Martin Says Universal Public Drug Plan Could Save Money for Canada

Mar 16, 2015
Author: 
Allison Mullin
Dr. Danielle Martin

Contrary to common public perception, Canadian taxpayers could save billions by the introduction of a universal public drug plan to provide prescriptions to all Canadians, according to new research published in the Canadian Medical Association Journal (CMAJ).

Canada is the only developed country with universal health insurance that does not also offer universal prescription drug coverage.

One of the study’s authors, Dr. Danielle Martin, assistant professor in the Department of Family and Community Medicine at the University of Toronto (U of T) and vice-president of medical affairs and health systems solutions at Women's College Hospital, says the study shows that universal prescription drug coverage would not mean tax increases, as many presume.

"In many of the scenarios that we modelled, universal pharmacare was cost neutral for governments. This goes against current thinking that a universal program will cost more,” states Martin.

The study modelled costs based on data describing $22 billion worth of retail prescription drug purchases in the fiscal year 2012-13. They created three scenarios for a universal public drug plan: a base scenario (expected outcome), as well as the best- and worst-case scenarios.

Researchers found that most prescriptions are already paid for by taxpayers, with $9.7 billion spent directly on public drug plans and $2.4 billion spent on private drug plans for public sector employees. Private sector spending on private insurance plans currently accounts for $5.7 billion, and uninsured patients pay $4.5 billion out-of-pocket for prescriptions they fill.

If Canada could achieve the pricing found in several comparable countries as well as the rates of generic drug use seen in some provincial drug plans, a universal public drug plan would reduce total spending on prescription drugs in Canada by $7.3 billion per year, or 32%, write the authors. As well, employers and unions that offer employee drug benefit plans could save $8.2 billion under a universal public drug plan.

These cost savings are attributed to decreased costs for generic- and brand-name drugs because of economies of scale in price negotiations and better product selection, taking into account a small increase in costs from increased use by people who were uninsured.

These savings, the authors contend, would be beneficial in a multitude of ways. For instance, Canada spends much more on medications than other countries with universal health insurance, but it attracts only small investments in drug research. To attract investment, the authors argue Canada should increase public investment in health sciences, possibly by using a portion of the savings generated through a single-payer system for universal public coverage of prescription drugs.

"Better access to medically necessary prescription drugs and improved quality of care go hand in hand with these significant cost savings," Martin pointed out. Overall, the authors conclude that universal public coverage of prescription drugs will allow for increased equality in accessing prescription drugs while achieving a significant cost savings for taxpayers.

Listen to an interview with  Martin.

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