Thank you for the invitation to be here today.
By way of background, I'm an internal medicine physician with a master's degree in health policy, planning, and financing. I spend most of my time working for Health Quality Ontario, a government agency in Ontario with the responsibility to be the primary adviser on the quality of health care in the province. I continue to practise general internal medicine at St. Michael's Hospital in Toronto. Prior to joining Health Quality Ontario in 2013, I was also a researcher with an interest in pharmaceutical policy, among other topics. For three or four years, I served on the committee to evaluate drugs, where Anne continues to serve. That's the committee in Ontario that makes recommendations to the provincial government about which drugs should be publicly funded and which drugs should not.
Last year, the minister of health in Ontario, the Honourable Dr. Eric Hoskins, hosted a round table where he invited I think all of the ministers. Eight ministers, including Minister Hoskins, participated. I attended the round table, and my colleagues at Health Quality Ontario and I wrote a report summarizing the key points made during the day, the areas of broad consensus, and also the areas of disagreement. The summary report is the main component of the brief I submitted, and I think most of you, or all of you, should have that in front of you. I was going to take the opportunity to highlight many of the points in that document, but I think in the interest of time, I'll probably truncate my remarks to some degree.
One key point I would like to make is on page 8 of the report, and that is that the growth in spending on prescription drugs in Canada over the last decade has been much greater than in all of the countries that we would generally compare ourselves to. I suspect you probably heard this finding from other witnesses who have presented here.
One point I would make though that's not in the report is that during the same period, there was no growth whatsoever in per capita prescription drug costs in the veterans affairs system in the United States. You might ask how it is the veterans affairs system is able to keep drug costs essentially flat, while in Canada drug costs have increased or probably doubled over the last decade on a per capita basis. Basically, the reasons are simple.
First of all, the veterans affairs system has a defined formulary. Second, they engage in aggressive price negotiation. Third, and this echoes one of the points Anne made toward the end of her presentation, the veterans affairs system supports intensive efforts to ensure high-quality prescribing by reaching out to physicians, and by putting in place a variety of mechanisms to help physicians prescribe in an evidence-based way.
A second point I would like to make is on page 10 of the report. It's that public subsidization of private insurance as it is done in Canada is inherently inequitable because people with higher incomes receive a larger subsidy than people with lower incomes. In effect, it's a regressive subsidy that goes against the general principle that government-financed programs are generally either universal or preferentially support those with lower incomes.
The third and final point I would like to make from the report starts on page 10. It's a bit of a longer point so I'd ask members of the committee to bear with me for a couple of minutes.
According to the experts who attended the round table, private health insurance plans in Canada have been somewhat overly expansive in their coverage and also overly permissive in their approach to guiding and monitoring prescribing practice. I'm sure Anne sees this in her practice. I see this routinely in my own practice. I'll give you an example. It's not unusual to see a patient with type 2 diabetes who has private insurance to be prescribed a new drug that costs $3 a day, when an older drug that costs pennies a day would be equally effective. In fact, the Canadian Diabetes Association, which produces clinical practice guidelines for type 2 diabetes, recommends the cheaper drug metformin be prescribed first for the vast majority of patients, not because it's cheaper, but rather because we know it works.
Quoting from the guidelines, the guidelines say:
The recommendation to use metformin as the initial agent in most patients is based on its effectiveness in lowering BG, its relatively mild side effect profile, its long-term safety track record, its negligible risk of hypoglycemia and its lack of causing weight gain.
If you're unlucky enough to have type 2 diabetes, this is probably the drug you want, at least as first-line treatment, not the expensive one. You might ask if it really matters that patients with private insurance are getting the drug that costs $3 a day when they would be equally well served, maybe even better served, by a drug that costs pennies a day. You might say to that question, “Well, the answer is no. Private insurance is a private issue. It doesn't really matter.” But there are several reasons why private insurance is not just a private matter. One I've alluded to already, which is that private insurance in Canada is often publicly subsidized.
I want to focus here on another reason, which is that virtually every physician or nurse practitioner in Canada who prescribes medicines, both prescribes to patients who hold private insurance and prescribes to patients who have public coverage. The prescribing decisions for patients with private insurance may influence prescribing decisions for those with public coverage. That sounds like a hypothesis, but we actually have evidence that this happens.
Going back to the diabetes examples I just cited in Ontario, for patients with public coverage, the formulary committee that Anne continues to serve on and that I previously served on provides advice to physicians that they should use the cheaper diabetes drug first and only add the more expensive drug as second-line or third-line treatment. Of course, that makes sense from a value-for-money perspective.
Nephrologist Ainslie Hildebrand and I did some research along with our colleagues to see whether physicians follow this guidance. We published our findings in a journal called Healthcare Policy which is publicly available. When a patient had been prescribed the expensive drug, we looked back to see whether they had previously received the cheap drug, which all of them, or virtually all of them, should have received, and about half the time there's no record of the patient ever having been prescribed the cheaper drug.
In the public plan where you would hope that physicians are routinely prescribing the cheaper drug first, it seems to only happen about half the time. We don't know whether that's because doctors don't know about the guidance the government provides or whether they know about it but just aren't following it. Because this is in the public plan, clearly the costs of what we might call low-value prescribing are borne by all of us.
The report that I've enclosed with my brief lists several areas where there was broad consensus at the minister's round table as well as several issues where there wasn't consensus and what we have labelled as issues that need to be resolved. I'll refer committee members to the brief rather than go through each of those points, but I would like to make a couple of additional remarks that might build on some of Anne's comments.
There's no doubt that new prescription drugs have dramatically improved the health of millions of Canadians with a variety of diseases: cancer, heart disease, HIV, hepatitis C, literally dozens of different diseases. The problem, of course, with new prescription drugs is that they cost a lot of money, hundreds of thousands of dollars sometimes, as Anne described in her presentation.
Using cost-effectiveness research to help decide what drugs to put on a formulary is basically a technical way of saying that what we want to do is get the biggest bang for our buck. If we spend $100,000 on a drug that provides only a small benefit—let's say it extends the life of someone with advanced cancer by two months—that's $100,000 less that we have to spend on home care, mental health care, or something else that is a priority.
Anne described what happens at a typical committee meeting. Of course, committee members don't just look at value for money. They also think about other things like the type of disease that is being discussed, the availability of other treatment options, the size of the affected patient population, and equity issues. All of these issues are relevant, but value for money has to be a key consideration in every public drug plan. I think most of us, probably all of us today, would say that it has to be a key consideration in the development of a national formulary or a national pharmacare program.
In closing, I just want to say thanks again to the committee for studying this issue. It's such an important issue that matters to so many people across our country, particularly those who can't afford medications or who don't have private insurance. Thanks for the opportunity to be here today. During the question period, I'd be happy to answer any questions.