Thank you for inviting me again.
My name is Stephen Frank and I am the president and CEO of the Canadian Life and Health Insurance Association (CLHIA). Joining me today is Karen Voin, vice-president, Group Insurance and Anti-Fraud, also from CLHIA.
On behalf of the life and health insurance industry, thank you for giving us the opportunity to speak to you again as you finish your consultations on this very important matter of pharmacare.
Our association accounts for 99% of Canada's life and health insurance business. Across the country, 24 companies offer extended health coverage to more than 28 million people. Our industry includes not-for-profit organizations such as Blue Cross, benevolent associations and larger companies. We work with employers to provide Canadian workers with extended health coverage for a wide range of prescription drugs, paramedical services, such as psychologists, physiotherapists and chiropractors, as well as eye exams, lenses and glasses, and dental care, just to name a few of our coverages.
Canada's life and health insurers believe that all Canadians should be able to access affordable prescription drugs. Today, prescription drug costs are too high, and we know there are gaps in coverage. However, meaningful reductions in prices and improving access for all Canadians can be achieved today within our current system.
Canada's insurers are keen to help and believe we have much to offer. Several initiatives set out by both the federal and provincial governments will make a difference.
The proposed amendments to the regulations of the Patented Medicine Prices Review Board (PMPRB), are important because they will provide the PMPRB with the necessary tools to reduce costs. We fully support the direction the PMPRB has taken and will continue to work with the authorities to better assist them.
As well, through the pan-Canadian Pharmaceutical Alliance, or pCPA, this will also help bring down the costs for public plans. We believe the federal and provincial governments are on the right track, but they need to go further. The current approach only leverages half the buying power of the Canadian market in any negotiation, and it leaves those Canadians with private insurance or who are paying out of pocket to fend for themselves. This situation results in prices that are higher than they need to be, and it also entrenches unequal prices for the same drugs across Canada.
The good news is that there is an easy way to address both these shortcomings. Private plans need to be included in the pCPA. This would allow governments to negotiate the best prices possible, using the entire Canadian market volume, while ensuring that all Canadians are treated fairly and pay the same price for the same drug.
Ultimately, Canada's life and health insurers believe the best solution to ensuring sustainable prescription drug coverage is one that blends together the strengths of both the public and private systems. We work together with employers to offer access to a wide variety of prescription drugs through employer-sponsored benefit plans. Canadians value their benefit plans, which provide them with rapid access to over 12,000 prescription drugs. The Sanofi survey in 2016 points to the importance that employees place on their drug coverage: 94% of them indicate that drug plans are very important or somewhat important. One of the reasons employees value their drug plans so highly is that new drugs are approved more quickly than they are in private plans, providing Canadians with faster access to new and innovative medicines, generally with fewer restrictions.
However, there are gaps in the Canadian system, and understanding the gaps is crucial if we're to develop appropriate and targeted solutions. There are Canadians who do not have access to a public or private plan or perhaps do not have adequate coverage. We need to focus and coordinate our efforts to understand where these gaps are and to work on achievable and targetable solutions.
The report that the parliamentary budget office tabled with this committee a few weeks ago highlighted the costs of moving to a universal single-payer system, as well as the savings that could be garnered from bulk purchasing. Even with optimistic assumptions, the costs would be nearly $20 billion for the federal government. As for any estimated savings, the bulk of these are estimated to arise from negotiating better drug prices by using the full buying power of the Canadian market. As I outlined above and want to stress, there's nothing stopping us from moving in that direction now by including insurers in the scope of the pCPA.
The bottom line is that the projected savings to the overall drug spend can be achieved today with minimal disruption and without taking away access to the wide variety of prescription drug plans that are so highly valued by Canadian employees.
In closing, I would say that our industry is committed to working closely with governments to help improve Canada's health care system.
Thank you for your time today. I would be happy to answer any questions you may have.