The debate about drug prices has been roiling for years in Canada and has reached a fever pitch of late.
On Saturday, Ottawa proposed changes to drug price regulations in Canada that it estimates will deliver $12.6 billion in savings over 10 years through lower drug costs.
Sure, Canadians spend too much on drugs, but not just for the reasons you think. Pharmaceutical companies should not shoulder sole blame for the increase. There are several factors at work here. We need to broaden the discussion to one of drug “spend,” not just drug prices.
Drug prices typically increase on an annual basis, and the prices of some drugs are much higher in Canada than in other countries. Generics, for example, are costlier in Canada than in the US, while brand name drug prices are often lower in Canada. Price disparity from country to country can be attributed to several factors, including supply and demand, direct-to-consumer advertising, litigation, the number of suppliers, and economic policies to incentivize pharma R&D.
However, the amount we spend on drugs has a strong behavioural component for consumers, physicians, pharmacists, employers, unions, politicians and legislators.
Here’s an analogy to illustrate the role consumers play. The price of groceries increases marginally from year to year, but my grocery bill increases dramatically one year. Perhaps because I chose to buy more organic fruits and vegetables, locally raised meats and other specialty products. I made a conscious decision to purchase these higher-end products.
However, a higher price-tag does not always indicate a superior prescription drug. For example, the current standard of care for a rare congenital condition called Neonatal-onset Multisystem Inflammatory Disease (NOMID) is a $96,000 specialty drug. Recently, a $17,000 specialty drug received approval to treat NOMID; our expert panel recommended that it is a good alternative, since it can be used to treat infants earlier, patients have a rapid response and it is significantly less expensive.
Many companies, and most public-sector employers and unions have drug plans with 100 per cent coverage of virtually every drug on the market. This means that they will cover any drug at any price. This has an adverse effect on the market. It can create an environment of complacency, with virtually no incentive for people to consider less expensive but equally effective alternatives.
Plans should only cover a more expensive drug if it is the most effective option is backed by research.
Otherwise, people should be empowered to consider the less expensive alternative if it carries equal effectiveness. Generic drugs have the same active ingredients as brand name drugs, and work the same way in the body, and save Canadians a huge amount of money.
Consumers can change their behaviour by becoming informed and empowered and by taking ownership over the sustainability of our system. The incentive is a system that can continue to afford to fund drugs for the population.
Other parties can contribute to sustainability as well. For example, prescribers can and should recognize that there may be less expensive alternatives. Employers and unions should take a more collaborative position (some already have). They are often deaf to the position that having a drug plan that recommends less expensive drugs can improve health and financial outcomes.
The dilemma around pharmacare is that some people have 100 per cent coverage of every drug (such as government employees and public-sector unions) while others have nothing and no insurance. A national pharmacare plan would mean that every Canadian would be on one single, national drug formulary (list of drugs). It means that every Canadian would be covered by one drug plan, and that the plan would cover those drugs that work most effectively, backed by evidence, and whereby clinical benefit justifies the cost.
In other words, any such formulary should dictate which drugs would be paid for — not doctors, pharmacists, unions, or even consumers. The plan could be administered by one organization and have enough leverage ($30 billion worth) with pharmaceutical companies and pharmacies to address drug prices. Consumers would still be able to get access to higher priced drugs not on the formulary, but they would have to pay out of pocket. The question is, are we ready for that?
Helen Stevenson is the former Assistant Deputy Minister of Health and Executive Officer who oversaw Ontario $4 billion drug program. She also founded Reformulary Group.
