Employers and unions that offer employee drug benefit plans could save $8.2 billion under a universal public drug plan, researchers say (photo by Joseph via Flickr)

Canada needs a universal drug plan – and it won't require tax increases, study finds

Plan would reduce total spending on prescription drugs by $7.3 billion per year

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, researchers say.

“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,” said Dr. Danielle Martin, one of the authors of the study, published in CMAJ (Canadian Medical Association Journal).

Canada is the only developed country with universal health insurance that does not also offer universal prescription drug coverage said Martin (pictured below), an assistant professor in the University of Toronto's department of family and community medicine and vice-president of medical affairs and health systems solutions at Women's College Hospital.

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

They 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 per cent, the authors said. 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 drugs 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 said, 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,” said Martin.

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 Dr. Danielle Martin.)

(Read coverage of this story in the Toronto Star.)

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