The federal government's 2018 budget announced the creation of the Advisory Council on the Implementation of National Pharmacare (the "Council") to advise the government on a national insurance program for prescription drugs. The 2019 budget introduced foundational funding for a national strategy. On June 12, 2019, the Council released its final report, A Prescription for Canada: Achieving Pharmacare For All (the "Council's Report") following its interim report delivered on March 6, 2019. The Council's Report recommends a universal, single-payer public pharmacare system and how Canada would get there.
This bulletin summarizes the key recommendations, which include implementation beginning in 2020; an ability for provinces and territories to opt in; new federal legislation and fiscal transfers to the provinces and territories; a $100 cap on annual household out of pocket spending; a national formulary covering essential medicine by 2022 and comprehensive coverage by 2027; and a dedicated process for assessment and coverage for expensive drugs for rare diseases.
The Rational For National Pharmacare
The Council's consultations identified a general consensus that prescription drugs should be universally accessible. According to the Council's Report, drugs are the second-largest cost in Canadian health care, after hospitals and ahead of physician services. In Canada, there are more than 100 government-run drug insurance programs and 100,000 private drug insurance plans. The Council found that coverage (and cost to the patient) for the same course of treatment is uneven across the country. It concluded that improving access to prescription medicine would save downstream costs and bring down the cost of pharmaceuticals with stronger buying power.
Elements of National Pharmacare, as Proposed
Terms of Coverage
The Council's Report sets out terms of coverage including that provinces and territories would continue their existing coverage, while the federal government would fund the expanded coverage required to meet the national pharmacare standards. The federal government would acknowledge existing programs, so that jurisdictions that are further ahead are not disadvantaged. Flexibility would exist for provinces and territories to offer (at their cost) coverage beyond the national pharmacare standards.
Out of pocket costs for all products on the national formulary would not exceed $5 per prescription, with a copayment of $2 for essential medicines and annual maximum copayment of $100 per household. Individuals receiving social assistance, government disability benefits or the federal Guaranteed Income Supplement would be exempt from copayments. Canadians would continue to be able to purchase private insurance to supplement coverage. Private insurance could, for example, provide coverage for copayments and drugs not on the national formulary.
The Council's Report includes a proposal that new pharmacare legislation separate from the Canada Health Act be tabled. The legislation would embody the Canada Health Act's five fundamental principles: universality, comprehensiveness, accessibility, portability and public administration. The Council's Report envisions legislation coming in to force in 2022.
Inserting pharmacare into the Canada Health Act was rejected by the Council for a number of reasons, including because that Act does not permit user charges such as co-payments (the Canada Health Act provides for first-dollar coverage for hospital and medical care).
Provincial and Territorial Participation and Funding
It would be up to the provinces and territories to opt in to national pharmacare. The Council maintains that the federal government should be prepared to proceed with national pharmacare, even if not all jurisdictions opt in initially. The Council acknowledges that it may take time for individual provinces or territories to prepare for a national program.
The Council's Report includes a recommendation for long-term, adequate and predictable federal funding to provinces and territories to cover the incremental costs of national pharmacare. Provinces and territories would become eligible for funding when they accept the principles and terms of coverage for national pharmacare. Funding would be delivered through new, targeted transfer payments, separate and distinct from the Canada Health Transfer.
The Council recommends that the federal government also work with First Nations, Inuit and Métis governments and representative organizations, to prepare a framework for which they may choose to participate in national pharmacare. The Council's mandate did not include any changes to the Non-Insured Health Benefits Program, which registered First Nations and recognized Inuit are qualified to opt in to.
The Council's Report outlines the terms of the proposed Canadian Drug Agency (the "Agency") and recommends that the federal government provide ongoing funding to the Agency. Preliminary funding was set out in Budget 2019. Initially, the Agency will be the Canadian Drug Agency Transition Office. The Agency's proposed responsibilities include:
- developing and implementing a comprehensive, evidence-based national formulary;
- implementing the proposed national strategy for expensive drugs for rare diseases; and
- negotiating drug prices and supply arrangements with manufacturers.
The Agency would also ensure that there are minimal delays between the time that a drug is approved for sale in Canada and when it is added to the national formulary. The Council's Report recommends that the federal government accelerate efforts to streamline and modernize its assessment of drug safety, quality and efficacy to expedite access to innovative medicines.
The National Formulary
The proposed national formulary of drugs covered by pharmacare would include prescription drugs for both physical and mental health conditions and provides options for different age, race, ethnicity, sex and gender identity.
Essential medicines would come first, with a recommendation that federal, provincial and territorial governments launch national pharmacare with universal coverage for a list of essential medicines by January 1, 2022. The essential medicines would be based on the World Health Organization's Model List of Essential Medicines (approximately 450 drugs) and the CLEAN Meds list (136 drugs) developed by clinicians and researchers at St. Michael's Hospital in Toronto. The priority medicines would be the most commonly prescribed clinically important drugs, which accounts for approximately half of all prescriptions provided in Canada, according to the Council.
Once the essential medicines list is in place, the Council proposes that the Agency use a prioritization framework to determine the sequence for adding drugs to the formulary taking into account therapeutic areas where there is a high degree of consistency across public drug plans (i.e. a drug that is widely accepted as an effective choice), therapeutic areas where there is greater variability (such as a cancer drug), and national health priorities. The list would become a fully comprehensive formulary no later than January 1, 2027.
National Strategy and Panel to Consider Expensive Drugs for Rare Diseases
The Council's Report also recommends a national strategy for expensive drugs for rare diseases including a distinct pathway for consideration and a national expert panel to work with patients and clinicians to determine which drugs should be funded for which patients. In Budget 2019, the federal government committed $500 million per year to this initiative starting in 2022-23.
In addition to the recommendations described above, the Council also recommends:
- mandatory public disclosure of payments by the pharmaceutical industry to health care providers, institutions and patient groups;
- mandatory generic substitution policies;
- investment in information technology systems to ensure governments have capacity to deliver national pharmacare by overcoming existing silos that prevent data sharing; and
- investment in data collection about prescription drug use to enable the creation of a central repository of essential data for measuring drug effectiveness.
 A discussion of Budget 2019 as it relates to pharmacare is included in two of Fasken's prior bulletins: "2019 Federal Budget Life Sciences Highlights" and "A Closer Look: Fasken’s Team Examines Important Budget 2019 Measures - Some which made Headlines, and Others that Should not Escape Notice".