Health Care Series: Canada’s Prescription Drug Imbroglio – GIVE ME SOME COVERAGE!

When it comes to buying prescription drugs in Canada, some provinces are more equal than others. Buy prescription drugs in Quebec and you are in luck. The province provides universal coverage to all residents who do not have private health insurance. (In every other province, Canadians pay for their own medication, usually through their private insurer or out of their own pocket.)

In Nova Scotia, New Brunswick and Prince Edward Island the story changes. Residents in Nova Scotia have only limited coverage for expensive pharmaceuticals used to treat diseases like cancer and diabetes. Residents of New Brunswick and Prince Edward Island have no coverage at all. This means paying the costs of cancer treatments out of pocket. With around two-thirds of new cancer drugs prescribed for in-home treatment priced at over $20,000 a year, this represents a substantial financial burden to cancer patients in those provinces. Other provinces and territories lie somewhere in the midpoint of these two extremes.

The difference in drug costs may be explained by the Canada Health Act. Although it sets out basic nationwide guidelines, each province sets its own provincial prescription drug benefits plans. The Act sets out nine basic national guidelines for health that includes public administration, comprehensiveness, universality, portability and accessibility. The overarching criterion of the Act is universal coverage for all “medically necessary” hospital and physician services without upfront payment. The guidelines are just that – guidelines. Ignoring them, however, means the provinces may risk losing monies under the Canada Health Transfer from Ottawa to the provinces.

(In 2011, Ottawa provided $25.4 billion in cash and $13.1 billion in tax points to the provinces.) While it may hand over funds, the federal government plays no direct role in health-care delivery.

What is the result of the provinces setting their own prescription drug policies? A 2008 Canadian Medical Association study found “the eligi-bility criteria and cost-sharing details of the publicly-funded prescription drug plans differed markedly across Canada, as did the personal financial burden due to prescription drug costs.” What this means is that a Canadian’s ability to access prescription drugs is largely dependent on where they live. For instance, seniors with income at or above the national average pay 35 per cent or less of their prescription costs in two provinces (New Brunswick and Prince Edward Island.) In every other province they pay as much as 100 per cent of their prescription costs. For low-income seniors, the situation is somewhat better. All provinces offer some level of drug reimbursement. (In Alberta and Nova Scotia, however, beneficiaries pay 35 per cent-100 per cent of their prescription costs and professional fees, regardless of their prescription burden.)

Unlike most Organisation for Econo-mic Co-operation and Development (OECD) nations, Canada does not have a national catastrophic drug coverage system or a universal prescription drug coverage plan. “Catastrophic prescription drug costs” refers to the provision of a general level of coverage that protects individuals from drug expenses that threaten their financial security or cause “undue financial hardship.”

In its place is a “patchwork” of public and private drug insurance plans. Canada has 19 publicly-funded drug plans which complement the more than 1,000 private drug insurance programs offered by employers, unions and professional associations. These private plans very significantly in terms of eligibility, benefit payment structures and drug formularies.

This patchwork of provincial drug plans is responsible in part for the three million Canadians who are uninsured or under-insured for prescription drugs. The Canadian Health Coalition (comprised of health care workers and anti-poverty groups) says this means access to drugs depends on where you live and if you work. It cites the example of the average couple aged over 65 with an income of $35,000 a year who require $1,000 of drugs a year. The entire cost would be covered in New Brunswick and Newfoundland and Labrador, two-thirds of the cost in Quebec and one-third in Ontario and British Columbia – but nothing in the Yukon or Northwest Territories.

Access to prescription medication is also dependent on the demographic you fit in or to put it plainly, who you are. Low-income non-seniors are the hardest hit by Canada’s prescription policy. Most people in this category have to pay for the full cost of their medications, unless they or their employer subscribe to a private insurance plan. In the case of low-income non-seniors, this is unlikely. Private insurance plans are often only available to full-time workers. Low-income earners typically work for the minimum wage, are on contract or work part-time. Even for low-income non-seniors, it pays to live in the “right” province. Take for instance a 23-year-old single woman with a child and a household income of $14,000 a year. The average cost of medication to treat hypothyroidism and hyperlipidemia for one year is $807. Due to different subsidization rates, the woman would pay $849 for medication if she lived in Nova Scotia, but only $252 a year if she lived in British Columbia.

So how does Ontario rate when it comes to prescription medications? Canada’s largest have-not province fares well when it comes to equitable access to medication. A study by the Centre for Health Services and Policy Research, University of British Columbia, found that Ontario (along with British Columbia, Saskatchewan and Manitoba) provided the greatest protection against catastrophic prescription drug costs.

Ontario has six main drug benefit programs. Beneficiaries of the largest one (the Ontario Drugs Benefit Program) include persons who are 65 years of age or older, long-term care home residents, persons enrolled in a home care program and persons on social assistance. Ontarians with high drug costs relative to income registered in the Trillium Drug Program are also eligible.

In 2010, in a bid to curb medication costs, Ontario reduced the price of most generic drugs to 25 per cent of the brand-name products. Prior to the reform, Ontario paid 25 per cent to 75 per cent for generic drugs. According to the Government of Ontario, the change to the generic drug regime saved the province $500 million a year, with an extra $100 million in savings anticipated in 2012.

But it doesn’t stop there. April’s provincial budget means health care in Ontario is set to change. In a bid to eliminate Ontario’s massive $15.2-billion dollar deficit in five years, the province announced it would cap health-care spending increases to 2.1 per cent annually over the next three years. This compares to the past eight years which saw health care spending increase by an average 6.1 per cent each year. This includes freezing base funding to hospitals, which are obliged under the Canada Health Act to provide medication to inpatients without an upfront fee.

Exceptions to this rule include the provision of certain medications to treat costly rare illnesses – otherwise known as delisted medications. It is not known if delisted medications in hospitals will increase under the new budget austerity measures. De-listing refers to the removal of a drug from provincial coverage for reasons of cost and/or safety. Also unknown is whether subsidized prescription coverage provided by the province will be affected.

What is known is that Ontario is set to take a unique approach to prescription coverage. In most provinces, every single senior, by virtue of their age, receives some form of prescription subsidization. Ontario, however, plans to change this. Seniors with the highest 5 per cent incomes will now pay more for their prescription drug costs to help subsidize home care and support for all seniors. Some seniors depending on income may foot the entire bill. Changes to the Ontario Drug Benefit (ODB) plan means single seniors with an income of $100,000 or more will pay a deductible of $100 plus 3 per cent of net income over $100,000. Senior couples with a combined income of $160,000 or more will pay a $200 deductible plus 3 per cent of income over $160,000. Combined savings will contribute $30 million in 2014-15 toward the new Ontario’s Seniors’ Strategy.

Adding to the future affordability of prescription drug costs across Canadais an impending national drug short-age. The supply shortfall is due in large part to unexpected production problems at a pharmaceutical faci-lity operated by Sandoz Canada in Quebec. (Canada already has a national shortage of a particular type of injectable painkillers used by cancer patients and arthritis sufferers.) As a result, many Ontario hospitals are sharing drugs. While for now it is mostly hospitals that provide pharmaceuticals pre-paid through taxes to inpatients which are affected, the drug shortage may eventually filter down to corner store pharmacies. In keeping with supply and demand principles, as pharmaceuticals become less available, the price is expected to rise. And while provincial pharmaceutical drug plans may absorb part of the shock, at least some of the increase may end up being passed on to the average Canadian. As for how much exactly Canada’s drug shortage will add to the prescription drug bill in Ontario’s 3,306 pharmacies, only time will tell.