Mulcair announces universal pharmacare – how will he pay for it?

The NDP is promising to roll out a universal pharmacare program, in cooperation with the provinces, to cover prescription drugs for all Canadians.

It isn’t clear yet what would be covered or how the numbers work out, but the party has committed $2.6 billion over four years. Even if a streamlined national coverage plan reduces Canada’s drug costs significantly, it will likely cost the government much more than that.

Commissions and public health experts have been calling for a universal publicly funded drug program since the Royal Commission on Health Services in 1964.

They argue the existing system is inequitable and that even low co-payments can be financially out of reach for many people forced to choose between paying for drugs and paying the rent.

One in 10 Canadians has avoided taking medically necessary medicine because of the prescription cost, according to a July, 2015 paper titled Pharmacare 2020.

Story continues below advertisement

WATCH: The NDP is promising to roll out a universal pharmacare program, in cooperation with the provinces, to cover prescription drugs for all Canadians.

This often means people get sicker, end up in emergency departments and cost the system more than if their drugs had been publicly paid for in the first place: The Pharmacare 2020 paper estimates Canada could save between $1 billion and $9 billion a year by avoiding those extra emergency medical costs for people whose conditions worsen as a result of not taking their meds.

WATCH: Mulcair says he is committed to long-term planning when it comes to sustainable healthcare

But paying for drugs is expensive.

Story continues below advertisement

Canadians spend about $30 billion a year on prescription drugs, about 42 per cent of which is covered by public health plans, which vary from province to province and are usually geared to people who are very old, very poor or very sick.

While 36 per cent of prescription drug costs are now covered by private plans, Canadians pay $6 billion a year in out-of-pocket prescription drugs.

It isn’t clear how the NDP’s pledge of $2.6 billion would cover this gap, especially given that a universal publicly funded pharmacare program would eliminate the need (and incentive) for private plans.

Even if a streamlined, efficient drug system reduces Canada’s prescription drug expenditures by as much as a third, and even if it succeeds in lowering hospital costs because people take the drugs they need instead of getting sicker, it would still probably cost the feds billions a year.

It’s likely that would translate to some kind of tax increase, said Wilfrid Laurier University health economics professor Logan McLeod.

“I don’t know what specific tax mechanism they would use but they would likely have to … increase expenditures. Because that’s currently something they’re not paying for.”

But McLeod argues this is something Canada needs.

“We pay for drugs when you’re in hospital. As soon as you’re discharged from hospital, we stop paying. There’s this asymmetry between where we get our drugs from and how we pay for them,” he said.

Story continues below advertisement

“This is absolutely something Canada should have … on equity grounds. Regardless of your income you should be able to afford medications you need.”

But it can be complicated to put together: You’d need to get all the provinces on board, meld together multiple drug plans.

“There’s a lot of moving parts, which is why it’s difficult to pin down what’s going to happen.”

Health Minister Rona Ambrose agrees with the bulk purchasing part of the NDP’s plan, which seeks to lower the cost of drugs by having all governments pool their resources and negotiation tools.

“Canadians are getting ripped off, they’re paying way too much for drugs,” she said.

But she isn’t a fan of universal drug coverage.

“There’s a lot of money in the system, and the difference, I guess, between the NDP and us is that some of that money [in tax cuts and credits] seniors will actually be able to keep for themselves instead of being taxed at even higher levels.”
Story continues below advertisement

Marc-Andre Gagnon, a Carleton University professor and co-author of the Pharmacare 2020 paper, said he’s “thrilled” by the NDP’s proposal.

“Finally, we can have a rational debate on these issues,” he said.

“It will all depend on many details once you start rolling it out. But right now I think it’s going in the right direction.”

Sponsored content