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Researchers estimate that public coverage of essential medicines could save billions

Publicly funding coverage of essential medications would cut the overall cost of prescribing these drugs by about $3 billion, a new study estimates. Much of the savings would come from bulk discounts: buying in high volume for the whole country would mean a much lower price.

Researchers modelled how universal coverage would affect prices for 117 essential medications. These drugs on the essential medications list account for 44 per cent of all prescriptions in Canada, and 30 per cent of all prescription drug spending in Canada. The list includes antibiotics, birth control pills, heart medications, antidepressants and insulin, among other essential medications.

Currently, various provincial drug programs pay for between 25 per cent and 41 per cent of prescription drug spending in Canada, according to information provided in the study. Private drug plans, such as those provided through employee benefit programs, pay for about 35 per cent of prescription drugs. Patients pay for about 22 per cent of prescriptions with their own money. However, about 10 per cent of Canadians say they cannot afford the costs of taking their medications as prescribed.

The research team compared prices of these drugs in Canada to prices in Sweden and New Zealand (which have national drug coverage) and to prices paid by the United States Department of Veterans Affairs. They found that the cost of generic versions of essential medications were 60 per cent lower in Sweden, 84 per cent lower in New Zealand, and 47 per cent lower in the U.S. compared to Canada. They also estimated that the U.S. Department of Veterans Affairs paid 43 per cent less for name-brand drugs.

Lower drug costs for Sweden, New Zealand and the U.S. Department of Veterans Affairs are largely due to the volume discounts enjoyed by these large single-payer systems. Canada would enjoy similar discounts if it had a similar system.

The researchers concluded that universal public coverage for the 117 essential medications would reduce Canadians’ total spending on these drugs by $3.04 billion per year. The savings would largely benefit patients and private drug plans: public coverage would save these private sector groups $4.27 billion per year, while increasing federal and provincial government costs by $1.23 billion per year.

In Canada, Royal Commissions on healthcare have recommended universal pharmacare, but Canada remains the only industrialized country with universal healthcare but no pharmacare. The authors of this study suggest that covering a list of 117 essential medications could cover much of Canada’s drug needs, and would be a practical step toward more universal pharmacare.

The by Steven Morgan, PhD and colleagues at the University of British Columbia was published in CMAJ on Feb. 27, 2017.

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  • A publication of:
  • Women's College Hospital