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Universal prescription drug coverage could save money for Canadians, study finds

Canadians enjoy universal healthcare that covers medical and hospital expenses. However, there is a common assumption that universal prescription drug coverage would be too expensive to put into practice. In a new study, researchers found that universal pharmacare may be much more affordable than many people assume.

"The discussion about pharmacare often focuses on concerns about the cost," says study co-author Dr. Danielle Martin, vice-president of medical affairs and health system solutions at Women's College Hospital. "This research shows that Canada could provide universal prescription drug coverage without raising taxes, and that changes the conversation."

The researchers found that overall spending on prescription drugs in Canada would likely decrease by $7.3 billion with universal drug coverage. That figure includes increased government costs of about $1 billion, and private sector savings of about $8.2 billion.

The researchers arrived at these figures by analyzing patterns of prescription drug use by different drug classes in Canada, and costs of those medications. They also studied how those drugs were paid for: through private drug plans such as employer plans, through government drug plans, or through direct payment by patients.

Their model took into account efficient product selections and price negotiating power that are available in a single-payer system. In other countries with universal drug coverage, governments are able to purchase generic and brand-name medications at lower prices because they are buying in large quantities.

Using data from the Canadian Rx Atlas, 3rd Edition, researchers led by Steve Morgan, PhD at the University of British Columbia’s School of Population and Public Health found that Canadians spent about $22 billion on prescription drugs in the fiscal year 2012-13. The researchers found that having a universal public drug program would lower those costs to $15.1 billion. Even though there would be an increase in prescription drug use by people who previously had no drug coverage, a universal program would still result in 32 per cent lower drug costs through economies of scale.

According to the researchers, the estimated $958 million in increased costs to governments would be a relatively small increase in spending.

The model assumes that Canada would be able to negotiate drug prices similar to those of other countries with universal drug plans, and that generic drug use would be similar to current use in some provincial drug plans.

The study authors note that Canada is the only developed country with universal healthcare that does not also have universal drug coverage. They add that about 10 per cent of Canadians cannot afford to take prescribed medication as ordered by their doctor.

The study was published in the Canadian Medical Association Journal (CMAJ) on March 16, 2015.


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