A call for a universal drug plan for Canada

Published in the Vancouver Observer | January 20, 2012 | Circulation 100,000 unique monthly visitors

Photo by David P. Ball

This year marks 70 years since a federal commission called for drugs to be included in national health insurance. But after numerous election campaign promises – and many people not covered by private plans such as Blue Cross – why doesn’t Canada have pharmacare?

Increasing prices and cost of living have pushed drug prices out of many Canadians’ reach, according to a study released this week – particularly in B.C. where one in six residents cannot afford to fill their prescriptions. In the wake of this week’s premiers’ health care conference, the Vancouver Observer investigated drug costs.

“We hoped to highlight just how many Canadians are having trouble affording the costs of their medicines,” said Dr. Michael Law, author of a report published this week in the Canadian Medical Association Journal. “(Pharmacare) would help us with affordability problems, and it would almost certainly save us money.

“A universal drug plan could do both – it could reduce the cost people pay at the pharmacy, as well as the cost (to the system) overall, if it were designed to do both of those things.”

Medicare without pharmacare 

Law – an assistant professor at the University of British Columbia (UBC) and on faculty with UBC’s Centre for Health Services and Policy Research – said the pharmacare debate has, in fact, been simmering for 70 years. But despite decades of election promises from nearly every political party, little progress have been made because of systemic “inertia.”

The year 1942 was a critical year in Canada’s medicare system: The federal government signed the Atlantic Charter on New Year’s Day – envisioning a post-war world free of disease, hunger and war. Tommy Douglas became head of Saskatchewan’s Co-operative Commonwealth Federation (CCF) – the predecessor to today’s New Democratic Party – leading the party to victory within two years, and creating the country’s first public health care system.

But 1942 also saw the first in a long line of health commissions – all of which would call for a universal drug insurance to offer affordable medicines to Canadians, as part of a public health system.

Dubbed the ‘Heagerty Commission’ after its chair, the Advisory Committee on Health Insurance‘s findings were never heeded – the beginning of a chain of inquiries and commissions which recommended pharmacare but were ignored.

Price of drugs double that of the U.S.

“Today, we have patchwork of coverage,” Law said. “In B.C., technically no one is uninsured – but Fair PharmaCare only covers you if you spend a certain percentage of your income on drugs.

In fact, although brand name drugs tend to be slightly cheaper in Canada than the U.S. – and the government regulates prices based on international averages, Law explained – generic medicines are substantially more expensive than the U.S., and among the highest in the industrialized world.

One comprehensive study of drug prices (PDF) found that generic medication costs more than twice as much in Canada as the U.S. Examining the 27 most popular drugs, the 2002 Palmer D’Angelo Consulting Inc. study found that some generics cost up to a staggering six times more here.

That study argued the costs were driven by a lack of competition amongst pharmaceutical companies in Canada – the entire market being dominated by two giant corporations, Apotex and Novopharm (now Teva) – as well as federal and provincial over-regulation.

But critics argue that the pharmaceutical industry is able to charge exorbitant rates because they have too much influence on government.

“We have some of the highest drug prices in the world – and we have the lowest public funding for prescription medicines within the (Organization for Economic and Co-operation and Development, OECD),” said Colleen Fuller, co-founder of PharmaWatch, an national advocacy group on medicines. “We have the highest generic drug prices, the second-highest brand name prices, and one of the lowest levels of public funding.


“These are huge problems,” she added. “The lack of public involvement both in funding and monitoring drugs means that, not only are people exposed to a much higher risk when they use prescription medicines, but they’re paying a much higher price than they should be paying.

“The industry has huge tentacles in government both nationally and provincial… What they want is more drugs on the market, they want them approved quickly, they want to be able to charge the highest price that they possibly can, and the government should just butt out. All they care about is money, and that is the bottom line.”

What Fuller and some other activists would like to see is not simply a universal pharmacare plan – but for Canada to get back into the business of researching and manufacturing cheaper medications.

She cites the example of the publicly-owned Connaught Laboratories, which was created at the University of Toronto in 1914 to fight an outbreak of diptheria – a disease known as “the strangler” and the leading cause of death among children. The labs went on to become the world’s first insulinproducer, but in 1984, Brian Mulroney’s Conservative government privatized Connaught and today they have been merged into the pharmaceutical giant Sanofi-Aventis.

“Now, we don’t make a drop of insulin in Canada, even though it was discovered here,” Fuller said. “All of the insulin in Canada is provided by foreign corporations – our own legacy being totally betrayed by the federal government.

“We have to put that to the Conservatives, because they’re the ones who caused that to happen. It’s a disaster – we’re paying some of the highest prices for these kinds of vaccines, as a consequence of these public policies. We need a public manufacturer in Canada that’s accountable, that works in the public interest, and is not charging an arm and a leg for medicines that we need.”

Fuller worries that Canada’s ongoing negotiations for a free trade agreement with Europe – the Comprehensive Economic and Trade Agreement (CETA) – will fuel a race to the bottom for drug standards and prices, already underway through Conservatives’ attempts to reform Canadian drug regulations. She said that pharmaceutical companies have gained a seat at the government table – while citizens advocacy groups are sidelined.

“It’s all being done behind closed doors, and industry is actually sitting down with them to figure out how to change the regulations,” she said. “Who’s sitting with Canada at the table? It’s the drug industry, the asbestos industry – there are no citizens at the table at all, in discussions.

“So they have a huge influence over the decisions being made at the trade table, as well as at the domestic policy table.”

Maude Barlow, national chairperson of the Council of Canadians, told theVancouver Observer that CETA poses a major threat to Canada’s already weak drug price regulations – allowing companies to extend their patents for years longer, and thereby delay the creation of cheaper generic versions.

“The immediate issue around CETA is we have to agree to align our pharmaceutical patents to the European ones – which are much more in favour of the transnational drug companies – and their patent regime,” Barlow said. “That would increase our drug prices by about $3 billion a year.

“CETA applies to not just the federal government but provincial and municipal governments. That immediately offsets any kind of cost-cutting you might want to do for health care.”

Dr. Law agreed that pharmaceutical companies exert a major influence on drug prices and government regulations – but believes that Canada does, in fact, play an important role in regulating prices.

“There’s a lot of inertia when you have a system involving $30 billion, and involving a lot of companies and manufacturers that make a lot of money,” he said. “The people who can’t afford their medication, unfortunately, don’t have a vocal lobby group.

“There’s people not taking their drugs for a whole range of cost reasons. They tend to be the poor, the sick and the uninsured. They’re not a powerful political lobby group.”

Currently, Law said, one of the governments’ main strategies for lowering prices includes negotiating with manufacturers to cut their rates – in exchange for adding their drugs to lists of insurable medications.

Law made a distinction, however, between costs to the medical system and governments, and how much consumers actually pay for drugs over-the-counter. The latter costs are driven up by wildly varying pharmacy dispensing fees – which range from $4 to $14, he said – and differences in people’s health insurance coverage.

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