Rising prescription drug prices are putting increased pressure on household budgets, workplace health plans, and public drug programs. Fortunately, there’s a public solution: a universal public pharmacare program.
Most Canadians have some prescription drug coverage through workplace or public plans. But coverage varies widely, and some have no plan at all.
Even with some coverage, the out-of-pocket costs leave one in four Canadian households with someone who can’t afford to take their medication as prescribed. On average, Canadian households spend $450 a year on prescription drugs and $550 on private health plan premiums, a combined average of over $1,000. Private premiums have risen rapidly in recent years, thanks largely to escalating drug prices, and are taking a growing bite out of workers’ take-home pay.
Canada’s current patchwork of public and private insurance plans is inefficient, expensive, and unfair. Lower-income workers are much less likely to have workplace health insurance, and when they do, there’s less coverage than for higher-income workers. This means lower-income workers pay more in out-of-pocket costs for prescription drugs, and much more as a share of their income. Lower-income workers and their households are much more likely to not take necessary medications, which leads to further sickness and additional pressure on our health care system. It’s estimated that one in six hospitalizations and hundreds of premature deaths could be avoided with affordable prescription drugs.
Canada is the only developed country in the world with universal health care that does not cover prescription drugs. Canada has the second-highest prescription drug prices per person in the world (after the United States), and one of the highest rates of people who can’t afford to take their medicine as prescribed.
The federal government could provide Canadians with universal access to necessary prescription drugs and save $5 billion or more annually by moving to a national public pharmacare program. It’s a solution that CUPE and other unions, many experts, and the federal New Democratic Party have long proposed.
Canadian families and employers would see significant savings with national pharmacare. Canadian families now spend about $5 billion on prescription drugs each year. Private workplace plans spend another $11 billion annually. Workers pay about half of the cost of these private plans through their plan premiums. It’s estimated a national public pharmacare plan would reduce these costs to households and employers by over $10 billion every year. Employers would have more money to invest in higher wages or improving other benefits.
Federal and provincial governments will need between $5 and $7 billion a year in new revenue to pay for a universal public pharmacare program, depending how the program is designed. These funds could be generated through corporate, personal, or modest payroll taxes. These modest tax increases would be offset by lower drug costs for employers and workers, especially lower-income workers, and much better coverage.
The benefits of universal pharmacare include large savings on administrative costs, lower drug costs thanks to bulk purchasing power, and greater use of generic drugs. These savings will help offset the costs of delivering increased public drug coverage.
However, to achieve these savings, the federal government must work with the provinces and territories to create a national drug plan that provides Canadians with universal, equitable access to prescription drugs. A program that just fills gaps in the patchwork of our costly private system by covering people who don’t have insurance will provide uneven coverage and won’t reduce costs.
Countries with universal pharmacare have negotiated far lower prices from pharmaceutical companies. Canada needs a national formulary (a comprehensive list of prescription drugs eligible for coverage), and a central agency that negotiates aggressively with manufacturers on prices. Sweden has lowered costs even more by setting up a publicly-owned generic drug manufacturer, which helps develop affordable treatments for rare conditions that private manufacturers don’t find profitable.
In their 2018 budget, the federal Liberals announced the establishment of an advisory council to implement national pharmacare, chaired by former Ontario health minister and pharmacare advocate Dr. Eric Hoskins. But there’s deep concern the federal Liberals will cave to the multi-billion dollar interests of private benefits insurers and pharmaceutical companies and introduce a patchwork system that costs more and covers less than an efficient, public, universal program.
Public pharmacare is a critical step in achieving better public health care, and a major part of the unfinished business of Medicare. More than 50 years ago, Canada’s Royal Commission on Health Services recommended that Canada introduce a universal public pharmacare program after our public medical care program was established. Fifty years is a long time to wait. It’s time we moved forward with a universal public pharmacare program to replace our costly and unfair patchwork system. Learn more at cupe.ca/health-care-public-solutions.