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Unlike medical care, Canada’s drug coverage far from universal

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Canada loves to brag about its universal health care system. Too bad it's actually not so universal.

Oh, yes, everyone gets government-funded medical coverage. But what isn't universal is the coverage itself. It excludes a large portion of the health care expenses of Canadians: Prescription drugs. As a new report from the C.D. Howe Institute points out, Canada's is the only universal health care system in the developed world that doesn't provide universal coverage for medically necessary prescription medications. Instead, it has a hodge-podge of provincial drug benefit programs that help some (but not all) patients with some (but not all) of their prescription drug costs, based on a variety of age, income and employment qualifications.

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The report , by Steven G. Morgan, Jamie R. Daw and Michael R. Law of the University of British Columbia, said that nationwide only 44 per cent of total drug expenditures are covered by provincial benefit programs – compared with 90 per cent of hospital costs and 99 per cent of all other medical costs. Perhaps even more importantly, the authors noted that the various provincial systems all involve "multiple payers" – patients, private and employer insurance plans, government benefit programs – none of whom are actually responsible for providing the patients' medical and hospital care. This lack of integration "results in access barriers, poor financial protection and excessive costs," they said.

Even for governments that acknowledge that there is a problem, the proposed solution – nationalized universal pharmaceutical coverage – sounds daunting indeed. After all, health care already eats up nearly 40 per cent of provincial government spending. Extending universal coverage to drugs, which account for about 16 per cent of all health costs in this country, would pile significantly more costs onto an already onerous public burden.

Or would it?

The authors noted that in countries with government-insured drug systems, total pharmaceutical costs per capita are considerably lower than in Canada – a product of greater administrative efficiencies, greatly increased bargaining power with drug makers and integrated medical systems that produce more prudent management of drug expenses. In countries with the most fully integrated, most comprehensive government drug coverage – New Zealand and Britain – per-capita drug costs are less than half that of Canada's.

"If our spending per capita matched that in the United Kingdom or New Zealand, we would spend at least $14-billion less per year," the authors wrote – nearly half of Canada's annual public and private expenditures for pharmaceuticals.

While the report acknowledged that expanding public pharmacare programs would, in the short term, require increased government spending, "such programs could actually lower total expenditures on prescription drugs while improving health outcomes and, thereby, generating further savings elsewhere in the health care system."

It's simple math, really. If governments were to, say, double their share of national drug expenses (that would bring it up to near 90 per cent), but the efficiencies gained were to cut total drug expenditures roughly in half, the costs to government would be a wash.

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"Costs are not the barrier to pharmacare reform in Canada," the report concluded. "Indeed, universal pharmacare for cost-effective treatments is the fiscally responsible policy option."

David Parkinson is a contributor to ROB Insight, the business commentary service available to Globe Unlimited subscribers. Click here for more of his Insights, and follow him on Twitter at @parkinsonglobe .

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About the Author
Economics Reporter

David Parkinson has been covering business and financial markets since 1990, and has been with The Globe and Mail since 2000. A Calgary native, he received a Southam Fellowship from the University of Toronto in 1999-2000, studying international political economics. More

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