the Quebec formulary, it wasn't clear to me whether out-of-hospital drugs for cancer and palliative care were covered. With the huge aging population that we have, I think that's going to be a huge cost.

Do you have any information on that, Mr. Gagnon or Mr. Morgan?

[Dr. Marc-André Gagnon]

The problem we have right now with this fragmentation between the way we pay for drugs and the way we pay for other health care services in an establishment, in hospitals, is that we have a lot of cost-shifting. With the new wave of oral anti-cancer drugs, for example, we don't need to treat you in the hospital, but then you need to pay for your cancer drugs yourself.

Many of the cases we see.... Last week we had a study that showed that half of the new cancer drugs arriving in the market did not show any therapeutic benefit compared to what already exists. The thing is, if you have a new treatment that instead of requiring, let's say, 10 injections in a month, requires only four injections in a month, you can be sure that for the patient this is something more interesting, but if the price difference between four and 10 injections is $60,000 per month, then you need to ask whether we should be paying for that. Then you can say, “Well, this is fantastic. Private coverage does accept to pay for that.” In terms of cost-effectiveness, that might not be the best solution.

[The Chair, Liberal, Bill Casey]

Mr. Davies is next.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you, Mr. Chair.

Thank you for being here.

We return from whence we began. Dr. Gagnon, Professor Morgan, we called you back to bookend this because you testified at the beginning of this study some 18 months ago. I'm going to be addressing my questions to you, if I can, as two of the world's pre-eminent researchers on pharmaceutical policy.

It seems to me now that every serious, non-biased, peer-reviewed study of universal pharmacare in Canada concludes as follows: one, that millions of Canadians can't afford the medicine prescribed by their doctors; two, that Canadians pay among the highest prices for pharmaceuticals in the world; three, that we can ensure that universal coverage could be brought to all Canadians through a public system; and four, that we will save billions of dollars collectively in doing so.

My first question is, Dr. Gagnon, Professor Morgan, do I have those points correct?

[Dr. Marc-André Gagnon]

Yes, absolutely.

[Prof. Steven Morgan]

Yes. I guess the PBO report is only the latest.

[Don Davies, NDP, Vancouver Kingsway, BC]

Professor Morgan, I just want to repeat this. It appears to me, in my review of the PBO report, that the PBO's conclusion that we would save $4.2 billion a year, every year for the next five years, was based on using the widest formulary in the country—that's Quebec's formulary—and making the most conservative assumption that we would save 25% through bulk buying, when it appears to me that every other comparative jurisdiction we've looked at achieved savings higher than that through bulk buying. Finally, the PBO did not even assign cost savings to a number of known cost-savings drivers, such as cost-related non-adherence or streamlining the administration. Is that a fair summary?

[Prof. Steven Morgan]

Yes, it used an extraordinarily open formulary in the context of Canadian public drug plans. It had conservative assumptions about price savings, when even our analysis vis-à-vis the U.S. veterans administration right here in North America, right south of the border, shows that they save about 50% relative to Canada on generic drugs and about 40% relative to Canada on brands. We know they were conservative on price estimates.

They also didn't factor in some of the therapeutic substitution effects that could happen if we have an evidence-based formulary. Part of that was because they assumed it would be the Quebec formulary. If you have an evidence-based formulary, there are billions of dollars in additional savings to be had.

That's the job of a public drug plan. It's to say it's about value for money. We're going to say yes to covering everybody when the drug's the right price and the right value and we're going to say no when the drug is not the right value. That's where purchasing power comes from.

To the insurance industry's claims that they should be able to be part of the deals that the public drug plans negotiate, when part of your negotiating team says they'll buy anything at any price always, they're not increasing your negotiation power. It's like going into the auto dealer with your partner, who says he wants this car right away and doesn't care what it costs. You're not going to walk away with a good deal.

You have to have buying power. You have to have purchasing partners who are willing to say no when the pricing terms aren't correct.

[Don Davies, NDP, Vancouver Kingsway, BC]

Professor Morgan, I think it's obvious, but I'm going to ask this question. Given the nature of Canadian federalism and the fact that health care is constitutionally under provincial power, it appears to me that any attempt to set up a national universal pharmacare system will require federal and provincial and territorial discussions. Do I have that correct?

[Prof. Steven Morgan]

Yes. Almost without doubt, the provinces will either have to cede authority in some way—and some lawyers and health lawyers have looked into this—or we're going to need to sit down and negotiate.

This is consistent with Canada's framework for national health and social programs, through which we need to meet fundamental human rights. The federal government enables all the provinces to meet those rights because we provide grants, but we also hold them to meeting those rights by making those grants conditional on performance.

[Don Davies, NDP, Vancouver Kingsway, BC]

That's right. I suppose that other than a federal stand-alone financed program, it would require discussions with the federal, provincial, and territorial governments, correct?

[Prof. Steven Morgan]

Yes.

[Don Davies, NDP, Vancouver Kingsway, BC]

Okay.

Are we missing any barriers, any reasons, any information, or any vexing problem that exists policy-wise that would prevent us from commencing those discussions, say, sometime in the next year, Dr. Gagnon?

[Dr. Marc-André Gagnon]

Absolutely nothing. The Council of the Federation has taken major steps in that direction in building the pCPA, building collaboration among provinces. I would really like to see something like pCPA with CADTH and PMPRB merging to create a national agency to manage a national pharmacare system with the collaboration of the provinces. We have this already, for example, with Canadian Blood Services, by the way, which is a fantastic example of this type of collaboration that leads to fantastic results.

[Don Davies, NDP, Vancouver Kingsway, BC]

Yes, it's puzzling to me.

Tommy Douglas envisioned pharmacare decades ago. I think the Hall report, if I have that correct, recommended some form of pharmacare. I think the Liberals and the NDP have campaigned on universal pharmacare at one time or another in the last 20 years, but there always seems to be barriers to actually starting the implementation, so I want to remove those barriers.

I want you to give this committee a recommendation.

Let's say, Dr. Morgan, that you are Prime Minister and, Dr. Gagnon, that you are Minister of Health. What does the system to bring in universal pharmacare look like? Who does the formulary, who pays for it, and how does this work?

[Prof. Steven Morgan]

I think we already have the institutional capacity to do an excellent job of running a drug plan. Let's face it: our provinces already do a lot of work on this, and we have world-renowned experts and agencies like CADTH. We now have really good capacity within the pCPA to do price negotiations.

As per the “Pharmacare 2020” report, the summary of our recommendations after many years of research, we envision this as a federal, provincial, and territorial cost-shared program with a national agency that is given a defined budget to manage and that manages a formulary to that budget on behalf of its FPT partners. Real money comes in from the federal government.

The current medicare deal is that the federal government cost-shares about 25% of the cost of medicare services. That might be a fair starting point for negotiating a cost-shared pharmacare program.

You establish a national formulary that becomes the standard benefit for all Canadians. If provinces want to top up beyond that with their own money that's independent of the national agency, that would be fine. Of course, if employers and unions want to negotiate gold-plated drug benefits for medicines that aren't cost-effective, they're welcome to do that as well.

We definitely see value in an evidence-based, budgeted, national program that at least manages the formulary that defines the standard benefit for all Canadians. We also see value in that formulary being reasonably comprehensive, as it is in comparable countries abroad.

[The Chair, Liberal, Bill Casey]

Your time is up.

Dr. Eyolfson is next.

[Doug Eyolfson, Liberal, Charleswood—St. James—Assiniboia—Headingley, MB]

Thank you, Mr. Chair.

Thank you all for coming. It's good to see you all again.

Mr. Frank, we're talking about these different figures. We have different sources and different figures. A lot of the research we've read, particularly the work from Dr. Morgan, has a lot of very heavily referenced, evidence-based, peer-reviewed research.

The figure you're saying—that it would cost us $20 billion a year—tends to fly in the face of that. From what peer-reviewed evidence do you get that figure?

[Stephen Frank]

The $20 billion was in the parliamentary budget officer's report.

[Doug Eyolfson, Liberal, Charleswood—St. James—Assiniboia—Headingley, MB]

For instance, you're not saying it would save us $4 billion a year.

[Stephen Frank]

I think you can assume you're going to cut the cost of every drug in Canada by 25%. Work out the math; it will be a lot of money.

[Doug Eyolfson, Liberal, Charleswood—St. James—Assiniboia—Headingley, MB]

Yes, but—

[Stephen Frank]

Yes, there is money there if you can cut the cost of those drugs, that's for sure, and we're not disputing that. The way you're going to get most of those savings is by bulk purchasing those drugs and doing a better job of negotiating.

[Doug Eyolfson, Liberal, Charleswood—St. James—Assiniboia—Headingley, MB]

I know, but that's not my question.

[Stephen Frank]

Those are the facts, and that's what I was referring to.