Despite the recent passing of legislation of the same name by the Trudeau government, national pharmacare remains as fanciful a prospect in Canada as high-speed rail
“Our governments seem to almost actively avoid making decisions, and instead prefer to just make tiny incremental announcements so that they always seem engaged with the issues of the day, even though they aren't trying to actually fix them.”
- Matt Gurney and Jen Gerson, The Line Podcast
“I can’t promise I’ll try, but I promise I’ll try to try.”
- Bart Simpson
Improving access to and the affordability of prescription drugs is something every government should aspire to, and few have expressed loftier ambitions in that regard than the recently defunct Trudeau Liberals. And yet, after almost a decade in power, and innumerable recycled announcements, endless rounds of consultation, a plethora of expert panels, reports and discussion papers, and billions of dollars spent or committed, the government has precious little to show for it. Given the glacial pace of progress on this front and the country’s current fiscal and geopolitical situation, Canadians are about as likely to see their prescriptions reimbursed under a national, universal pharmacare plan in the coming years as they are to ride high speed rail between Quebec City and Windsor.
The pharmacare story is as complex as it is jading, with many subsidiary policy failures. A considerable amount of context is necessary to understand the full measure of dithering and dissembling that has taken place along the road to nowhere.
The boring but important background stuff
Articles on this topic tend to begin by noting that Canada is the only country with publicly funded health care that does not include prescription drugs, and this one will be no exception. However, this truism is only partly true in practice, as roughly 45 percent of drug expenditure in Canada is paid for by federal, provincial and territorial drug plans. Private health insurance and out-of-pocket payers account for the remainder, to the tune of 35 percent and 20 percent respectively. Another frequent platitude about the Canadian system is that it is fragmented and patchwork, with drug coverage shared by a hodge podge of hundreds of public plans and thousands of private ones, each with its own eligibility criteria, deductibles, co-pays and dozens of other variables that the average Canadian would find mystifying.
For those of us who understand it on a deeper level, fragmented and patchwork don’t capture the level of dysfunction in our pharmaceutical pricing and reimbursement system. At best our system is flailing; at worst it’s failing, and the numbers bear this out. To begin with, Canada pays the third highest prices and spends the third most per capita in the OECD for prescription drugs. Given how much we spend, you would think we would prioritize speedy access to drugs, but the opposite is true. It takes more than two years on average for a new drug to be covered by a public drug plan after it has been approved for sale by Health Canada. This is double the average time in comparable OECD countries and worst among the G7.
This dysfunction takes place against the backdrop of tectonic changes in the nature and cost of prescription drugs that have further strained the system in recent years. As little as two decades ago, pharmaceutical spending was dominated by chemically manufactured “small molecule” drugs for common ailments like depression and high cholesterol—so called “blockbusters”—that were arguably within the means of everyday Canadians. Today, the market is increasingly dominated by high-cost drugs, many of which are made from living cells or organisms and treat much less common conditions. These drugs, which can cost upwards of hundreds of thousands and sometimes millions of dollars per year now account for over one third of spending in public drug plans, despite being used by only 2-3 percent of beneficiaries. The proliferation of high-cost drugs, combined with increased utilization and demographic changes has growth in spending on pharmaceuticals outstripping growth in spending on hospitals and physicians, and unlike decades past, there is no impending wave of competing generic versions of these drugs poised to arrest these trends.
While estimates of the number of Canadians who are uninsured or underinsured for prescription drug coverage vary across different studies and reports, in these rapidly worsening economic times, there is no denying that the choice between food, shelter and medicine will grow ever starker for this demographic. Even private insurers are struggling to foot the bill for some of the highest cost drugs and have banded together in recent years to pool their resources and smooth out the impact these drugs can have on their client’s continued ability to provide drug coverage to their employees.
The feds join the party
The writing on the wall has been apparent to the federal government since at least as far back as 2015, when then Conservative Minister of Health, Rona Ambrose, penned a plaintive letter to her provincial and territorial counterparts seeking permission to have the federal government join the Pan-Canadian Pharmaceutical Alliance (pCPA), an entity which negotiates drug prices on behalf of government drug plans. In colourful language which tapped into the more populist roots of her party, Minister Ambrose noted that Canadians pay some of the "highest costs for prescription drugs in the world" and expressed her belief that Canadians were being “ripped off” by industry drug prices.
While the Minister was ultimately successful in her bid to have the federal government join the pCPA, the irony is that it was only after considerable foot dragging by the Harper government and its failure to support the objectives of the 2004 National Pharmaceutical Strategy (NPS), a fed-prov initiative formed in the wake of the Romanow commission’s report on the future of health care. The NPS was supposed to advance a number of objectives that remain relevant today, such as catastrophic drug coverage, the creation of a national formulary and accelerating access to breakthrough drugs for unmet needs. However, with successive changes in government, the momentum behind that initiative fizzled out at the federal level and it fell to the provinces and territories to salvage what they could, which they did by establishing the pCPA in 2010, much to their credit and mutual benefit.
The far greater irony is that the impact of this singular initiative by Minister Ambrose which ultimately led to the federal government joining the pCPA arguably outstrips the totality of the tangible achievements of the Liberal government in this same policy space over the past decade, despite the latter’s much more ambitious suite of policy objectives, as will be seen. That in no way diminishes the fine work of many smart and well-intentioned public servants who have had their shoulder to the wheel of these objectives for longer than they care to count. If there is fault to be found, it lies elsewhere.
The rise and fall of drug pricing reform
Minister Ambrose was alerted to the need for robust action on drug pricing in part by the reporting of an agency within her own portfolio, the Patented Medicine Prices Review Board (PMPRB). The PMPRB has a dual mandate, to police excessively priced patented drugs and to report on pharmaceutical trends. It was through this latter function that the agency had been raising some alarm bells in the mid 2010s about how Canadian patented drug prices had been trending upward compared to other developed countries and on the challenges posed by an early influx of high-cost drugs on the longer-term sustainability of the Canadian pharmaceutical system.
In early 2016, the PMPRB floated a discussion paper identifying some possible changes to its own guidelines that it believed to be responsive to these trends. That paper landed just as the Trudeau government was finding its feet early into its first mandate. As stated, most governments do feel an obligation to make prescription drugs more affordable and accessible for their constituents. That impulse and the concomitant desire to be seen as taking a tough line with the pharmaceutical industry, a sector that often ranks dead last in public favourability surveys, typically manifests itself either early into a mandate, when the government is riding high on the anti-elitist platform that carried it to power, or quite late, when the ideas tank has run dry and the best the government can do is a little grandstanding and some jazz hands to distract a jaundiced electorate.
The Liberal Party’s 2015 campaign platform included several commitments that addressed prescription drug affordability and access, although pharmacare was not yet one. The PMPRB’s proposed changes to how it internally managed excessive pricing dovetailed with a young government’s ambitious agenda and before long morphed into a major set of regulatory amendments that were unveiled to the public by the incredibly capable Minister of Health at the time, Jane Philpott, in May of 2017 during a speech before the Economic Club of Canada. The proposed reforms, which were forecast to save Canadians $13.2B over ten years encountered furious resistance from the pharmaceutical industry from day one. However, it was not long before many patient groups echoed that resistance, out of fear, fomented mainly by the industry itself, that lower prices in Canada would result in less not more access to drugs here.
The road to hell may be paved with good intentions but the heavy machinery is fuelled by consultations. In this case, two years-worth of them, involving hundreds of hours of meetings between PMPRB officials and pharmaceutical companies, industry associations, patient groups, academia and private insurers to name a few. These consultations were aided and abetted by multiple scoping papers, a multistakeholder steering committee, an expert advisory committee and even a third-party review undertaken by David Dodge, the former Governor of the Bank of Canada and high priest of public finance who offered his blessing of the government’s cost-benefit methodology on the impact of the proposed regulations.
Despite a veritable onslaught of resistance, the regulatory reforms were finalized and published in the Canada Gazette in August of 2019, with a coming into force date of July 2020. In the news release announcing the publication of the final regulatory amendments, the new Minister of Health, Ginette Petitpas Taylor, hailed them as “the biggest step to lower drug prices in a generation” which would not only “make prescription drugs more affordable and accessible” but also “lay the foundation for National Pharmacare."
Fast forward three years, after multiple delays in the coming into force date of the regulatory reforms, the government announced that it would be making major changes to the reforms before their new June 2022 coming into force date, essentially eviscerating the substance of what industry had fought so hard against in the 2019 amendments. In the accompanying news release, the new Minister of Health, Yves Duclos, had a dramatically different take on the regulations from that of his predecessor:
“These changes will ensure the sustainability of the healthcare system, while supporting innovation and investment in the pharmaceutical sector.”
A proper accounting of everything that transpired prior to the government reversing itself on the rationale and purpose of the PMPRB reforms is beyond the scope of this piece, which is about pharmacare after all. But the dynamic that underlies this evolution in perspective is revealing and provides insight into why the Trudeau government was so completely ineffectual in bringing any of its pharmaceutical policies to fruition during its decade-long tenure, especially pharmacare.
In a Hub article entitled “The good and the bad of Trudeau’s time in office”, the historian and author of “Being Prime Minister” J.D.M Stewart opined that the Liberal government under Justin Trudeau preferred the poetry of governing to the prose. That certainly resonates as an eloquent and insightful take on how the government devolved from the heady days of Ministers Philpott and Petitpas-Taylor’s enthusiastic embrace of the PMPRB reforms to Minister Duclos’ treatment of them as something foul that he regretted stepping in. However, the truth is that the reforms were taking on a malodorous air in the Trudeau government well before Minister Duclos scraped them off his shoe in 2022.
It is easy to understand why the initial reform package sailed through cabinet. It is only natural that Ministers would be keen on a relatively concise set of regulatory amendments when told that they stood to save Canadians $13.2 billion by simply waving the magic wand of Governor-in-Council approval. It is not so natural though to think that industry would stand idly by while that same amount was shaved off its bottom line. A government that knows its business should expect to gird for war in defence of such a policy. This is where the poetry of governing parts from the prose and why so many of the Trudeau government’s bold policy proclamations, not just in pharmaceuticals but so many other federal domains (electoral reform, affordable housing, reconciliation, climate targets, take your pick), began to unravel once rubber met road.
In fairness, while support for the PMPRB reforms was already flagging in 2019, any further posturing about taking a tough stance with the pharmaceutical industry went out the window with the pandemic. Overnight, pharmaceutical supply became a national security issue and any leverage the government thought it had with industry defenestrated itself faster than a Putin dissident. With next to no domestic pharmaceutical manufacturing capacity, Canada found itself in the unenviable position Ukraine now does in the eyes of the Trump administration—devoid of cards.
To this day, the amendments to the PMPRB’s regulations, even in their depleted state, have yet to be operationalized by the agency. This is because before that can happen, the PMPRB must consult on changes to its guidelines to give effect to the new regulations. In late 2023, Minister Duclos called on the PMPRB to halt its consultations in the face of continued industry opposition. Given that the PMPRB is a quasi-judicial agency and technically independent and arms-length from Health Canada and the Minister, a crisis within its senior leadership over how to respond ultimately led to the resignation of two of its Board members, a short-lived but intense media storm and a Parliamentary inquiry by the Standing Committee on Health. Even now, consultations on how to implement the regulatory amendments are ongoing. A best-case scenario, assuming they are not repealed outright by the next government, would not see any price reductions that might flow from their application take effect before January 2027, a full decade after the reforms were first unveiled to much fanfare by Minister Philpott.
Four steps forward, three steps back
The PMPRB debacle is only one small piece of a much larger policy puzzle as it relates to the government’s putative aim to improve drug pricing and reimbursement in Canada and establish a national pharmacare program. As mentioned, in the early days of the PMPRB reform process, it was described as a “foundational step” towards the eventual establishment of pharmacare. Putting aside the circular logic of this claim, namely, that before we introduce a measure that will vastly lower drug prices through monopsony buying power, we must first lower prices, the other foundational stepping stones identified in Budget 2019 were:
1. The establishment of a Canadian Drug Agency to bulk buy drugs (presumably as the entity that would be responsible for administering pharmacare).
2. The creation of a national formulary, meaning a list of essential drugs that would be covered under pharmacare; and
3. Implementation of a strategy on drugs for rare diseases.
It bears repeating that none of these objectives were new to the national dialogue and can be traced at least as far back as the NPS in 2004. The cyclical restating of these same objectives by successive generations of government brings to mind the self-deprecating witticism that Canada is the future and always will be. Rarely has the language around a suite of policy objectives reached such peak Orwellian equivocation as the Trudeau government’s characterization of the purpose and effect of its public engagement on these objectives. As with the PMPRB reforms, a veritable eruption of consultations, discussion papers, “what-we-heard” reports, expert panels, etc. have flowed lava-like from announcements relating to each of these foundational pieces only to cool off and calcify from the irresistible forces of gravity and time. Here’s but one example of the hedging and non-committal language that typifies these initiatives:
“The pan-Canadian Advisory Panel on a Framework for a Prescription Drug List (Advisory Panel) is creating a recommended framework for developing a potential pan-Canadian prescription drug list, or formulary. The Advisory Panel’s non-binding recommendations are intended to add to the national conversation about ensuring Canadians have access to prescription drugs.”
Consultations and public engagement on these objectives are perennially forward-looking, non-binding and always directed at “informing” further discussion. The ongoing “dialogue” is never about the actual creation of something tangible but rather about conceiving a “framework”, or better yet, values and principles to inform a framework. Whereas the Liberal party’s 2019 electoral platform spoke of “advancing pharmacare” its 2021 platform committed to “continuing progress towards national universal pharmacare”. Pharmacare is the future and always will be.
Political journalists and podcasters Matt Gurney and Jen Gerson framed this general phenomenon beautifully in the following excerpt from their “The Line” podcast:
“Our governments seem to almost actively avoid making decisions, and instead prefer to just make tiny incremental announcements so that they always seem engaged with the issues of the day, even though they aren't trying to actually fix them.”
Much like the PMPRB reforms, to this day there is still no national formulary in effect, no bulk buying of prescription drugs underway and five of the six rare disease drugs that were the subject of the recent bilateral deals to co-share the cost of rare disease drugs (at a relatively paltry $468 million per year for three years), a commitment dating back to Budget 2019, were already being reimbursed by the provinces and territories anyway.
As for the CDA, it exists but in the form of a re-branded Canadian Agency for Drugs and Technologies in Health (CADTH), a pan-Canadian agency that has changed names more than once since its establishment by the federal, provincial and territorial governments in 1989. It now falls in large part to this beleaguered agency to breathe fresh life into these ever-pending objectives through yet another round of consultations and policy recommendations. Why? Because that’s what is required by the 2024 Pharmacare Act, the Trudeau government’s signature achievement in legislative doublespeak.
The Turducken Act
The Trudeau government’s first formal commitment to a national pharmacare plan appeared in Budget 2018, with the announcement of the creation of the Advisory Council on the Implementation of National Pharmacare. Chaired by former Ontario Health Minister, Dr. Eric Hoskins, the council was tasked with engaging in a “national dialogue” to assess options for establishing a universal pharmacare system in Canada. In 2019, the council released its final report, “A Prescription for Canada: Achieving Pharmacare for All,” which recommended the establishment of a universal, single-payer, public pharmacare system. The report outlined a phased approach to implementation, starting with coverage for essential medicines and expanding to a comprehensive national formulary. Although pharmacare was mentioned in the 2019 and 2021 Liberal campaign platforms, the tabling of the report did not exactly spur the government to vigorous action. On the contrary, as some senior government officials can attest, for a not insignificant period after the report’s tabling, speaking the word “pharmacare” in dealings with the public was as ill-advised career-wise for a civil servant as uttering “Voldemort” is for aspiring young wizards at Hogwarts. For whatever reason, government at the highest level had soured on the idea and made it clear to the rank and file that its name was not to be spoken. It wasn’t until the 2022 Confidence and Supply agreement between the Liberals and the NDP that pharmacare—or more accurately legislation of the same name—returned to the lips of government officials.
Although the government did not meet the original deadline agreed to with the NDP for tabling legislation, after negotiations and an extension, Bill C-64, the Pharmacare Act, was introduced on February 29, 2024, and received Royal Assent on October 10, 2024.
Excluding preamble and title page, the Act is four-and-a-half pages long (two-and-a-quarter if it were unilingual), and among the things it purports to do, one of them is definitely not committing the government to implementing a national pharmacare program.
Right out of the gate, the summary section of the Act kindly lets us know to keep our pharmacare expectations in check, using language that will be very familiar to the reader by now. It describes the legislation as setting out “the principles that the Minister of Health is to consider when working towards the implementation of national universal pharmacare”. Section 3 of the Act goes on to describe the legislation’s purpose in equally equivocal terms: “to guide efforts to improve … the accessibility and affordability of prescription drugs … in collaboration with the provinces, territories, Indigenous peoples and other partners and stakeholders, with the aim of continuing to work toward the implementation of national universal pharmacare.”
The Act then contemplates a number of similarly familiar-sounding interim steps the government must undertake anew in its eternal quest to render pharmacare onto the people.
For one, it authorizes the Minister of health to “seek advice from the Canadian Drug Agency on” matters including “the prescription drugs and related products that should be included in prescription drug coverage plans … and the conditions of that coverage.” Given that the federal government is a founding member of CADTH/CDA and the greatest single contributor to its funding, it seems odd that the Minister would require a piece of legislation to empower him or her to do so.
No pharmacare announcement under the Trudeau government would be complete without the striking of an advisory body of some kind and the Act is no exception. It calls on the Minister to establish another “committee of experts” this time to provide recommendations on the operation and financing of pharmacare. That committee has since been struck and at the time of writing of this article, is traversing the country virtually consulting with “provincial and territorial governments, indigenous groups… drug plan administrators, health care providers, industry and academics”. Fortunately for the committee, the 2019 Hoskins report already contains a comprehensive set of recommendations on both the operation and financing of pharmacare, so they should make quick work of it.
As mentioned, in addition to tasking the CDA to provide recommendations on a national formulary, under the Act it must advise the Minister on a bulk buying strategy, whatever that means, and on a number of matters relating to the appropriate prescribing of prescription drugs, none of which are remotely new.
Last but not least, the Act authorizes the Minister to, if he or she has entered into an agreement with a province or territory to do so, “make payments to the province or territory in order to “…provide universal, single-payer, first-dollar coverage — for specific prescription drugs and related products intended for contraception or the treatment of diabetes.” This is the only aspect of the legislation that is truly novel and potentially meaningful on a realistic time frame. To date, bilateral agreements have only been signed with BC, Manitoba, PEI and the Yukon, after a concerted push by the government to get them past the wire prior to the election. Again, it’s not clear why special legislation is necessary for the Minister to do something like this. There is no equivalent legislation that authorizes the Minister to negotiate the bilateral deals that were recently struck to cost share the reimbursement of an agreed upon list of rare disease drugs. Nevertheless, to the extent this expanded public coverage comes to pass and survives the next government it is a positive development. The question now is regardless of which party comes to power, what other positive developments on this front can we realistically expect on the other side of an election?
Curiously, when the Act was first tabled, CBC News breathily reported that “Ottawa unveils national pharmacare plan that covers diabetes, contraception to start…” What kind of “national pharmacare plan” can really be said to be unveiled in the absence of, at the very least, a list of the drugs it would cover? If it talks like a duck but doesn’t walk at all, it is a lame duck at best and an overstuffed turkey at worst. One of the most frustrating things about this legislation to those who understand its full context is that, since its passage and especially since the writ was dropped, both the Liberals and NDP repeatedly point to it in claiming credit for single-handedly delivering up pharmacare, with little pushback from the media or anyone of influence who knows better. One clever tactic the Trudeau government employed from the outset to mute criticism from experts who are vocal proponents of pharmacare is to appoint them to their advisory committees. You can only criticize something so much when you’re publicly tied to it. In fairness, many of these same people care deeply about this issue and are professionally committed to realizing universal pharmacare in Canada. More’s the pity.
One final observation about the Act: for a piece of legislation that purports to be about the creation of national universal pharmacare, the bill is achingly silent on two key points that could not be more relevant to its future form and scope:
1. The role of the private insurance industry in pharmacare, which contributes $15 billion annually in pharmaceutical spending and already covers two-thirds of Canadians, mostly to their satisfaction according to survey data.
2. Money
The four horsemen of pharmacare
The idea of national pharmacare was first proposed in 1945 and has roiled to the surface of Canadian political life many times since. Polling throughout that time has indicated strong support in principle among the Canadian electorate for pharmacare, as it does today. Why then, if so many of us seem to think it’s such a great idea, and have for more than 80 years, has political will not galvanized around it? Why are we still deliberating over the niceties of its “foundational steps” in 2025? As always, the answer is complicated but certainly the usual suspects of money and power are part of the explanation. And as is often the case with longstanding, intractable problems in Canadian politics, the fact that Canada is a federation with a division of powers between different levels of government also cannot be ignored.
When you take a step back and contemplate the big, intractable issues in Canada today—affordable housing, immigration, emergency wait times, the opioid crisis, energy infrastructure, military procurement, etc.—it’s hard to escape the feeling that our governments are just not equal to the challenges of our time. Indeed, it is difficult to fathom that we could even build a railway from coast to coast today if we had to, let alone a high-speed rail corridor from A to B. Gone are the days when the answer to undertakings of that scale was to throw waves of human misery at them until the job was done. That is as it should be of course but what approach or methodology have we replaced it with? No matter how much a problem screams for a solution, there always seem to deeply vested interests manning the ramparts of the status quo who must be consulted ad infinitum until every thread has been pulled and the situation seems so complex and daunting that the government adopts the modus operandi described earlier by the clever journos at The Line (and much more succinctly by Bart Simpson).
The author of this article started out his public service career in the waning days of the Chrétien regime. One of the first lessons that was hammered into any public servant working in policy by that government was that there could be at most three big-picture priorities per mandate. Any Minister that sought to advance a major policy initiative or seek out new funding for a program had to shoehorn it under one of those priorities or get used to disappointment.
To have any chance of success, national, single-payer, universal pharmacare would have to be treated as this kind of mandate-level priority. It would require a whole of government effort that emanates from the centre and permeates the entire apparatus. Unfortunately, under the Trudeau government, responsibility for advancing pharmacare policy was siloed inside Health Canada and assigned to a woefully small group of people who, to their credit, have not wavered in their Sysiphean-like task. But no isolated group of that size, no matter how talented or hard-working can be expected to deliver on a project of this magnitude. It is dizzying to reflect on all the papers and consultations and panels that have been turned out in the name of pharmacare by this group of dedicated civil servants, but the government as a whole is no closer to delivering on pharmacare than it was ten years ago, and with a new government waiting in the wings, probably less so.
As for the power part of the equation, the pharmaceutical industry is a sophisticated, highly organised, transnational, trillion-dollar enterprise. It is one of a handful of industries that bestride the earth like a colossus and the only way for a mid-level power like Canada to gain the upper hand on a policy that is opposed by the full force of such a powerful stakeholder group is to hold the high ground and not break ranks under any circumstances.
Two other powerful constituencies that must be reckoned with in this context are patient groups and the private health insurance industry. For patients, the only thing worse than the status quo is fear of the unknown. Absent iron clad guarantees from government that they’d be at least as well off under pharmacare than they are now, patient groups are going to remain extremely wary of change of such magnitude. As for private insurers, single-payer, universal pharmacare represents an outright existential threat and is approached with terror and trepidation.
So much of what has or, more accurately, has not happened on pharmacare and related policy initiatives since 2017 can be explained by the government’s aversion to taking its lumps from stakeholders who can only be appeased by the abandonment or gutting of a policy that displeases them. Ironically, whether you fish or cut bait, the public opprobrium is the same. Indecision is the killer and it’s how governments end up rotting from the inside.
As far as the money thing goes, between government, private insurers and out-of-pocket payers (i.e. co-pays, deductibles and the uninsured) Canadians now spend north of $40 billion per year on prescription drugs. Growth in drug spending is now in the double digits and projections call for more of the same in the next few years, due mainly to the ever-increasing number of high-cost drugs entering the market. In October 2023, the Parliamentary Budget Officer (PBO) released a report estimating the additional cost to federal and provincial governments of paying for the entirety of the nation’s prescription drug usage (as opposed to the current sharing of that expense with private insurers) at $13.2 billion by 2027-28. That number was based on a projection that total spending that year would be $38.9 billion. Given that we’ve already surpassed that, it’s safe to assume that the incremental cost to government today would be in the neighbourhood of $15 billion if not more.
The federal deficit for the 2023–24 fiscal year was $61.9 billion, exceeding the government’s target by $20 billion. In recent years, the federal debt-to-GDP ratio has risen from 31 percent to 49 percent due to pandemic spending. The PBO projects Canada’s economy to grow by 1.7 percent in 2025, with inflation close to 2 percent, and that’s without factoring in the tariff situation with the US. Under these circumstances it isn’t hard to figure out why the Trudeau government couldn’t find the fiscal space for a pharmacare program, and it’s safe to say you can forget about the next one doing so.
Even if the government had $15 billion burning a hole in its pocket that it was eager to spend on a national pharmacare program every year, it lacks the jurisdiction to actually administer such a program. Health care delivery is largely a provincial and territorial responsibility under section 92(7) of the Constitution Act. With the exception of its jurisdiction over specific populations (e.g. First Nations, military personnel, veterans, inmates etc.) the federal government’s role in health care is an indirect one: its spending power and fiscal transfers under the Canada Health Act. This explains why the federal government has been dependent on negotiating bilateral agreements with the provinces and territories to give effect to its new legal obligation to cover contraceptives and diabetes medication. It seems like a pretty major stumbling block to overcome for a federal government intent on establishing single-payer, universal pharmacare. Quite apart from its lack of authority to centrally administer such a program, any perceived attempt by the federal government to exert control over how pharmaceutical reimbursement is managed is viewed with a mixture of suspicion and contempt by the provinces and territories who haven’t forgotten having to go it alone under the NPS. To put it more bluntly, the provinces and territories neither trust the federal government in matters of this kind nor think it competent to carry them out.
For argument’s sake, let’s say the federal government is able to negotiate standardized bilateral agreements with the provinces and territories to foot the bill for the $15 billion in incremental costs, how would Canadians materially benefit? Presumably, one condition of providing funding would be that provinces and territories would be responsible for reimbursing the prescription drug needs of each and every resident in their respective jurisdictions. To the extent this would bring the working poor and other uninsured populations into coverage, this would be a very good thing. It would also mean that every Canadian would enjoy the same level of coverage, as provinces and territories would be required to subscribe to a federally constituted “national formulary” as a condition of providing the funding. Again, to the extent this means Canadians would no longer have to move from one region to another just to gain coverage for a particular drug product, it is also a good thing. Conversely though, it is likely that some Canadians would enjoy less coverage than they did under their private insurance and would be paying out-of-pocket to make up the difference.
The one benefit that would not result from such an arrangement, however, is accelerated access to new and innovative therapies, which is the single greatest shortcoming of the public reimbursement system today that screams for redress. Recall that it takes more than two years on average after Health Canada approves a new drug for sale in Canada for it to be picked up by a public drug plan. One reason for this is that before the pCPA will consider negotiating with the manufacturer of the drug it must await the CDA’s review of whether it is effective and offers sufficient value for money to warrant doing so. This is a complex analysis and unavoidably time consuming. Efforts have been made in recent years to have Health Canada and the CDA’s reviews run in parallel, but industry uptake of this option has been limited.
The other factor responsible for the long delay in access is an inevitable by-product of the pCPA’s structure and function. There is no question that coming together to negotiate as a collective was a major step forward for the provinces and territories, and since 2016, the federal government as well. However, while the pCPA negotiates a national price for all the public drug plans, it still falls to each of the individual drug plans to give effect to that deal through hammering out what’s called a product listing agreement (PLA) with the manufacturer. Both processes are time consuming but the pCPA’s price negotiations especially so because it is a consensus driven organization with 14 constituents (10 provinces, 3 territories and the feds) each of which is responsible for safeguarding its own unique interests and priorities. Negotiations cannot proceed until members agree on a mandate and then the jurisdiction that is appointed to lead them must report back to the other members periodically on their progress. As much as this is an improvement over how things worked before the pCPA was established in 2010, when each jurisdiction negotiated one-on-one with manufacturers, it is cumbersome, unruly and inherently time consuming. Pharmacare of the kind just described would do nothing to change this and would only add to the already heavy burden on the hard-working staff at the pCPA and the drug plan leads in member jurisdictions.
The final and most glaring flaw in this approach to negotiating a series of bilateral agreements with the provinces and territories is that there is nothing really in it for them. Unless the federal government is prepared to pay for far more than just the incremental cost from the added burden of covering Canadians who were formerly beneficiaries of private insurance or were not insured at all, there is little to no incentive for signing a deal of this kind.
It is not surprising then that even within the Trudeau government, there was consternation and confusion at the highest levels over the scope and function of its pharmacare plan. During his tenure as Finance Minister, Bill Morneau expressed reservations about implementing a universal national pharmacare program that would replace existing private and provincial drug coverage systems. In a speech to the Economic Club of Canada on February 28, 2018, Morneau emphasized the importance of addressing gaps in coverage without overhauling the current system:
“We recognize that we need a strategy to deal with the fact that not everyone has access, and we need to do it in a way that’s responsive—that deals with the gaps and that doesn’t throw out the system we currently have.”
Even Mark Holland, the Health Minister at the time Bill C-64 was making its way through Parliament seemed to be grappling with the basic question of whether pharmacare should take the form of an entirely new program that completely displaces existing insurance schemes, or a fill-in-the-gaps model:
"What we're trying to get at is what's the most efficient, efficacious and effective way to get everybody covered and to make sure that coverage gets the health outcomes we want."
To this day, it’s still not clear what the Trudeau government truly envisioned for pharmacare and there is nothing in the Pharmacare Act that helps shed light on this mystery. As the Trudeau years recede into the mists of time, expect bold claims by former members of that government of having fully intended to enact universal, single-payer, national pharmacare, if only this or that had happened along the way or if they had just a bit more time to govern. However, if anything is clear at this point it’s that the government really didn’t know what it wanted or had a clear idea of how to carry it out. Hence the eternally forward-looking orientation of an endless number of pharmacare-adjacent announcements. If the Pharmacare Act is all a decade in power buys you, national pharmacre isn’t a policy, it’s a permanently unfinished heirloom our great grandchildren will still be working to complete.
To make an omelette, you need to kill some people
While there are still many things about our health care system that still work extremely well and should be celebrated, there are too many other things that really don’t and are past the point of crisis. It does seem highly discordant that at a time when many provincial governments are experimenting, or at least tolerating, private sector incursions into public health (try getting a family doctor in Quebec right now without paying for it) that any government would want to add to its burdens by doubling the size of a public program that is already struggling to achieve its desired objectives.
Imagine that there are two buildings sitting side by side. One is a towering government-owned skyscraper two hundred stories high that is buckling under its own weight. The other is a privately-owned building a mere 15 stories that could stand to be refurbished but is structurally sound relatively speaking. Having the government take on a $15 billion incremental cost to an already overburdened $200 billion per year public health system is like demolishing the smaller building and adding another 15-stories to the top of the teetering skyscraper.
The foremost problems with our current pharmaceutical system are affordability, timeliness and breadth. High-cost drugs are taking up an ever-greater share of public and private drug plan budget; the process for arriving at a price to pay for them is dysfunctional and under-resourced, and too many people are falling through the cracks between what the government pays for and what the private insurers do. There is no fixing these problems without a whole lotta money and the fortitude to do something truly disruptive with it.
In the meantime, Canada has mature systems in place for providing public and private drug coverage to the majority of Canadians. Countries like France, Germany, Switzerland, and the Netherlands have hybrid models that integrate public and private prescription drug coverage, each with distinct approaches tailored to their healthcare objectives.
An alternative to pharmacare that integrates existing private coverage and negotiates one price for all payers would harness the full monopsony power of the country and secure the support of a key constituent. This may sound outlandish but an arrangement of this very kind between the pCPA and the Canada Life and Health Insurance Association (CLHIA), the industry association representing private health insurers in Canada, was very nearly consummated in the late 2010s before being scuttled last minute for reasons unknown.
Meeting monopoly power with monopsony power is the best way to negotiate a price that Canadian payers can afford, but it does not directly address the timeliness or gap issue. That requires even more disruption, and boatloads of money.
This short term, alternative proposal is a controversial one and not shared by many proponents of pharmacare. However, if anything is clear from the federal government’s track record on pharmacare during the Trudeau years is that if we are going to make any headway in coming to the aid of the uninsured and underinsured in this country, we must take incremental steps within existing systems. We should not let the perfect be the enemy of the good.
And now for the bad news
Given the seismic shift in Canada’s political priorities since January, this piece is a selfish indulgence on the part of the author because the whole pharmacare debate is moot now anyway. For the foreseeable future, there is only one issue that will dominate the attention and resources of the federal government and that is the fact that Canadians, like Alaskans, can now see Russia from their house. It’s time to circle the wagons and batten down the hatches. If there ever really was a policy window for pharmacare it is closed and shuttered until further notice.
But hey, at least weed is legal now.
Douglas Clark is the former Executive Director of the Patented Medicine Prices Review Board and the former CEO of the pan-Canadian Pharmaceutical Alliance
