Can a health care system change?
Online posting: July 25, 1997
Published in print: September 1, 1997 CMAJ 1997;157:507
Re: The times they are confusing: What lies ahead for the
new health minister and physicians in Canada?, by John Hoey and
Kenneth M. Flegel, CMAJ 1997;157:39-41 [full text / résumé]
Drs. Hoey and Flegel ignore the connection between ill health and
poverty. Numerous studies[1] have firmly established that income
status and health status are closely linked. The 20% of Canadian
children living in poverty are virtually guaranteed poorer health
as a result of their economic situation.
I also disagree with their recommendation to abandon plans for
a universal national pharmacare plan. They base their
recommendation on the fact that provinces will be unwilling to
pick up the costs of such a plan. Fair enough, but the costs are
still going to have to be borne. They will inevitably be higher
in a system with a public–private split than in a purely public
scheme.
Hoey and Flegel are correct in suggesting that it makes sense
for Canada to develop a universal formulary for provincial plans
and negotiate prices jointly. Under such a system, Australia has
kept its drug prices to about 60% of the average prices in the
Organization for Economic Cooperation and Development
countries.[2] But here in Canada, with 55% of drug costs paid for
either out-of-pocket or through private insurance, the price for
these drugs will not be brought down through the power of the
provincial governments as single buyers. A second feature of a
purely public drug insurance plan is that overhead costs are
lower because the provinces do not have to generate profits or
advertise, as private insurance plans do. One of the main reasons
for the difference between health care spending in Canada and the
US is the difference in overhead costs (about 1% in the Canadian
system versus 14% in the US one).[3]
Some rough calculations can give us an idea of the savings
that could be achieved through a national pharmacare scheme.
According to the latest figures from Statistics Canada the total
amount spent on prescription drugs in 1996 was $7.67 billion.[4]
Out of that total, private sector spending was just under $4
billion. Let us suppose that only 50% of the private spending ($2
billion) would be covered under a pharmacare plan and that the
other 50% would be for drugs not included in a national
formulary. Conservatively, let us assume that joint provincial
buying power would lower drug prices by 10%. Therefore, instead
of costing $2 billion, the drugs covered would cost $1.8 billion;
a savings of $200 million. Let us also assume that administrative
costs go from 10% to 5%. On $2 billion, administrative costs
would drop from $200 million to $100 million, another $100
million in savings. The 1996 prescription drug bill under a
national pharmacare plan would drop from $7.67 billion to $7.37
billion. Public spending would definitely rise, but the overall
cost to society would drop.
We need to be realistic, as Hoey and Flegel conclude, but we
should also be bold enough to suggest radical reforms. A true
commitment to lowering the rate of poverty and to implementing a
national pharmacare plan are 2 bold steps that the new minister
could take.
Joel Lexchin, MD
Toronto, Ont.
joel.lexchin@utoronto.ca
References
- Jin RL, Shah CP, Svoboda TJ. The impact of unemployment on
health: a review of the evidence. CMAJ
1995;153:529-40.
- Organization for Economic Cooperation and Development.
Purchasing power parities and real expenditures: GK results,
vol II, 1993. Paris: The Organization; 1996: Table 2.9.
- Himmelstein DU, Woolhandler S. The national health
program book: a source guide for advocates. Monroe (ME):
Common Courage Press, 1994.
- Dingwall DC. Drug costs in Canada. Ottawa: House of
Commons Standing Committee on Industry for the review of the Patent
Act Amendment Act, 1992; 1997.
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