Author
Canadian Health Policy Institute (CHPI)
Introduction
This study is Part 2 of CHPI’s annual series of reports published under the title: How good is your drug insurance? This edition compares the generosity of coverage for new drugs in public (federal and provincial) and private insurance plans in Canada within five select therapeutic classes. Presenting the data separately by therapeutic class allows us to see how particular patient populations are uniquely impacted by differences in drug insurance benefits.
Objective
To compare insurance coverage for new medicines by therapeutic class, between Canada’s provincial and federal public drug programs; and to compare the generosity of insurance coverage for new medicines by therapeutic class, between public sector drug programs and the benchmarks currently set in a competitive market by private-sector drug insurance.
Data
Empirical data were obtained from Health Canada and IMS Brogan covering the period from January 1, 2004 to December 1, 2012.
Results
There is significant variability of insurance coverage for new drugs across provincial and federal plans. Quebecers tend to have much better and quicker access to new medicines in their publicly funded drug plan relative to the public plans of other jurisdictions. Also, the generosity of drug insurance coverage under the private sector drug plans in Canada is far better than that of the public sector drug plans.
Conclusions
These findings are relevant to three recent developments with implications for drug insurance policy in the public and private sector. First, some private sector unions (e.g. BC Nurses Union) have negotiated drug insurance coverage on the basis of equality to the public sector drug plan in their province, perhaps without realizing that this will mean far more restricted drug insurance coverage for new medicines. Second, some academic groups are advocating for the nationalization of private drug insurance in Canada and its replacement with a government-run monopoly program billed as Pharmacare. The findings of this report are strongly indicative of the low generosity of benefits that can be expected from a government-run Pharmacare program, and confirm that greater benefits tend to accrue to patients from a competitive market for drug insurance in Canada. Third, the Canadian Life and Health Insurance Association (CLHIA), which represents the private sector drug insurance industry in Canada, recently began advocating for governments to impose a single minimum national formulary, which is a defined list of the drugs that would be covered by both public and private sector insurance. This study shows that the private sector currently insures a far greater number of new drugs compared to the public sector – a result of competitive market pressures that encourage generous coverage. If implemented, a government-imposed single minimum national formulary would further politicize drug insurance in Canada and reduce private-sector competition, creating a ‘race to the bottom’ that will drive insurance coverage in the private sector down to the minimum benefit defined by governments.
