grootendorst national pharmacare€¦ · universal drug plan deductibles, by province province...

Doweneedanationalpharmacareprogram?

PaulGrootendorstLeslieDanFacultyofPharmacy,UniversityofTorontoDepartmentofEconomics,McMasterUniversity

December2017

overview

• Currentdruginsurancecoveragearrangements• Criticismsofcurrentarrangements• Possiblewaysforward

Currentdruginsurancecoveragearrangements

Currentdruginsurancearrangements

• Privatelyfunded• Groupcoverage(mostlyemployer-sponsored)[68%ofCanadians]

• http://clhia.uberflip.com/i/878840-canadian-life-and-health-insurance-facts-2017/1?

• Thesebenefitsaretaxfree• $1paidaswagetoemployee:taxedatindividual’smarginalrate

• marginaltaxratevarieswithincome• Marginalrate>50%insomeprovincesonincomeover$200,000

• http://www.taxtips.ca/marginaltaxrates.htm

• $1paidasdrugbenefitstoemployee:notax

Currentdruginsurancearrangements

• Twomaintypesofprivategroupcoverageavailable• administrativeservicesonly(ASO)plans(over½ofprivatecoverage)

• Groupsponsor(anemployer,university,etc.)paysfordrugcosts.• Athirdpartyfirmrunstheplan,handlingtransactionsbetweenpharmacyandemployer.

• http://www.benefitscanada.com/benefits/health-benefits/the-basics-of-aso-34925

• conventionalinsuredgroupbenefits• thegroupsponsorpaysapremium;inexchange,theinsurerwillcoverdrugcostsincurredbyplanbeneficiaries

• Thereisprivatedruginsuranceavailabletoindividuals,butthiscoverageisquitelimitedowingtoadverseselectionproblems

Currentdruginsurancearrangements

• Publiclyfunded• Provincialgovernmentdrugplans

• Seniors65+[15%ofCanadians]• Welfarerecipients[about5-6%]• Longtermcareresidents[1%]• Otherswithhighoutofpocket(OOP)drugcostsrelativetoincome(“universal”plans)[about5%]

• Federalgovernmentdrugplansforfirstnations,military[3%]

Currentdruginsurancearrangements

• Almostallplansrequirebeneficiarypayforportionofdrugcost• OOPpaymentsrepresent23%oftotalrx drugcosts• NationalHealthExpenditureDatabase,2015,CanadianInstituteforHealthInformation

• Amountpatientrequiredtopayforaprescriptioniscalledthe“copayment”or“copay”• Beneficiarycopaytakesavarietyofforms.Examples:• Deductible =beneficiarypaysfirst$xperyearthenplancoverstherest

• Mostuniversal planshavedeductiblessetatsomefractionofhouseholdincome• Coinsurance =beneficiarypaysy%ofprescriptioncost

Universaldrugplandeductibles,byprovince

Province Deductible amount

BritishColumbia 2-4%ofnetfamilyincome1

Saskatchewan 3.4%oftotaladjustedfamilyincome2

Manitoba 2.97%-6.73%oftotaladjustedfamilyincome3

Ontario 4%ofnetfamilyincome4

Quebec $1,0295

NovaScotia 0-33%ofadjustedfamilyincome6

Newfoundland 5,7.5or10%ofnetfamilyincome7

PEI 3,5,8or12%oftotalhouseholdincome8

Alberta9 Nodeductible.Premium+30%co-paytomax$25/rx

NewBrunswick10 Nodeductible.$800annualpremium+30%co-paytomax$30/rx

$12,598

$6,378

$10,235

Rxdrugspendingshares,Canada,2015,andspendingin$millions

public outofpocket privateinsurer

SourceCIHINHEXhttps://www.cihi.ca/en/spending-and-health-workforce/spending/national-health-expenditure-trends

Currentdruginsurancearrangements

• Provincialplansaremoreactivelymanagedthanprivateplans• Provincescollaboratetonegotiateondrugpricesviathepan-CanadianPharmaceuticalAlliance• http://www.conseildelafederation.ca/en/initiatives/358-pan-canadian-pricing-alliance

• Theyemploytherapeuticsubstitution&otherformularyrestrictions• Routinelyuseeconomicappraisals

• Privateplanstypicallylessmanagedthanpublicplans;relymoreonbeneficiarycopayments

FormularyrestrictionsinpublicplansExample:

OntarioDrugBenefit(ODB)planwillreimburselevofloxacinonlyincertainconditions,includingfailureonfirstlinetherapy(amacrolide)

https://www.healthinfo.moh.gov.on.ca/formulary/

Economicappraisalinpublicplans

• TheCanadianAgencyforDrugsandTechnologiesinHealth(CADTH)performsaCommonDrugReview(CDR)• TheCDRreviewsevidenceoncostandeffectivenessofnewdrugsandmakesformularylistingrecommendationstothepubliclyfundeddrugplans• https://www.cadth.ca/about-cadth/what-we-do/products-services/cdr

• Newdrugsthatdonotoffersufficientcostoreffectivenessadvantagesovercompetitorsarenotrecommendedforfunding

Criticismsofcurrentarrangements

Criticisms

1. privateplanadministrativecostsaretoohigh2. drugpricespaidbyprivate&publicplansaretoohigh3. privateplansimposefewformularyrestrictions4. existingcoverageleadstopoorprescribingchoices5. consolidationofplanswouldbetterspreadriskforspecialtydrugs6. privateinsurersareconflicted7. oursystemofdrugcoverageisinequitable8. patientcopaysreducemedicationadherence

1.privateplanadministrativecostsaretoohigh

Administrativecostsforprivateplansarehigherthanforpublicplans.

Privatehealthcareplans10xtimesmorecostly

“Canada'snationalhealthinsuranceprogramhadoverheadof1.3percent;theoverheadamongCanada'sprivateinsurerswashigherthanthatintheUnitedStates(13.2percentvs.11.7percent).”

Woolhandler S,CampbellT,Himmelstein DU.CostsofhealthcareadministrationintheUnitedStatesandCanada.NewEnglandJournalofMedicine2003;349:768–75.

Administrativecostsforprivateplansarehigherthanforpublicplans.

Privatehealthcareplans5xtimesmorecostly

“Whileadministrativecostscomprisedonly3.2percentofpublicspendingonhealthcareinCanadain2009,administrationcostsrepresented15.1percentofspendingfinancedthroughprivateinsurance(CIHI2012).”

MorganS,Daw J,LawMR.RethinkingPharmacare inCanada.CDHoweInstituteCommentary,2013.

https://www.cdhowe.org/pdf/Commentary_384.pdf

Administrativecostsforprivateplansarehigherthanforpublicplans.

Privatedrugplans4xtimesmorecostly

“Theadministrativefeesforpublic[drug]plansinOntarioandQuebecwereestimatedat2%,whereastheywere8%forprivateplans.”

GagnonMA,HébertG.TheEconomicCaseforUniversalPharmacare.CanadianCentreforPolicyAlternatives,2010

https://www.policyalternatives.ca/sites/default/files/uploads/publications/National%20Office/2010/09/Universal_Pharmacare.pdf

Administrativecostsforprivateplansarehigherthanforpublicplans.

PotentialsavingsfromaNationalPharmacareplan

“Theadministrativecostsofthesingle-payerPharmacaresystemwouldbe$1billionto$2billionlessthanthecostofamixed,private-publicsystemofdrugcoverage.”

MorganSG,MartinD,GagnonMA,etal.Pharmacare2020:ThefutureofdrugcoverageinCanada.Vancouver,PharmaceuticalPolicyResearchCollaboration,UniversityofBritishColumbia,2015.

http://pharmacare2020.ca

Administrativecostsforprivateplansarehigherthanforpublicplans.

Assessment

Acentralizednationalplanwouldreducepercapitaadmincosts:• nomarketing,sellingor(fornon-ASOplans)underwritingcosts• couldbesomescaleeconomiesin

• negotiatingpricesfordrugs,wholesaledistributionandpharmacistservicefees

• decisionmakingarounddrugcoverage

“Thewastefulduplicationcausedbythevariedformularylistingprocessesemployedbyeachseparateprovinceandterritoryincreasesadministrativecostsforbothdrugplansandpharmaceuticalmanufacturers…”

KeonJ.Nationalpharmacare:let’sgetitright.TheHillTimes.2015.• https://www.hilltimes.com/opinion-piece/2015/04/06/national-pharmacare-lets-

get-it-right/41654

Administrativecostsforprivateplansarehigherthanforpublicplans.

Assessment

Howeverprivatefirms(suchasBlueCross)handleprescriptionclaimsadjudicationforsomeoftheprovincialpublicplans.Thesefirmsseemquiteefficientatthistask.

Overall,unclearhowmuchadminsavingswouldresultfromcentralizingdrugcoverage.Likelywellunder$1B.

2.drugpricespaidbypublicandprivateplansaretoohigh

Drugpricespaidbyprivateplansarehigherthanforpublicplans.

“Drugcostsareaprimeculprit.Provincesarefinallyactingontheirpartthroughnegotiatingdiscounts,greateruseofgenericdrugsandlimitstothefeestheyarepreparedtopay.Butmuchofthecostofdrugsisbornebyprivatesectoremployersthroughtheiremployeebenefitplans.Theseemployersfeelandactasthoughtheyarepowerlesstoreininthecostincreasesthathavebeenrunningaround10percentperyear.”

DonDrummondMatthewsFellowinGlobalPolicyandAdjunctProfessor,Queen’sUniversityForwardtoStevensonH.Anendtoblankcheques:Gettingmorevalueoutofemployerdrugplans.Reformulary Group2011.

http://www.reformulary.com/files_docs/content/pdf/en/end_to_blank_cheques.pdf

Canadiandrugpricesarehigherthanpricespaidincomparablecountries

“drugpricesremainmuchhigherinCanadacomparedtocountriesotherthanSwitzerlandandtheUnitedStates”GagnonMA,HébertG.TheEconomicCaseforUniversalPharmacare.

Canadiandrugpricesarehigherthanpricespaidincomparablecountries

“Intermsofdrugprices,Canada’smulti-payersystemisamongthemostexpensivesystemsintheworld,becauseitdiminishesourpurchasingpower.

ThepricesofgenericdrugsinCanadaarenearlydouble(79%higherthan)themedianofpricesfoundinotherOECDcountriesandmorethanfourtimes(445%)higherthanthebestavailablepricesintheOECD.

Similarly,thepricesofbrand-namedrugsinCanadaare30%higherthanincomparablecountriesliketheUnitedKingdom.”

MorganSG,MartinD,GagnonMA,etal.Pharmacare2020:ThefutureofdrugcoverageinCanada.

Canadiandrugpricesarehigherthanpricespaidincomparablecountries

“Overall,Canadiansspentjustover$22billiononthemedicationsincludedinouranalysisduringthefiscalyear2012/13.Underourbasescenarioestimates,totalspendingontheseprescriptiondrugsunderasystemofuniversalpubliccoveragewouldbeabout$15.1billion,representingadeclineof$7.3billionor32%.”

MorganSG,LawM,DawJR,AbrahamL,MartinD.EstimatedcostofuniversalpubliccoverageofprescriptiondrugsinCanada.CanadianMedicalAssociationJournal2015187(7),491-497.

http://www.cmaj.ca/content/early/2015/03/16/cmaj.141564.full.pdf+html

Canadiandrugpricesarehigherthanpricespaidincomparablecountries

Howtoreducedrugcostsbyonethird?

Lowerdrugprices(2/3ofsavings)

“…weuseddrugpricesfoundinCanada’sofficialcomparatorcountriestogaugetheextentthatbrandname andgenericdrugpricesmightdecreaseunderauniversalpublicdrugplan.”

Moreformularyrestrictions(1/3ofsavings)

“Weusedproductselectiondecisionsseenunderexistingprovincialdrugplanstoestimatechoicesbetweenbrand-nameandgenericdrugsunderauniversalpublicdrugplan.”

Canadiandrugpricesarehigherthanpricespaidincomparablecountries

Assessment

““Intermsofdrugprices,Canada’smulti-payersystemisamongthemostexpensivesystemsintheworld,becauseitdiminishesourpurchasingpower.”

MorganSG,etal.Pharmacare2020

Wealreadyhavelotsofpurchasingpower

NewZealandgetsverylowpriceswithapopulationofabout4.5million;theODBprogramalonepaysforthedrugsofabout3millionpeople.• http://www.health.gov.on.ca/en/public/programs/drugs/publications/op

dp/docs/odb_report_13.pdf

Canadiandrugpricesarehigherthanpricespaidincomparablecountries

Assessment

Unclearifthereismuchroomforfurthercutstogenericdrugprices

1. GenericdrugpricesinCanadahavebeenreducedtoaslowas15%ofthereferencebrandeddrugprice.• http://www.canadaspremiers.ca/pan-canadian-pharmaceutical-alliance/

2. MarketentrycostsforgenericdrugsarehigherinCanadaowingtotrade-dressconventionsandpatentlitigationrisk• http://www.canadiangenerics.ca/en/advocacy/docs/10.24.12%20Tendering%20Gen

eric%20Drugs%20-%20What%20Are%20the%20Risks_FINAL.pdf

3. Distributioncostsarealsohighergiven10,000pharmaciesspreadoutoverCanada’sgeography• http://napra.ca/national-statistics

Canadiandrugpricesarehigherthanpricespaidincomparablecountries

Assessment

“thepricesofbrand-namedrugsinCanadaare30%higherthanincomparablecountriesliketheUnitedKingdom.”

MorganSG,MartinD,GagnonMA,etal.Pharmacare2020

Unclearifthisisthecase.Internationalpricecomparisonsaredifficultbecauseofhiddenrebatesanddiscounts

Howeverthedatawedohaveindicatesthatpatented(mostlybrand)pricesinCanadafor2016aboutsameasthosepaidinUK(seenextslides).

Unclearifwecanreducebrandpricesby30%

Canadiandrugpricesarehigherthanpricespaidincomparablecountries

Assessment

Letscomparepatentedbrand-namedrugpricesinCanadatopricesincomparablecountriesusingdatafrom2016PatentedMedicinePricesReviewBoard(PMPRB)annualreport:

• PatenteddrugpricesinGermany&Switzerland9%higherthaninCanada• PricesinandUKaboutsameasinCanada• PricesinItaly,Sweden5to8%lessthanCanadianprices• PricesinFrance77%ofCanadianprices

PMPRB2016AnnualReporthttp://www.pmprb-cepmb.gc.ca/en/reporting/annual-reports

AverageForeigntoCanadianPriceRatiosforPatentedDrugs,byCountryandYear1987-2016.Countriesrestrictedtothosewithnationaldrugplans.

DataSource:PMPRBAnnualReports

4060

8010

012

040

6080

100

120

1990 2000 2010 2020 1990 2000 2010 2020 1990 2000 2010 2020

France Germany Italy

Sweden Switzerland UK

pric

erat

io

yearGraphs by country

3.privateplansimposefewformularyrestrictions

privateplansimposefewformularyrestrictions

“privatedrugplans’formularieswelcomeallnewexpensivedrugseveniftheyarenomorebeneficialtopatientsthancheaperexistingdrugs.”

GagnonMA,HébertG.TheEconomicCaseforUniversalPharmacare.

privateplansimposefewformularyrestrictions

“only19%ofCanadianemployeeswithdrugbenefitplansappeartohavemanagedformularies,suggestingthismightbeamajoropportunityforreducingprivatesectordrugcosts,againwithoutlimitingpatients'accesstomedicines.”

“Cost-shiftingmechanisms,includingdeductibles,co-paymentsandfixeddispensingfees,aremorewidelyused”

Kratzer J,McGrail K,Strumpf E,LawMR.Cost-ControlMechanismsinCanadianPrivateDrugPlansHealthcarePolicy2013Aug;9(1):35–43.

http://www.longwoods.com/content/23479

privateplansimposefewformularyrestrictions

Adissentingview:

“Forcing24millionCanadianswithprivatedrugplanstoaccepttheinferiorcoverageprovidedbypublicdrugplanscouldhaveprofoundhealthandeconomicimplications.”

“Reducedaccesstonewerandbettermedicineswillleadtoworsehealthoutcomesandadditionalcostsforthehealthsystem.“

SkinnerBJ,Rovere M,Mohindra M,TranK.Pharmacare:whatarethecostsforpatientsandtaxpayers?CanadianHealthPolicyInstitute,September24,2015.

http://www.canadianhealthpolicy.com/product_articles/pharmacare--what-are-the-costs-for-patients-and-taxpayers-.html

%ofnewdrugscoveredinprivatevpublicdrugplans,byyear

Averagewaitindaysforcoverageofnewdrugsinprivatevpublicdrugplans,byyear

privateplansimposefewformularyrestrictions

Assessment

Increasedmanagementofprivatesectordrugplanscouldreducecosts.

Indeed,thisisgraduallyhappening:

Reformulary Group,acompanyfoundedbyaformerODBexecutiveofficer,offerstohelpmanageprivateplanformulariesandsavemoney.• https://www.youtube.com/watch?v=AtvqGL4WXfo• http://www.reformulary.com/index_en.php?page=home

ManulifeDrugWatch• http://www.theglobeandmail.com/report-on-business/manulife-

launched-drugwatch-program-to-scrutinize-coverage-of-pricey-drugs/article27265898/

privateplansimposefewformularyrestrictions

Assessment

Skinneretalmakeunsubstantiatedclaimsrehealthconsequencestopublicplanbeneficiariesof:• theuseofformularyrestrictionsonnewdrugs• delaysinlistingnewdrugsThispapercreatestheimpressionthatanyformularymanagementisharmful.

Evidencetosupporttheseclaimswouldbehelpful.

4.poorprescribingchoices

existingcoverageleadstopoorprescribingchoices

Thereis“inadequatemonitoringofprescribingpracticesandrelatedhealthoutcomesinCanada”

“multiplicityofdrugplansinCanadacanalsocreateaburdenonprescribingdoctorsandinhibitsafeandappropriateprescribingpractices”

“Anestimated1in3elderlyCanadiansreceivesprescriptionsfordrugsknowntoposehealthrisksforolderpatients.Andanestimated1in6hospitalizationsinCanadacouldbepreventedifprescriptiondrugswereusedmoreappropriately.”

Morgan,SG,MartinD,GagnonMA,etal.Pharmacare2020:ThefutureofdrugcoverageinCanada.

existingcoverageleadstopoorprescribingchoices

“EstablishapubliclyaccountablebodytomanagePharmacare,onethatintegratesthebestavailabledataandevidenceintodecisionsconcerningdrugcoverage,drugprescribing,andpatientfollow-up.”

“ByconsistentlyusingevidenceandinformationsystemstoguidedrugcoverageandprescribingforallCanadians,aPharmacareprogramcouldrealisticallyreduceby50%theexistingproblemsofmedicineunderuse,overuse,andmisuse.”

Morgan,SG,MartinD,GagnonMA,etal.Pharmacare2020:ThefutureofdrugcoverageinCanada.

existingcoverageleadstopoorprescribingchoices

Assessment

Proposaltotrackprescriptiondruguseandtheoutcomesofprescriptiondrugusewouldprovideimportantinfoonrealworlddrugsafetyandeffectiveness.

In2012,abouttwo-thirds(65.9%)ofseniorsonpublicdrugplanshadclaimsfor5ormoredrugclasses,andmorethanone-quarter(27.2%)ofseniorshadclaimsfor10ormoredrugclasses.• https://www.cihi.ca/en/types-of-care/pharmaceutical-care-and-utilization/most-

seniors-take-5-or-more-drugs-numbers-double

In2007-2011,about11%of45- to64-year-oldstookatleast5prescriptionmedicationsconcurrently.• http://www.statcan.gc.ca/pub/82-003-x/2014006/article/14032-eng.pdf

existingcoverageleadstopoorprescribingchoices

Assessment

“Anestimated1in3elderlyCanadiansreceivesprescriptionsfordrugsknowntoposehealthrisksforolderpatients.”

Morgan,SG,MartinD,GagnonMA,etal.Pharmacare2020:ThefutureofdrugcoverageinCanada.

Unclearifthesehealthrisksareentirelyavoidable– manydrugsproducebenefitsandharms,andareusedbecauseofanticipatednet benefit.Ontheotherhand,poorprescribingcontinuestobeaproblem,amongseniorsandchildren

Unclearifanationalpharmacare (NP)planwillreducemedicationchoicestoprescribersgiventhatprivateplanscanaugmentcoverageprovidedbyNPplan

5.Riskpoolistoosmall

Riskpoolistoosmall

“Agrowingnumberofspeciality drugs— whichcancost$50,000oreven$500,000perpatientperyear— arenowavailableinCanada.Whereasthesetypesofdrugsaccountedfornegligibleexpensesadecadeago,theynowaccountformorethan25%ofprivatedrugspendinginCanada.”

“PharmacarewouldalsocreatethelargestpossibleriskpoolforthecostsofspecializedmedicinesinCanada,whichisthebestwaytoprotectbothpatientsandemployersfromthecostofrarebutexpensivemedicalneeds.”

Morgan,SG,MartinD,GagnonMA,etal.Pharmacare2020:ThefutureofdrugcoverageinCanada.

Riskpoolistoosmall

Assessment

Noquestionthatcostofbiologicsandotherspecialtydrugsrepresentsrisktosmallemployers

Thatiswhyprivateplanshavestartedtopoolsuchrisks• http://cdipc-scmam.ca

Nationalplanwouldallowforgreaterriskpoolandthusfurtherreducerisktoindividualsandplansponsors.

6.Privateinsurersareconflicted

Conflictofinterest

“Thereasonforthesteepriseinpremiumsissimple:mostoftheprivatedrugplansaremanagedbyinsurancecompanieswhichareusuallycompensatedintheformofapercentageofexpenditures.Asaresult,theirfinancialincentiveisnottotrytostemthegrowingcosts,buttoincreasethem.”

GagnonMA,HébertG.TheEconomicCaseforUniversalPharmacare

Conflictofinterest

“therearefewtonoincentivesfacingCanadianinsurerstocontrolcosts.Insurancecompaniestypicallyearnincomebasedonadministrationchargesthatareleviedasapercentageoftotalplanexpenditures.”

Kratzer J,McGrail K,Strumpf E,LawMR.Cost-ControlMechanismsinCanadianPrivateDrugPlansHealthcarePolicy2013Aug;9(1):35–43.

Conflictofinterest

Assessment

• Thereare>20privateinsurancecarriersinCanada• Competitionbetweenthemforgroupcontractsisrobust

• http://healthydebate.ca/opinions/demystifying-private-drug-plans

• Ifthereislittleappetiteformanagedplansthenthatmustreflectdecisionsofplansponsors(employers,unions,etc.)• Possiblethatsponsorsdon’tfinditworthwhiletobargainwithdrug

planbeneficiariesoverplandesign.• See:O’Brady,GagnonandCassels.Reformingprivatedrug

coverageinCanada:Inefficientdrugbenefitdesignandthebarrierstochangeinunionizedsettings.HealthPolicy2015• https://www.sciencedirect.com/science/article/pii/S01688510140

03121

7.oursystemofdrugcoverageisinequitable

Inequitablesystemofdrugcoverage

Twotierdrugcoverage

Canadianswithgoodjobshavecomprehensive,andtax-freeprivatedrugcoverage

Inequitablesystemofdrugcoverage

Twotierdrugcoverage

Canadianswithlowpayingjobs,orthoseunabletojoinagroupplanhaveeither• privatecoveragethatmayrequire

substantialcopayments,or• nocoverageandthusmustrelyon

provincial“universal”plans

Shareofhouseholdbudgetspentonrxdrugs,byhouseholdbudget,2006Households<65yearsnotreceivingsocialassistance

MacLeodetalOpenMedicine 2011http://www.openmedicine.ca/article/view/381/368

Inequitablesystemofdrugcoverage

Assessment

• ThereisnoquestionthatmoreaffluentCanadianshavebettercoverage• Financialburdenofprescriptioncostsfallsmostheavilyonlessaffluent

households.• AppearsthatmostCanadiansagreethateveryoneshouldhavecoverage

foratleastaminimumsetofdrugs

8.patientcopaysreducemedicationadherence

patientcopaysreducemedicationadherence

“Surveyshaveshownthat1in10Canadiansdonottaketheirmedicinesasprescribedbecauseofcosts.

Thisaffectsnearly1in4Canadianhouseholds.”

Morgan,SG,MartinD,GagnonMA,etal.Pharmacare2020:ThefutureofdrugcoverageinCanada.

patientcopaysreducemedicationadherence

Underinsuranceactuallycostshealthcaresystem

“Whenpatientsfacefinancialbarrierstonecessaryprescriptiondrugs,itcostsallCanadians.”

“Becausepatientsoftendonotdirectlyandimmediatelyfeelthebenefitsofpreventivetherapies—suchasmedicinestoreducetheriskofheartattacksandstrokes—theyoftenchoosetostoptakingthesemedicineswhenfacedwithassociatedcosts.Thisresultsinpredictableincreasesintheuseofotherhealthcareservices,whichareoftenmoreexpensivethanthemedicineswouldhavecostinthefirstplace.”

Morgan,SG,MartinD,GagnonMA,etal.Pharmacare2020:ThefutureofdrugcoverageinCanada.

patientcopaysreducemedicationadherence

Assessment

• UnclearifNPinCanadawouldprovidedrugstopatientsatnocost

• Othercountrieswithnationaldrugplansrequirepatientcontributions

• Asaresultthereiscostrelatednon-adherenceincountrieswithnationaldrugplans

Source: D. O. Sarnak, D. Squires, G. Kuzmak, and S. Bishop, Paying for Prescription Drugs Around the World: Why Is the U.S. an Outlier? The Commonwealth Fund, October 2017.

patientcopaysreducemedicationadherence

Assessment

• 100%coverageforatleastaminimumsetofdrugsisagoodidea.• Appropriatepharmacotherapyforchronichealthproblemsnowmay

preventfutureuseofmedical/hospitalservices• See:”CanValue-BasedDesigninPharmacySaveMoneyandCut

HeartAttacks?”• http://www.managedcaremag.com/archives/2011/2/can-value-

based-design-pharmacy-save-money-and-cut-heart-attacks• http://vbidcenter.org/about-us/

• Expansionofcoveragetominimumstandardsseemswarranted

Possiblewaysforward

NationalPharmacareasperMorganetal

• Tax-financedsystemwithfederalgovernmentcontributionstoencourageprovincialparticipation• “Evidence-based”formulary• Electronicprescribing.

Woulditaddresstheseproblems?

1. privateplanadministrativecostsaretoohigh2. drugpricespaidbyprivate+publicplansaretoohigh3. privateplansimposefewformularyrestrictions4. poorprescribingchoices5. consolidationofplanswouldbetterspreadriskforspecialtydrugs6. privateinsurersareconflicted7. oursystemofdrugcoverageisinequitable8. outofpocketdrugcostsreducemedicationadherence

Woulditaddresstheseproblems?

• privateplanadministrativecostsaretoohigh• Wouldbelower,butlikely<$1B

• drugpricesaretoohigh• Limitedsavingsfromcutstogenericprices;perhapsmodest(10-15%?)savingstobrandprices

• privateplansimposefewformularyrestrictions• Certainly,butunclearifrestrictionsimposedbypublicplansaredesirable• QuestionofwhichdrugsarecoveredunderNPwouldbecontentious

Woulditaddresstheseproblems?

• poorprescribingchoices• Seemsthattheinformationsystemsandmanagedformularyproposalcouldimproveprescribingappropriateness• UnclearifNationalPlanisrequired

• consolidationofplanswouldspreadriskforspecialtydrugs• Yes:thiswouldfurtherspreadriskandallowforcreativeprice-quantitycontracts

• privateinsurersareconflicted• Insuranceprovidersarenotconflicted.

Woulditaddresstheseproblems?

• oursystemofdrugcoverageisinequitable• Agreed.Expansionofcoveragetounderinsuredwouldimproveequity

• outofpocketdrugcostsreducemedicationadherence• Yes– underproposedNPpatientdoesnotpayforprescriptionsandthatwouldincreaseadherence

Otherpossibility

• Example:Federallyadministeredandfinancedplanthatcovers100%ofcostoflimitedsetofessentialmedicinesforallCanadians• Provincialandprivateplanscansupplement• Advantages• Poolsbuyingpowerforthesedrugs– perhapsslightlybetterprices• Administrativesimplicitywith1insurerforcommonsetofdrugs• Fedscanhelpensuresecurityofsupply

• Issues• Whatdrugswillappearonthislist?

Howtofinancecosts?Severaloptions

• Generaltaxrevenues(primarilyconsumptionandincometaxes)• Dedicatedpersonalincome-contingenttax• Example:OntarioHealthPremium

• http://www.fin.gov.on.ca/en/tax/healthpremium/index.html• Premiumis$0forthoseearningupto$20,000• Premiumis$60forthoseearningupto$20,001to$21,000• Premiumis$900forthoseearning$200,600andover

• Dedicatedpayrolltax• Example:Ontario’sEmployerHealthTax(EHT)

• http://www.fin.gov.on.ca/en/tax/eht/• TheEHTratesvaryfrom 0.98%onOntariopayrolllessthan $200,000,upto 1.95%forpayrollinexcessof $400,000.