Health Committee on May 2nd, 2016

[W. Neil Palmer]

Let me start with the beginning of your question, which is why unions would reject it.

We don't have to look any further than British Columbia. Some of the unions there, the public service unions, accepted what they called a pharmacare tie-in type of plan, all being told that the plan was just as good as what they already had, and quickly found out that this wasn't the case. There were a large number of grievances, payments, and exceptions made to the so-called pharmacare plan because some members didn't have it.

What I'm suggesting, sir, is that if you take the plan away, people aren't just going to agree with it.

In some cases with the private plans, is it possible to have more appropriate prescribing? Certainly, and it's the same with the public plan. I don't think that's necessarily determined by whether it's public or private.

To come back to your earlier question, I think that, whether through the private sector or the public sector, every Canadian should have access to an affordable drug plan. I leave it either to this committee's making recommendations or to the individual provinces getting together, but there are clearly coverage gaps, and they need to address those. I think there's a great opportunity for the private insurance industry, which frankly I think has missed the boat on this, but as well for the public plans to provide a basic plan.

In Alberta, anyone can sign up to the provincial drug plan just by paying the premiums. Quebec has coverage. Now, they have issues with their model, but.... There are models out there, and I think we can get to a point where everybody has coverage.

[John Oliver, Liberal, Oakville, ON]

In your costing analysis, one of the costs that you didn't build in is the administration cost that private companies pay to their insurers or their agents to manage the accounts for them. What would you estimate that cost to be, and what percentage of the total cost of drugs in Canada is actually for administration through those private firms?

[W. Neil Palmer]

We didn't take it into account; nor do most other studies really take that into account in any significant way. But it's a few percentage points; it's not a significant number.

[John Oliver, Liberal, Oakville, ON]

I've heard that ranges of 12% to 14% markup on drug costs is the administration fee that—

[W. Neil Palmer]

That would seem very high.

[John Oliver, Liberal, Oakville, ON]

Okay. So you don't know what they are?

[W. Neil Palmer]

It would be single digits.

[John Oliver, Liberal, Oakville, ON]

In your report, you also said that the 2020 study didn't “consider other qualitative consequences that loss of private drug plan coverage will have on Canadians including”, and then you said the “impact on the ability of pharmacists to serve patients”. Why would you conclude that the basis on which a pharmacist is being reimbursed, whether through a public plan or a private plan...that the public plan would impair their ability to provide service to Canadians?

[W. Neil Palmer]

Currently the public plans pay a lower professional fee in most jurisdictions than the private plans may pay; it could be $7 instead of $10. Even though the Morgan study assumed that the revenues would all be the same, in practice they pay a higher dispensing fee for private plans, and certainly cash-paying customers pay more, so there's going to be a loss of revenues to pharmacists.

[John Oliver, Liberal, Oakville, ON]

Do I have time for another question?

[The Chair, Liberal, Bill Casey]

No, your time's up, I'm sorry.

Mr. Webber, you have five minutes.

[Len Webber, Conservative, Calgary Confederation, AB]

Mr. Chair, I'm such a kind and giving individual, I'm going to give my honourable doctor colleague the first couple of questions.

[The Chair, Liberal, Bill Casey]

You're very kind. He needs all the help he can get, though.

[Len Webber, Conservative, Calgary Confederation, AB]

Exactly.

[Colin Carrie, Conservative, Oshawa, ON]

I want to say, too, that I appreciate your comments, Mr. Palmer, on the administrative cost of private versus public plans, because I've really never heard of government in many ways administering things a lot more cheaply than the private sector without competition. It's nice to get some realistic numbers there.

[W. Neil Palmer]

If I may add, most of the provincial plans use private administrators to adjudicate most of their plans.

[Colin Carrie, Conservative, Oshawa, ON]

Okay. Thank you for that.

You did mention something about private versus public. I think you mentioned that right now, private coverage is about $8 billion, so that if we went to a monopoly model, we would shift $8 billion to the public plan. Is that accurate, that governments around Canada or the taxpayers would have to come up with $8 billion?

[W. Neil Palmer]

That's assuming that all the private coverage moved over. There would be some savings because some drugs on private plans would no longer be covered. Depending on the national pharmacare model you put in place, $8 billion or so, in 2015 dollars, would be shifted over to the federal government. Now, to the extent they can find savings, maybe that number would go lower, but it would be a significant move, assuming it's the federal government. I guess the concern is, what are you getting in terms of health outcomes by making that shift? You're simply moving all the dollars and costs over, and everybody has the same plan. It may address that equity question, but it's certainly not improving the health outcomes generally for the people who already have coverage.

[Colin Carrie, Conservative, Oshawa, ON]

One of the things I think I'd like to find out is what it would cost if we move in this direction. When you were talking about defining the problem, you mentioned the national formulary. I think you said there was already 90% similarity and that it would replicate something already in place. What would be the cost to taxpayers if we did replicate something like that? Do you have any idea?

[W. Neil Palmer]

I think you could create the national formulary. The question is, what do you with it?

[Colin Carrie, Conservative, Oshawa, ON]

Would it cost more or, as you said, would it replicate what's already in place?

[W. Neil Palmer]

There are a lot of practical problems. For example, with some cancer drugs, each province has specialized cancer protocols it puts in place. In British Columbia, there's the British Columbia Cancer Agency. In Ontario, it's Cancer Care Ontario. Down in the eastern provinces it's a bit different. If a national formulary is intended to be mandatory—thou shalt follow whatever is here—that's going to cause a lot of disruption in the sense that, for some of these highly specialized technologies, people will have to change their protocols and the way they administer care. If, on the other hand, it's simply a reference guide, well, it's not going to cost a whole lot. It's fairly easy to put forward. We can list all the drugs that people have in common and the way they're funded.

I'll add another example. In Ontario the exceptional access program is used to stay on top of drugs that are highly specialized for multiple sclerosis, pulmonary hypertension, and a variety of other conditions, to make sure the province can track patients as they progress. That's how Ontario does it. Multiple sclerosis in Nova Scotia goes through a clinic at Dalhousie. They do it differently.

Will a national formulary force everybody to do it the same way, or will those decisions on who gets what drug be made in Ottawa? I think it would be significant. Those are where the costs would be. If it's simply a reference guide that these are the drugs that should be reimbursed, and the provinces still decide, then it will be fairly inexpensive. It might be informative to the extent that it identifies where there are some discrepancies across the jurisdictions.

[Colin Carrie, Conservative, Oshawa, ON]

Okay, thank you.

[Len Webber, Conservative, Calgary Confederation, AB]

Great. I do have a quick question for Mr. Dempster on his graphs. Thank you for them, as I'm very much a graph person myself.

On one particular graph on page 3, I see that B.C. has a significantly lower number of new medicines added. Under a national formulary, provinces like B.C., which have such a low number, would likely benefit the most then from this new national formulary or national drug program. Is that correct?

[William Dempster]

That's a great question and a very good observation. Especially on the far left, at 14%, it looks like the proportion of products that B.C. is reimbursing hasn't changed compared to a decade ago. I had this conversation with a senior drug plan manager in B.C. a couple of weeks ago, and asked him just that. He said that of all of those drugs that are available elsewhere, closer to 30% are actually available. They're just not listed publicly. It's a matter of individual adjudication and getting special forms filled out by doctors. However, they are reimbursed. These just don't actually show up in this data source, which is IMS Brogan's health analytics, the PRA quarterly data source.