Loading articles...

Liberals to create national drug agency as building block of pharmacare plan

Last Updated Mar 19, 2019 at 2:04 pm PST

Prime Minister Justin Trudeau and Minister of Finance Bill Morneau arrive in the Foyer of the House of Commons to table the Budget, on Parliament Hill in Ottawa on Tuesday, March 19, 2019. THE CANADIAN PRESS/Justin Tang

OTTAWA — The Trudeau Liberals’ new budget promises a new agency to buy drugs in bulk and cut Canadian medication costs, the first step toward a national drug plan.

In a sign of just how expensive pharmacare could be, the government is also promising to spend $500 million a year, starting in 2022, just on subsidizing drugs that treat rare diseases, which have few patients to split huge research and development costs.

The government said it intends to work with provinces, territories and other partners to develop the mandate for the national drug agency, with Health Canada to receive $35 million over four years starting in 2019-2020 to create an office to support the plan.

National pharmacare wasn’t a promise Justin Trudeau made before he became prime minister back in 2015, but he did promise the Liberal government would work harder to bring down medication costs.

This new agency is expected to help negotiate better drug prices and eventually reduce national costs by as much as $3 billion.

UBC Professor Steve Morgan has been one of the driving forces behind national pharmacare. He says while the feds are investing in the infrastructure of such a program, they are ignoring the operative side.

“We’re being told we need to wait another few months — possibly, even a few years — before they’re ready to start that program. That’s the part that’s frustrating, because we’ve been waiting a long time for a program like this.”

“If you look at this budget, it has a promise of a rare disease fund of about $500 million ongoing, starting in 2022. It would appear to me that their target for launching at least the rare disease drug program is 2022 and it may be that their target for launching something of a legitimate, bonafide pharmacare program would be 2022, as well,” he added.

Morgan says it’s frustrating that national pharmacase is “being punted to essentially an election campaign promise.”

“Now we have to wait and see what will be the result for the 2019 campaign in order to know whether or not that promise will be fulfilled.”

RELATED: BUDGET 2019: As deficit grows, feds spend on job retraining, home incentives

The budget also includes plans to create a national formulary, a list of drugs that have been evaluated for both efficacy and cost-effectiveness. Lower-tier governments now assess drugs on their own, duplicating much of the work.

Despite clear language in the budget on how the government eventually intends to move ahead on a pharmacare plan, a central question remains: how to pay for it.

A universal pharmacare plan does not appear affordable for Canada right now, said Rebekah Young, the director of fiscal and provincial economics for Scotiabank. She said adding such a plan to the government’s books without major tax hikes would require stronger growth than Canada sees even in the best of times.

Provinces do not have a lot of capacity to take on substantial new costs, she said, noting the parliamentary budget office has estimated the cost of a pharmacare plan at about $20 billion a year.

“The big question then becomes who is going to pay and how much?” she said. “That will definitely be a key feature of the summer debate when we head into the election.”

RELATED: Federal deficit grows as Liberals spend on pharmacare, job retraining

The federal New Democrats have promised that if elected, they would follow through on a universal pharmacare plan to respond to dramatic increases in prescription drug costs.

Over the past three decades, Canadians’ spending on medication has soared from $2.6 billion in 1985 to $33.7 billion in 2018. People take more drugs to manage more conditions than they used to — living longer, and better, but at considerable cost.

The Canadian Institute for Health Information says drugs are the fastest-growing component in health spending but that most people’s medication needs aren’t covered by public health insurance, unlike care provided in hospitals and through visits to the doctor.

Canada’s current patchwork of drug coverage — including more than 100 public programs and 100,000 private insurance plans — is not well equipped to handle the increasingly expensive drugs now coming to market, the government said in its budget document.

“Absorbing these rising costs is difficult for individual Canadians and their families — and poses challenges to the long-term sustainability of government- and employer-sponsored drug plans,” it said.

The steps toward pharmacare contained in Tuesday’s budget follow interim findings issued by a federal expert panel led by former Ontario health minister Eric Hoskins.

It recently issued a report on the “building blocks” of pharmacare, including a recommendation that Ottawa oversee an agency to roll out a national drug plan.

The interim report said drug spending in Canada is expected to surpass $50 billion by 2028.

At the time of its release, British Columbia Health Minister Adrian Dix described the panel’s interim report as encouraging, but said the federal government would need to “step up.”

“It’s very positive to see the interim report, but ultimately this issue will be about whether the federal government is prepared to cost-share or not,” he said.

Hoskins’ advisory council is set to issue a final report on the issue of access to drug coverage this spring, with the findings to be tabled in the House of Commons.

—Follow @kkirkup on Twitter

Kristy Kirkup, The Canadian Press