Canadians are getting older, that is no secret. While this doesn’t mean we are heading to some fiscal cliff where we can’t support public services, like the neoliberal think tanks would have you believe, it does mean we need to be honest with ourselves about challenges we will face in the near future (a national seniors strategy might be a place to start). Approximately 15 per cent of Canadians are aged 65 and over (classified as senior citizens). At the same time, 85 per cent of seniors take at least one prescription drug and those over 80, on average, take five. There is also a problem with polypharmacy (a topic for discussion at another time), where nearly 70 per cent of all seniors take five or more drugs and almost 10 per cent take 15 or more medications. Yet, provinces and the federal government continue to have a hodgepodge of senior’s prescription drug plans that vary across the country in coverage and deductable or co-pay amounts seniors have to pay (a universal national pharmacare program could help solve this). In many cases families have to finance the bulk of parent’s drug costs or they go without the medication they need.
A recent report from the Broadbent Institute highlighted, “The seniors’ poverty rate has increased from a low of 3.9 per cent in 1995 to 11.1 per cent, or one in nine, in 2013. Fully 28 per cent of single women and 24 per cent of single male seniors are living in poverty in this country.” Older Canadian women are also twice as likely to in poverty than men and 30% of older Canadian women live below the poverty line. Overall, it is estimated that 600,000 Canadian seniors living in poverty.
We know that there also are 11 million Canadians that do not have access to workplace pension plans and do/will rely on government administered income supports like OAS/GIS and CPP (more than 75 per cent of private sector workers have no workplace pension plan). It has been shown that, “roughly half (47 per cent) of Canadian families aged 55–64 have no accrued employer pension benefits in Canada. The vast majority of these Canadians retiring without an employer pension plan have totally inadequate retirement savings — the median value of their retirement assets is just over $3,000... The status quo is not acceptable. Income data shows that the median income for single seniors without employer pension income is below $20,000 — roughly half that of those with an employer pension. This is because they rely almost totally on OAS/GIS and CPP, since their savings are virtually non-existent.”
It is proven that health is often directly correlated to income levels/class (i.e. the rich live longer than the poor). Public pension plans like the CPP deliver seniors a, “defined benefit and indexed pension at a reasonable cost — a cost that few individuals could ever match by investing on their own, or through anything but the largest employer pension plans.” Without getting too deep into the debate on why we need increase Canada’s mandatory savings rate, it is currently at 9.9 per cent which is among the lowest in the OECD and we only spend 4 per cent of GDP on public pensions while the average in developed countries is 8 per cent of GDP (the CLC has further analysis here on why we need to expand the CPP). What this means is at the end of the day is the average CPP benefit in 2015 was $550 and on average, women received just two-thirds of the benefit for men.
In two previous blogs, ‘Is the worst drug company Canadian?’ and ‘The new pharma trade craft’, we looked at Valeant Pharmacueticals and other Canadian drug companies who are world renown for their inhumane and unethical price gouging. More often than not, it is seniors who are hit hardest by these big pharma pariahs who only care about reaping massive profits for the private equity firms, hedge funds, bay street banks and individual shareholders who have knowingly invested in their immoral company. So, it came as some surprise to learn that Canadian pension plans are investing huge amounts of money into the worst pharmaceutical companies out there.
You are likely asking yourself isn’t it counter intuitive for Canadian pension funds (which are established to create retirement security and income for seniors) to invest in big pharma companies that are price gouging seniors into destitution? Moreover, what is a public pension plan like the CPP doing investing the money of Canadians in companies who are clearly unethical and work against the health interest of the Canadian public (and humanity in general) with their exuberant price hikes and negligible R&D ?
Pension fund investment data isn’t always the easiest to come by, but we do know a few things. Valeant was, “the third-largest equity holding of the Canada Pension Plan Investment Board as of March , and the fund has been rapidly adding to its position.” It is reported that, “The CPP had been building up its Valeant holdings since first buying stock in the company in 2010. On March 31, 2013, the pension fund held 2.28 million shares in Valeant at a total value of $174 million; a year later, it had increased its stake to 3.06 million shares for a total of $445 million. This past spring, it reported holding 3.4 million shares and $851 million in equity in the company...While Valeant’s tumble has struck at least $400 million from the CPP’s books.” The current value of the CPPIB’s shares in Valeant after it crashed and burnt are around $78 million.
It is likely that Canadian pensions invested over $1 billion in Valeant before its collapse. It is not just the CPP investing in the worst drug companies; the Ontario Teachers’ Pension Plan (which is Canada’s third largest pension fund) had purchased $17.2 million worth of shares in Valeant during the third quarter of 2015. Bloomberg reports that, “It is not clear whether the pension fund still owns the stock. The pension fund doesn’t talk about individual trades or holdings during the year, Deborah Allan, a spokeswoman for Ontario Teachers, said by e-mail.” Further, “other Valeant investors with Canadians’ pensions on the line include the Caisse de dépôt et placement du Québec (CDPQ) and the province of Alberta.” The Public Sector Pension Investment Board (The pension plan for the Canadian Public Service, the Canadian Forces, the Royal Canadian Mounted Police and the Reserve Force) had Valeant as one of its top ten equity holdings as of March, 2015. PSP Investments has also invested in Concrodia Healthcare, a similar M&A firm to Valeant, and holds 307,859 shares of the company’s stock after selling 172,200 shares recently.
It is fundamentally wrong for Canadian pension plans, public or private, to be investing our money in companies that make profit from exploiting the suffering of people. Moreover, these companies one of the central reasons why more and more Canadians cannot afford to fill their prescriptions, especially seniors. A report from late last year shows that as it stands, “almost 1 in 10 seniors are skipping their medication because they simply can’t afford them. To put this in context, Canada ranked second last in the Commonwealth Fund’s country ranking for seniors’ access to medication.” There is nothing to gain outside of a quick buck by investing in companies that in the long term undermine our public health and access to medicine. To put it another way, it is time our pension plans quit robbing Peter to pay Paul.