By Lydia Stewart Ferreira
Two Canadian think tanks – the C.D. Howe Institute and the Institute for Research on Public Policy – recently issued contradicting reports on whether prescription drug plans should be age-based or income-based.
As background, medications prescribed outside a Canadian hospital setting are not covered by Canada’s medicare system. They are financed through a patchwork of private and public drug insurance plans that only provide coverage for select populations. For example, up until the late 1990s, people 65 and older received universal, public drug coverage in most provinces. But with population aging, the public liability associated with age entitlements has become a major concern for governments. Four Canadian provinces have discontinued their age-based programs, which covered most of the cost of medications for seniors, and replaced them with income-based programs, which protect all residents against catastrophic drug costs. Other provinces have started to move or are considering moving in this direction.
The C.D. Howe Institute think tank concluded that provincial drug plan benefits based on age are ‘outdated’ and drug plan benefits should be based on income instead. “[I]ncome-based plans are a better alternative for cash-constrained provinces and offer more equitable access to public benefits.”
The authors state that age-based plans may have seemed affordable decades ago when the ratio of seniors to workers was low, but are now ill-equipped to handle the serious financial pressures (nearly $30 billion spent on prescription drugs nationwide in 2013) that come with a surge of seniors in the population.
The Institute for Research on Public Policy think tank assessed the performance of income-based public drug plans against three key policy objectives: access, equity and efficiency and found that income-based plans perform poorly with respect to all of these objectives. The Institute concluded that provincial drug plans should be based on age and provide universal coverage via small income tax hikes which would be offset by central discounted bulk purchases.
The national Canadian newspaper, the Globe and Mail, stated on December 8, 2014 that it was “crucial to ensure the necessary drugs are available to all and are taken when prescribed, so that sick people don’t become a further burden on the health care system. It is not acceptable that some Canadians do not fill needed prescriptions because they cannot afford them.” The Editorial comment when on to state that “[i]t makes no sense to divorce pharmaceutical treatment from the principle of universality. More and more health care is pharmaceutical care… .” The Editorial recommended that instead of one drug plan model, different models should be used in different provinces ‘to see what’s working and what isn’t.’
While any informed, empirical discussion about health care is welcome, the two major think tanks – the C.D. Howe Institute and the Institute for Research on Public Policy – have missed a golden opportunity. Instead of focusing on the age/income debate or different prescription drug models for different provinces, the think tanks should have expanded their research and analysis to include a discussion of an optimal prescription drug insurance plan design. In keeping their focus on the age/income debate, the think tanks have not dealt with the messy but core questions of the continuous medical evaluation of drug effectiveness and efficacy, the role of prescribers, insurers and drug companies in drug demand and the inclusion or exclusion of prescription drugs into federal health care legislation and provincial public health insurance plans. If think tanks do not address these difficult questions …. .