Author
Canadian Health Policy Institute (CHPI)
Introduction
Good drug insurance should provide financial protection from the unexpected and unaffordable cost of accessing necessary medicines should you or your family become ill. Yet the quality of drug benefits differs from plan to plan. Some plans provide fully insured access to the most advanced drug treatments available, while other plans cover only a small fraction of new drugs and only insure part of the costs. The wait for drug coverage also differs by plan. Canadians might be surprised to find out how much better and faster coverage is under private drug plans compared to public drug plans. The findings are important because there are proposals currently being advanced in Canada to replace private drug plans with a government-run monopoly known as Pharmacare. This report provides hard evidence from Canadian experience that private competition is good for patients and that a government-run Pharmacare monopoly will reduce access to new medicines.
Objective
To compare coverage for new drugs in private versus public drug plans in Canada.
Data
The most recent data were obtained from Health Canada and IMS Brogan covering the period from January 1, 2004 to December 1, 2013.
Results
Of the 39 new drugs approved by Health Canada in 2012, 36 (92%) were covered by at least one private drug plan compared to only 11 (28%) that were covered by at least one public plan – as of December 1st, 2013. For the new drugs approved for sale by Health Canada in 2012 that were eventually covered under at least one private plan and at least one public plan, private drug plans took 143 days on average to approve coverage compared to 316 days for public drug plans. (See more in Highlights section)
Conclusions
The quality of drug coverage is far better in private than in public drug plans in Canada. Government-run drug plans tend to restrict access to the most advanced medicines available. By contrast, competition drives private drug plans in a socially beneficial “race to the top” to provide the best possible access to the most advanced treatments available. Universal drug insurance is best achieved by subsidizing low-income individuals so they can afford private coverage, not by a government-run monopoly. A drug insurance system that expands access to private drug coverage, enhances competition between insurers, and expands informed consumer-driven choice among plan designs will produce the highest level of benefits for Canadians.
