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Opinion: Pharmacare is the wrong solution at the wrong time

Recently, to great fanfare and much media attention across the country, the Canadian Medical Association Journal (CMAJ) announced the publication of a new study trumpeting the great benefits of a federal government-funded pharmaceutical drug coverage.

April 6, 2015  By Brett Belchetz

According to proponents, the plan – dubbed “Pharmacare” – would save
Canadians approximately $7 billion per year in drug costs, with little
to no tax increases, and would greatly improve the health of Canadians
by providing drugs to the 10 per cent of us who currently cannot afford
prescribed medications.

On the surface, such claims sound like a
win-win: more coverage for less money, with better health outcomes. But
on closer inspection, the CMAJ study makes some highly dangerous
assumptions, and ignores a potential financial sinkhole that could
further push our already strained health-care system towards collapse.

example, the study’s authors falsely claim that Canada is the only
industrialized country with a universal health-care system that does not
provide national drug coverage to its citizens. However, in actuality,
Canada is the only country in the industrialized world with universal
health care that does not have a second, private tier of health care,
and one of only three nations in the industrialized world that does not
require its citizens to pay some form of user fee for medical services.

fact, the CMAJ study cites, as examples for Canada, countries with
extensive private health-care systems. In these other countries, public
drug coverage is affordable thanks to the savings achieved by shifting
part of the health-care burden to the private sector.


So, unless
the CMAJ is interested in discussing Pharmacare within the context of a
fundamental rethink of our health-care system, including private care
and user fees, the entire premise of their argument – comparing us to
international peers – is misleading and inappropriate.

Additionally, the CMAJ study’s cost savings claims are highly suspect.

would save $8 billion annually, states the study, by eliminating
out-of-pocket and private insurance expenses for prescription drugs.
These reforms, they say, would only require $1 billion in extra
government spending. The magical transformation of $8 billion of private
spending into $1 billion of public spending would happen through better
bulk pricing, increased use of generic drugs and smarter prescription

But the study’s pricing assumptions are based on costs
similar to those found in Europe. And any savings achieved by switching
more patients to generic drugs or by ensuring that physicians prescribe
from a list of drugs may quickly disappear when newer, more expensive
brand name drugs are demanded by Canadians.

Also, the study bases
all cost assumptions for future pharmaceutical use on historic levels
of demand. This is a highly incorrect methodology that completely misses
the impact on drug demand that will occur when the price of
prescriptions approaches zero. Any first-year economics student can tell
you that as price approaches zero, demand skyrockets. Our health-care
system, with its zero dollar pricing for patients, has shown just such
growth in demand.

In Canada, health-care spending consumes
approximately 40 per cent of all provincial budgets, and the costs will
likely rise as our population ages and gets sicker. Such levels of
expenditure would be forgivable if our health-care system was a world
leader. But despite all of the money we pour into it, it’s broken. In
June 2014, Canada’s health-care system ranked second worst in the
industrialized world in a study by the Commonwealth Fund, beaten by
every nation except the United States on metrics such as wait times,
efficiency and health outcomes.

So, when our national health-care
system is broke and underperforming, and when even the CMAJ authors
admit that their Pharmacare plan may initially require $5 billion in
additional government funding, now is not the time to introduce an
untested national program of unpredictable cost.

Dr. Brett Belchetz is an emergency room physician and Fraser Institute senior fellow. This article was provided through Troy Media ( )

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