Memo to the Trudeau government: Pharmacare will SAVE us a s***load (Part 1 of 2)

Four points about what pharmacare will cost – and what it will save – that some Liberal officials don’t seem to understand

“It’s pharmacare. It’s going to be a s***load of money, right?”  

When the NDP introduced a private member’s bill (Bill C-340) to speed up the pace of implementing pharmacare last week, the right-wing reaction on social media swung immediately, and predictably, to outrage: “We can’t afford it!” “My taxes!” “Nice gift to Big Pharma!” “Get your hand out of my pocket, Justin!”  

The scatological outburst above, however, did not come from angry, anti-government libertarians on Twitter. It came out of the mouth of a Trudeau government insider “close to the pharmacare file,” the Toronto Star reported. “It’s nothing more than a political stunt, and I don’t think it’s helping anyone,” the government source told the Star.  

It’s a disconcerting response, to say the least. For a government committed to passing a Canada Pharmacare Act by the end of the year (as per the supply-and-confidence agreement with the NDP), shouldn’t officials be more knowledgeable about the issue? Every serious analysis of pharmacare’s fiscal implications has debunked oft-repeated claims that pharmacare is unaffordable – including the Trudeau government’s own expert panel.  

Created in the wake of Budget 2018, the Advisory Council on Implementing National Pharmacare, led by former Ontario Liberal Health Minister Dr. Eric Hoskins, spent a year of gathering research and conducting hearings. In its final report submitted to the Trudeau government in June 2019, the Advisory Council tackled the issue of affordability head-on: “During our consultations with Canadians, the council heard more than once from people who felt this country couldn’t afford national pharmacare. But it became increasingly clear to us that, in fact, we can’t afford to go on without it.”  

Some in the Trudeau government apparently didn’t get the memo – even some of those working on the pharmacare file. So, for the benefit of those who haven’t read very carefully the Hoskins report, here are four key points about the costs of pharmacare drawn from its pages, in language that even skeptical government insiders can understand.  

1. We pay a s***load more for prescription drugs than countries with pharmacare 

Among countries with developed public health care systems, Canada is alone in not covering prescription drugs. This means we end up paying for prescription medications in countless other ways. “We are already spending tens of billions of dollars on medicines,” Dr. Hoskins wrote in the Advisory Council’s final report. “Canadians pay for prescription drugs through their taxes, through their premiums, through their wages and then they pay some more, when they reach into their pockets to cover their copayments and deductibles.”  

Opponents of pharmacare like to pretend these costs don’t exist because many of them aren’t borne directly by the government. But when we add them all up, they are substantial. In 2021, Canadians spent $36.8 billion on prescription drugs, about 40 per cent of which was spent by workplace plans, about 20 per cent covered by out-of-pocket costs, and the remaining 40 per cent by provincial plans. That’s expected to rise to $52 billion per year by 2027, according to the Advisory Council.  

The mish-mash of public and private plans is “fragmented, uneven, unequal and unfair,” the Advisory Council observed, leaving us with “a non-system where too many people fall through the cracks.” A majority of Canadians have some drug insurance through their workplace or a provincial drug program, but some 7.5 million people (one in five Canadians) are un- or under-insured, and about one in ten Canadians cannot afford to fill their prescriptions at any given time. And yet, we still manage to spend substantially more per capita for prescription drugs than every other country except the U.S. and Switzerland. 

Our current “non-system” of public and private insurance plans gives Big Pharma a latitude to price gouge that it doesn’t have anywhere else, the Advisory Council found. Canada’s drug prices are significantly higher than elsewhere—50 per cent or even 60 per cent higher according to some studies. This “scattered approach to paying the bill,” Dr. Hoskins wrote in the Council’s final report, has left us with “dozens of public and thousands of private plans (that) have become a costly administrative nightmare, with little purchasing power to negotiate the best drug prices.”  

A public, single-payer system that covers everyone in Canada is key to bringing drug costs down. The Advisory Council returned to this point again and again in its report. “Our current fractured system […] weakens Canada’s negotiating position with pharmaceutical companies,” reads the final report. “We pay some of the highest drug prices in the world. Other countries with universal pharmacare get better deals for the same drugs. Without price reductions, our public and private drug plans will continue to be strained. […] Canada can meet this challenge, but we need the purchasing power and unified effort of all 37 million Canadians.”  

2. Done right, pharmacare will save us a s***load through lower drug prices 

Estimates of the savings from a comprehensive public pharmacare program vary. But every single assessment done, both before and after the Hoskins report, has found that pharmacare would be a s***load cheaper than continuing with the status quo. 

In place of a comprehensive, public pharmacare system that covers everyone, Big Pharma and the insurance industries have called for more “affordable” or “fiscally prudent” programs focused on the uninsured or those suffering from rare diseases. But half-measure that leave the existing patchwork of drug plans in place are ultimately more costly, the Advisory Council concluded: “We came to understand that a ‘fill the gaps’ approach was unrealistic since, like our current mixed public/private system, it would do little to lower drug prices or create fairness or uniformity in access across the country.” 

The Advisory Council calculated that public pharmacare would save Canadians $5 billion per year relative to the status quo, due to lower drug prices and greater administrative efficiencies. Instead of paying $52 billion for our “confusing patchwork” of public and private plans that excludes millions of people and allows Big Pharma to overcharge everyone, a public, single-payer plan would bring total drug costs down to $47 billion while making sure everyone had access to medicines, regardless of income. Other estimates of the savings from pharmacare are much higher ($7.3-$11 billion per year), since they expect drug cost savings to be higher (30-40 per cent rather than the Advisory Council’s very conservative 10 per cent). 

There is, admittedly, something counterintuitive to the economics of pharmacare. What do you mean, we can give more people better access to prescription medications while paying less overall? How does that work? If we think of pharmacare as just free stuff, then it can sound like a costly proposition.  

In fact, as Globe & Mail business columnist Tony Keller recently pointed out, pharmacare is a perfect example of “a proposed government program that, if done correctly, can deliver more than the status quo, while spending billion of dollars less.” And key to doing pharmacare correctly is a public, single payer plan, as the Advisory Council stressed – and as the NDP’s bill C-340 calls for.  

In right-wing mythology, pharmacare is about the government reaching into your pocket and paying for someone else’s medication. In reality, public, single-payer pharmacare is about using the government to get the greedy hands of Big Pharma and the insurance industries out of our pockets. Unfortunately, even some Trudeau government insiders don’t seem to understand (or want to understand) – despite a detailed report sitting on their desks for over four years making just this point.  

(Read Part 2 of this blog series, which addresses points 3 and 4, namely “Pharmacare will save us a s***load on downstream health care costs” and “We don’t need to raise taxes a s***load to pay for pharmacare”) 

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