14 September 2010

Saving billions with a pharmacare plan

"Universal pharmacare touted as way to save billions," said a front-page headline in the Globe and Mail yesterday. "Universal pharmacare could save billions: study," confirmed the CBC. The headlines refer to a Canadian Centre for Policy Alternatives report which claims a national pharmacare plan could save Canadians almost $11-billion a year in drug costs.

The savings would come principally from adoption of a national drug-purchasing policy that combined rigorous drug assessment and price negotiations with pharmaceutical companies. New Zealand, where both per capita spending on drugs and growth in drug costs are less than half what they are in Canada, was offered as a model. Further savings would come from lower administration costs and ending tax subsidies to private plans.

The report states that our policy of setting drug prices high to encourage research and development in Canada is a failure. It results in us spending three dollars more on drugs for each dollar we generate in R&D spending.

As for the burden national pharmacare would place on public finances, the report points out that drug costs have been increasing twice as fast in private plans as in public plans. As the author of the study, Marc-Andre Gagnon of Carleton University, pointed out, "Canadians cannot afford not to have universal pharmacare."

Professor Gagnon also emphasized that a national plan would be much more equitable across the country and across social groups.

There should be no surprise here. We know from Medicare and public auto insurance that a public, single-payer system is the most efficient approach when comprehensive insurance is required. When provincial health ministers meet this week in St. John's, they should keep this fundamental fact uppermost in their minds.

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