Learning From The Failures of Past Pharmacare Efforts

by Jan Kurman

Over the past 60 years, there have been many attempts to expand and reform the Canadian healthcare system to include pharmaceutical drugs. In that time, changes have definitely been made at the provincial level to diminish the exorbitant costs of patented drugs. Many individuals remain without coverage and the cost of prescription drugs have increased sharply these past few years.[1] This is no longer an issue of whether the federal government should do something or not. It needs to act since the current system is unsustainable.

Three major attempts at a national pharmacare program have transpired. The first one occurred in 1964 when the Hall Commission released its final report. More than 30 years later, the Chrétien government created the National Forum on Health in 1994 to examine the issues facing Medicare. The third attempt came soon after as another royal commission was created in 2001. The Commission on the Future of Health Care in Canada, or more simply “the Romanow Commission”, was also tasked to review Medicare and recommend policies to improve the system and keep it sustainable.

So why did all these attempts fail? Firstly, we need to examine the problems internally and find out what each party recommended, by what method, to what degree, and by what means. Then we can look at the problems faced externally by each group. What was the economic, fiscal, and political climate that each group faced? Only after considering these issues can we begin to formulate why each case led to failure.

The Hall Commission (1964)

The Royal Commission on Health Services, also called the Hall Commission after its chair, was established in 1961. Its purpose was to “inquire into and report upon the existing facilities and the future need for health services for the people of Canada and the resources to provide such services, and to recommend such measures”.[2] The final report was released in 1964, after a tremendous amount of public hearings, research studies, and the examination of health care systems.

The Hall Commission recommended a universal, single-payer model of medical care which would be paid for by the federal and provincial governments. The plan was to expand medical coverage in order to cover the costs of preventative health care services and hospital care for all Canadians. This plan was similar to that of Saskatchewan’s at the time, but included a larger range of health services that would be covered publicly.[3] The release of the Hall report contributed significantly to Prime Minister Lester Pearson and his cabinet agreeing to cost-share Medicare with those provinces that agreed to adopt a universal single-payer model.[4]

In terms of pharmacare, the Hall Commission recommended 50/50 cost-sharing between the federal and provincial governments toward the establishment of a prescription drug program, with a $1.00 charge for each prescription. At the time, prescription medications represented 6.5% of spending on personal health services.[5] This recommendation was not implemented in the end. The Hall report also contained 25 forward-looking recommendations on pharmaceuticals that remain current to this day, including bulk purchasing, generic substitution and a national formulary.[6]

The report focused most of its discussion of pharmaceuticals on the need for drug price control rather than insurance. By 1966 an agreement for nationwide public medical insurance was

in place, and serious intergovernmental discussion of program expansion appeared to be over, at least for a time.

The National Forum on Health (1997)

Chaired by Prime Minister Jean Chrétien, the National Forum on Health examined four key issues facing medicare between 1994 and 1997. These were “(1) the determinants of health; (2) evidence-based decision making; (3) values that should guide health system renewal and policy development; and (4) ethical dilemmas and the identification of strategies to improve the efficiency of the health care system and to put resources where they have the greatest potential to improve the health of Canadians”.[7]

In its final report, Canada Health Action: Building on the Legacy, the forum called for national pharmacare and home care programs, and recommended increased funding for health, health care research, health information and health management systems. These proposals became part of the vigorous public debate about the future of medicare.

The forum declared that Medicare should also cover the costs of home care and prescription drugs through new legislation or policy. The ratio of public to private health coverage was also planned to be restored to the usual 75:25. This ratio had dropped to a low of 69.8:30.2 in 1997 and there were concerns about the creeping privatisation of Medicare.[8] To combat the expanding number of private insurers, public plans had to expand in scope.

Federal and provincial governments have always avoided universal, single-payer programs for prescription drugs even though they are regarded as a medically necessary service. This is because no province has successfully controlled the runaway costs that come from a publicly funded program. Saskatchewan implemented a universal drug plan in the 1970s that covered all costs except for a small dispensing fee.[9] This program was mostly abandoned in the late 1980s as the costs became too high. Universal prescription drug coverage is often seen as politically enticing but financially risky.

The forum’s proposals fell on deaf ears at the time. Canada had just gotten out of a severe recession in 1990 and 1991. High levels of public spending at the federal and provincial level resulted in a downgrade of the country’s triple-A credit rating.[10] After four years of spending cuts, Canada was on the road to recovery at the time. Provincial governments were angered by the federal changes to health transfers and only beginning to recover themselves fiscally. They were in no mood to negotiate a new national program.

The Romanow Commission (2002)

In April 2001, the federal government established the Commission on the Future of Health Care in Canada to review Medicare and recommend policies and measures to improve the system and its long-term sustainability. It was headed by Roy J. Romanow, Q.C., former Attorney General and Deputy Premier of Saskatchewan.[11]

In terms of pharmacare, the report had many recommendations for the federal government:

  • Establishing a New Catastrophic Drug Transfer
  • Establishing a National Drug Agency
  • Establishing a National Formulary
  • Integrating Prescription Drugs into the Health Care System

Romanow envisioned the creation of a National Drug Agency in 2004/2005, the development of a National Drug Formulary by 2005/2006, and finally the full integration of prescription drugs at all levels of care and coverage under the Canada Health Act between 2011 - 2020.[12]

Despite the relatively good economic times and the support from physicians and pharmacists, these recommendations failed to materialize. Politicians and policy makers were more concerned with fixing existing services rather than implementing an expansion of the current system. Any type of pharmacare program was seen as extremely expensive with no potential cost control by the general public. Also, the leadership of the governing federal Liberal party was on shaky ground (Martin-Chretien battle), and this hampered any sort of major policy changes.[13] With all this happening, the country’s third attempt at universal pharmacare was doomed to fail.

Barriers To Healthcare Reform

Healthcare is chiefly a provincial responsibility. Any attempts to reform the current system into a federal program will be met by serious provincial opposition. This situation has made federal politicians hesitant to pursue major changes.

  • Coverage, formularies, and prices vary greatly from province to province. Some provinces offer limited coverage plans while others are much more generous (Quebec).[14] Provinces that have inferior plans will welcome an expansive federal pharmacare program. However, provinces with first-rate pharmaceutical plans will unlikely support attempts by the federal government to alter the current landscape.[15] There would need to be a common ground in which all provinces agree upon in order for negotiations to start.

A national pharmacare program risks being blocked by private interests. The pharmaceutical industry, private insurance companies, and other professional organizations will likely be opposed to such a policy as they have much to lose.

  • Profitability is the main concern for all private institutions. Government intervention in the pharmaceutical industry will presumably turn the heads of major drug companies. They will no longer be able to exploit price differences among provinces as the federal government will become the sole negotiator in all things drug related. Private insurance companies may lose customers if the government makes universal pharmacare mandatory for all citizens. All these measures will affect the profits of these private interests and create a defiant opposition to a national pharmacare program.

Politicians and taxpayers are more concerned about fixing the current state of healthcare rather than creating a whole new program.

  • The existing healthcare benefits that Canadians enjoy are usually the focus of most debates. There is concern that the addition of new programs may erode the current benefits that Canadians are fond of.[16] Or that an expansion of the current system will increase the current burden of taxes that they pay. The costs that come with creating a national pharmacare program may deter individuals from supporting such a change. Fiscal hawks in parliament will challenge the feasibility of universal pharmacare and garner enough support to seriously oppose it nationwide. More information and work is needed to show the general public the benefits and gains of a national pharmacare program.

There is a lack of electoral incentives needed to push for a universal pharmacare program.

  • The current patchwork of private and public insurance plans for prescription drugs has transformed the way Canadians think about drug coverage. Public coverage is readily available for the poor and senior citizens in most Canadian provinces. Voluntary private insurance is also accessible for a large number of Canadians.[17] A universal pharmacare program would offer very few benefits for a large portion of the voting population.[18] However, the minority of Canadians that have insufficient or no pharmaceutical drug coverage need to be heard if we are to have a healthy democracy.

 

[3] "Civilization.ca - History of Canadian Medicare - 1958-1968 - Public or ...." https://www.historymuseum.ca/cmc/exhibitions/hist/medicare/medic-5h05e.html. Accessed 8 Jul. 2019.

[4] "Justice Emmett Hall Memorial Foundation." http://www.hallfoundation.ca/justice-emmett-hall. Accessed 4 Jul. 2019.

[5] "National Pharmacare in Canada - Canadian Medical Association." https://www.cma.ca/sites/default/files/2018-11/national-pharmacare-canada-e.pdf. Accessed 4 Jul. 2019.

[6] Royal Commission on Health Services. Report Volume One. Ottawa: Queen’s Printer, 1964.

[7] (Anne Crichton et al., Health Care: A Community Concern?: Developments in the Organization of Canadian Health Care Services [Calgary: University of Calgary Press, 1997], p. 252).

[8] "The future of health care in Canada - NCBI." 25 Jun. 2001, https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1121447/. Accessed 4 Jul. 2019.

[9] "Canadian Pharmacare: Looking Back, Looking Forward - NCBI." https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3430151/. Accessed 8 Jul. 2019.

[10] Boothe, K. (2013). Ideas and the Limits on Program Expansion: The Failure of Nationwide Pharmacare in Canada Since 1944. Canadian Journal of Political Science, 46(2), 419-453. doi:10.1017/S000842391300022X

[12] "CP32-85-2002E.pdf - Publications du gouvernement du Canada." 1 Nov. 2002, http://publications.gc.ca/collections/Collection/CP32-85-2002E.pdf. Accessed 4 Jul. 2019.

[13] Ibid

[14] "formularies in canada - Patented Medicine Prices Review Board." http://www.pmprb-cepmb.gc.ca/CMFiles/NPDUIS/NPDUIS_formulary_report_part_1_en.pdf. Accessed 8 Jul. 2019.

[15] Boothe, K. (2013). Ideas and the Limits on Program Expansion: The Failure of Nationwide Pharmacare in Canada Since 1944. Canadian Journal of Political Science, 46(2), 419-453. doi:10.1017/S000842391300022X

[16] "Universal prescription drug coverage in Canada - NCBI." https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5094297/. Accessed 8 Jul. 2019.

[18]  Hacker JS. The historical logic of national health insurance: structure and sequence in the development of British, Canadian, and U.S. Medical Policy. Stud Am Polit Dev. 1998;12(1):57–130.