By Nigel Rawson and John Adams
January 24, 2025
Introduction
National pharmacare, as proposed by the federal government, will not improve patient access to innovative medicines without major changes to current gatekeeping practices. Without deeper reforms, it could make drug access worse for patients.
Canadians used to be proud of their “national medicare,” but health care across the country is now in crisis (Angus Reid Institute 2023). There’s a significant shortage of doctors, nurses, and hospital beds, several million Canadians have no family physician (Duong and Vogel 2023), emergency rooms are overrun with people who have nowhere else to turn for medical treatment (Kirkey 2024; Zafar 2024), and wait times to see a specialist (assuming an appropriate one is accessible in your area) and for surgery are far too long (Moir and Barua 2023) such that patients can die before seeing a health care provider.
Only drugs administered in hospitals are covered under medicare, whereas those provided in ambulatory care have never been part of the system, despite several recommendations from commissions, committees and Throne Speech commitments to improve coverage of prescription drugs over the past 60 years (Health Canada 2005; Morgan and Daw 2012). No national plan was introduced until the Trudeau Liberals, supported by the NDP, passed Bill C-64 in 2024 (Parliament of Canada 2024).
In the face of federal inaction, provinces and territories created public drug programs in the 1970s to provide taxpayer-funded prescription drug coverage to their seniors and low-income residents. Some have been extended to cover children and other special groups, such as people with diabetes. However, how patients receive coverage varies. Virtually all plans require a copayment, with some having a maximum amount. Some require an annual premium and at least six provinces have a deductible amount that must be paid before the plan will offer any benefit. Even then, there is variation. Consequently, drug coverage by government plans is a patchwork varying by jurisdiction and within them. Many Canadians also have access to private health insurance, which includes drugs, either paid by themselves or cost-shared with employers, unions or associations to provide coverage where government plans fail them.
Opinion polls regularly show that most Canadians are in favour of a national system, while media reports frequently appear about Canadians not being able to access a drug they need or cannot afford to pay out-ofpocket costs in the form of copayments, premiums or deductibles required by government drug plans. However, the devil is in the details (Watts et al. 2024). Many Canadians hope for a system that would allow them to access any drug approved for use in Canada at little or no cost. Others are more realistic, wanting national pharmacare to provide the same level of access to prescription medicines as offered by a good private insurance plan. Some want a system totally paid for out of taxation, while others want a mixed government-private insurance approach.
However, imposing a federal government-led national system holds more risks for delaying and limiting patient access than Canadians already experience. Improvements in speeding up the approval and reimbursement procedures andmaking access more equitable across the country should be made within the existing processes. The current methods are too cumbersome, time-consuming and expensive. National pharmacare as proposed by the federal government will not improve patient access to innovative medicines without major changes to the current gatekeeping practices. As proposed, it is more likely to make patient access worse (Rawson and Adams 2024).
System gatekeepers
It is important to understand how drugs are approved in Canada and considered for listing in government drug plans before discussing potential benefits and risks of national pharmacare. Drug manufacturers must obtain approval or agreement from five gatekeepers in Canada. No other country has this many layers of gatekeeping for biopharmaceutical health care.
The first is Health Canada. Before launching a new medicine in Canada, manufacturers must submit data about its benefit, safety, and manufacturing quality to Health Canada for marketing approval. Unless Health Canada grants priority status for a drug for an unmet need when evaluations take about six months, otherwise assessments take around a year (Rawson 2018). New medicines are typically submitted to Health Canada about a year after submission in the United States and/or the European Union. Two reasons are particularly relevant: Canada’s population of 40 million is small when compared with the US population of over 330 million and the European Union’s almost 450 million, and the other gatekeepers that drug developers must pass to get their medicines to Canadians.
The second gatekeeper is Canada’s Drug Agency (CDA), formerly known as the Canadian Agency for Drugs and Technologies in Health (CDA 2024). CDA’s key role is to perform health technology assessment reviews to try to evaluate the cost-effectiveness of new medicines and make recommendations about reimbursement to all government drug plans, except those in Quebec. Health technology assessment is a methodology – not a science (Hofmann 2013). CDA health technology assessments have at least eight flaws: use of inadequate data, use of non-discounted list prices, second-guessing Health Canada on clinical efficacy, using numerous questionable assumptions, taking too long to do its work, and an arbitrary “value” of a human life first used in 1990 and not adjusted for inflation or anything else. CDA reviews commonly take nine months (CHPI 2024), despite having a target of six months.
The next gatekeeper is the pan-Canadian Pharmaceutical Alliance (pCPA). Like CDA, the pCPA is owned, managed, and funded by the federal, provincial, and territorial governments, and its primary accountability is to these governments, not to patients and health care providers. The pCPA has up to 40 business days (eight weeks) to decide whether to negotiate once a reimbursement recommendation is published (pCPA 2023), but the target timeline is regularly not achieved. It takes, on average, over a year between submission to CDA and a pCPA outcome (CHPI 2024).
Even when CDA recommends reimbursement for a medicine and pCPA successfully negotiates its price, patients can’t get access until government drug plan officials (the fourth gatekeeper) have added the drug to the relevant benefit list. Government drug plans are not mandated to list medicines successfully passing through the Health Canada, health technology assessment, and price negotiation gates. They can negotiate further price and other concessions with the developer before deciding whether to list a drug. On average, it takes about six months from a successful pCPA negotiation to the first listing in a provincial drug plan (CHPI 2024). Drug plan officials have no motivation to list a medicine. The siloed nature of government accounting (Lau et al. 2024) means any proposed increase in the drug plan budget from adding a new medicine is not balanced against potential savings from fewer hospitalizations or specialist services, or an early return to work, school, or family to take a broader economy or societal perspective. The time taken by gatekeepers to decide whether to list a new drug further extends the wait for patients wanting to get access to it. Even when a drug is listed, criteria for access may be so restrictive that few patients can receive benefit.
The fifth gatekeeper is the Patented Medicine Prices Review Board (PMPRB), a tribunal established by a federal act whose role is to prevent time-limited, patent monopolies granted for new medicines from being abused by excessive prices. Its role is not to set drug prices nor to decide whether prices are reasonable or appropriate but to use a referenced-based pricing analysis to compare list prices in Canada with those in a set of other countries. The PMPRB is unique in the world as no other country has such a gatekeeper. The PMPRB’s jurisdiction officially begins after a new patented medicine is sold for the first time in Canada, which means its work can start soon after regulatory approval from Health Canada or much later after health technology assessment and price negotiation processes have been completed. Between 2017 and 2022, the PMPRB tried to expand its powers to severely reduce list prices of new drugs in Canada. The PMPRB’s plan met much opposition from patients and drug developers. Challenges in federal and Quebec courts led to rulings against all proposed changes, except a change in countries in the PMPRB’s price comparison. The PMPRB is now under new governance and management and re-developing its role. New draft guidelines were released for consultation in December 2024 (PMPRB 2024).
While Canada’s relatively small population contributes to the country being given lower priority in drug developers’ priority lists for launching new medicines, the gatekeeping procedures established by federal, provincial and territorial governments make Canada an even less attractive market for new medicines. Some developers decide not to bring their medicines to Canada, while others delay because they are aware of the complexities and costs of the required submissions for regulatory approval and CDA health technology assessment, negotiations with the pCPA and individual government drug plans, which may not lead to listing by drug plans or result in listing that is highly restricted such that few patients qualify. Would national pharmacare allow patients improved access or be just another layer of bureaucracy? What are the potential benefits and risks of national pharmacare as envisaged by academics and the federal government?
Potential benefits of national pharmacare
1. Equitable access
When the Trudeau Liberals were elected in 2015, national pharmacare was part of their platform and, in 2018, they appointed an Advisory Council to lead a dialogue on how to implement affordable national pharmacare. The Council recommended a public plan based on medicare that adheres to the five principles in the Canada Health Act of 1984 (Health Canada 2019):
• Universal: all Canadians should have equal access.
• Comprehensive: pharmacare should provide a broad range of safe, effective, “evidence-based” drugs.
• Accessible: access to prescription drugs based on medical need, not ability to pay.
• Portable: benefits should be portable across provinces and territories when people travel or move.
• Public: national pharmacare should be both publicly funded and administered.
Proponents of national pharmacare are strongly supportive of these principles. They see the principal benefit of national pharmacare as providing fair and equitable access to prescription medicines across the country, eliminating the current patchwork in access. The present patchwork of public or private drug plans exposes households and businesses to considerable and inequitable financial risks (Law et al. 2018), adds considerably to the administrative costs of prescriptions (Chamoun et al. 2022), and isolates the management of prescription drugs from other key components of medicare (Morgan et al. 2016).
2. Helping lower-income Canadians
The provision of access subsidized by taxpayers and, therefore, “free” or low cost at the point of service should eliminate the need for low-income Canadians to choose between paying for their prescriptions or paying for housing or food, or skipping doses to extend prescriptions (Xie 2024). When patients don’t fill their prescriptions or skip doses, they can end up in emergency rooms, which is not good for their health, the health care system or the economy.
3. Savings
Proponents of national pharmacare believe that it will produce cost savings as a result of the whole country negotiating prices with drug developers because better discounts could be obtained than when individual provinces and territories negotiate. In part, this is due to the proposal that national pharmacare should at least begin by covering only a set of “essential medicines.” For nearly 50 years, the World Health Organization has published a model list of cost-effective essential medicines intended for under-developed or developing countries; the latest list contains several hundred drugs (WHO 2023). In contrast, a list of as few as 117 to 125 medicines has been suggested as a basis for national pharmacare in Canada (Morgan et al. 2017; Taglione et al. 2017). The federal government’s Advisory Council proposed a stepwise implementation starting with the creation of a Canadian drug agency that would develop a national formulary of drugs to be covered by national pharmacare that would initially cover a “carefully chosen list of priority essential medicines” (Health Canada 2019).
Potential risks of national pharmacare
1. Equitability
Equitability is associated with fairness which, in terms of access to prescription medicines, should mean that any Canadian who needs a drug should be able to access it when they need it without being inhibited by rules, regulations or cost. However, proponents of national pharmacare appear to interpret fairness as equality of access, such that the program should provide everyone with access to everyday medicines. The risk here is that equality can mean access for all but could also mean access for none.
For example, the list of diabetes medications “to be discussed with provinces and territories” (Health Canada 2024) for the initial phase of national pharmacare includes predominantly older drugs and excludes newer medicines, such as Ozempic and Rybelsus, that have been shown to reduce the risk of heart attacks, strokes and end-stage kidney disease (Shi et al. 2023) – common complications of type-2 diabetes. This is equivalent to saying everyone can have a basic Nissan but no one can have a Mercedes-Benz.
2. Cost
The Liberal-NDP pharmacare act came into law in October 2024. Many of its key terms are not defined (Watts et al. 2024). Federal Health Minister Mark Holland at first said the plan would be a public-private combination. However, following his testimony at a Senate committee, he wrote to its chair to confirm that diabetes medications and contraceptives included in the initial phase of the government’s “vision of a national universal pharmacare program” will be paid for and administered through a public plan – not a mix of public and private payers – and that coverage will be single-payer and first-dollar. The Parliamentary Budget Officer estimated just the first phase of national pharmacare would increase federal spending by $1.9 billion over five years based on a public-private model (PBO 2024) – the Liberals’ 2024 budget proposed providing $1.5 billion over five years to support the launch of national pharmacare for “universal, single-payer coverage for a number of contraception and diabetes medications” (Government of Canada 2024). However, a totally public scheme will cost much more.
The Liberals’ own Advisory Council estimated that the annual incremental costs of a fully implemented public national pharmacare program would be $15.3 billion in 2027 to cover a “comprehensive” list of drugs based on a national (unspecified) formulary (Health Canada 2019). That’s a lot of additional taxation, even assuming the numbers are correct. It would be impossible for this new tax burden to be borne by the so-called rich. It would mean increased taxes for every Canadian. Moreover, if the list of covered drugs were to be older, cheaper drugs – as the proposed list of diabetes medications suggests – would be worse than the present coverage and result in poorer health care.
A public-private national pharmacare would likely cost less. However, this does not appear to be the direction in which the federal government is heading. In November 2024, the government announced a panel of five individuals (two physicians, a pharmacist, a nurse and a health economist – no patient representative was included) to shape the path towards national pharmacare, including deciding what type of scheme – public or public-private – would work best (Ritchie 2024). At least three members are keen advocates of a public model covering potentially just a list of “essential” medicines (Brhlikova et al. 2023; CFNU 2024; Morgan and Herder 2024), which strongly suggests the direction likely to be proposed. Cost savings resulting from a tightly controlled and limited drug benefit list will be paid for by other already over-stretched parts of the system and by deteriorating patient health.
3. Medicines covered
In his letter to the Senate Committee, Holland twice mentioned that a “range” of medications will be covered. The only insight we have into which diabetes medications may be covered is a list “to be discussed with provinces and territories” (Health Canada 2024). The list is remarkably short and incomplete, covering about a third of available diabetes medicines. Comparing what’s on the list with 52 diabetes mediations approved by Health Canada and insured by at least one government drug plan and/or the large private insurer, Manulife, demonstrates the current postal code lottery across Canada. Coverage in government plans ranged from 48.1 per cent in British Columbia to 84.6 per cent in Quebec, whereas Manulife covers 96.2 per cent. However, the federal government’s list for national pharmacare includes only 18 of the 52 medications – just 34.6 per cent (Rawson and Adams 2024).
Such a truncated list runs the serious risk of creating a worse postal code lottery. But it’s not just the shortness of the list that’s a problem, it’s what’s not on it. For instance, the past two decades have seen important developments in the treatment of type-2 diabetes with the introduction of three novel classes of medications. Two of these classes reduce the risk of heart attacks, strokes, and end-stage kidney disease (Shi et al. 2023), which are common complications of diabetes and can be fatal. Ozempic and Rybelsus, used by about a million Canadians, are two of these drugs. All government drug plans cover Ozempic and almost all list another 12 of the new medications, but the government’s list includes just four of these drugs and excludes Ozempic and Rybelsus. Furthermore, the government’s list includes a pork insulin, which isn’t in Diabetes Canada’s Clinical Practice Guidelines because it causes allergic reactions in many type-1 diabetes patients. This can be dangerous for many. National pharmacare with such a restricted list of diabetes medications is likely to increase emergencies, hospitalizations, specialist interventions, disease complications, organ failures, amputations, and premature deaths.
The diabetes medications list raises the questions of who drew it up and what are their qualifications? It appears to have been prepared by government officials without advice from diabetes specialists but with a focus on less expensive, older drugs. Will lists of essential medicines for other diseases and conditions be drawn up by anonymous unqualified officials based more on cheapness than clinical appropriateness? Limiting access to medications will save money only if the focus is exclusively on the drug budget. When all impacts on patient wellbeing and workplace productivity are considered, they are likely to further bankrupt the sickness care system in the long run.
4. Private insurers
Employers and unions who co-share the costs of private insurance with their employees and members may see national pharmacare as a way of off-loading these costs onto taxpayers. This will not only reduce patient access to medicines but is also erroneous because corporate taxes are likely to rise to help pay for the national scheme. Moreover, if private insurance drug coverage is no longer part of compensation packages offered to employees, there will be a demand for increased wages as personal taxation rises.
5. National or provincial pharmacare
The federal government cannot impose national pharmacare on the provinces and territories because health care delivery is their responsibility, not the federal government’s. The federal government’s aim is to reach a bilateral agreement with each province and territory. British Columbia has signed a bilateral agreement with the federal government and Manitoba is said to be interested. In contrast, Alberta and Quebec have indicated that they are not interested in signing, although both provinces want the money they would have received if they were to sign on (Johnson 2024; La Presse Canadienne 2024). What will the other provinces and territories decide (Kirkup 2025)?
Just as important, if a province signs a bilateral agreement with the federal government to provide medications under national pharmacare, will the provincial drug plan continue to cover other drugs in the same class that are on its own benefit list but not in the national formulary? If so, further inequities will be created beyond those already existing, but if not, all patients in the province will have poorer access to medicines they need.
6. Administration
The proposals for national pharmacare don’t state who would manage it or how. If the current provincial drug plan systems are used to administer national pharmacare, the current patchwork of deductibles, copayments and premiums will be perpetuated, unless provinces incorporate a different process for patients receiving drugs under first-dollar national pharmacare mentioned by the federal minister of health. Provinces will demand resources to implement such changes. There is a further risk that if a limited number of drugs in a class – for example, diabetes medications – are covered by national pharmacare, provinces may apply the coverage to all residents, which will limit access to all residents.
On the other hand, if the federal government takes responsibility for managing national pharmacare, this will create three classes of patients: one that has coverage of a limited list of medications, a second that has some coverage of a wider list of medicines through their provincial plan, and a third that has much better access through private insurance. A further complication is that the federal government has a poor track record when it comes to setting up management systems. One has only to think of the Phoenix payroll system and the ArriveCan app.
7. Expensive medicines
The plans for national pharmacare don’t include anything for patients who need expensive medicines that can cost thousands of dollars per month. This especially impacts patients with rare disorders. The needs of these Canadians are deferred to a so-called strategy for rare diseases for which the federal government has promised too little money and, even that, has yet to reach patients.
Lower-income Canadians may need help with paying for medicines for common illnesses, but introducing national pharmacare just to provide access for these individuals is unnecessary. Removing the current cost barriers (premiums, copayments and deductibles) each government drug plan has for these Canadians would solve most of the problem without eliminating or undermining the private insurance plans two-thirds of Canadians have or creating another new national system developed by the federal government. In addition, provinces and territories can do more to help admit people who are eligible for their existing plans but not enrolled.
On the other hand, almost every Canadian needs help if they have to pay thousands of dollars per month for the rest of their lives to ease their suffering and/or extend their lives. Do they not deserve government assistance? These drugs are essential to such Canadians.
The federal government’s approach to dealing with expensive drugs has been to try to regulate lower prices, which hasn’t worked. Now, the approach seems to depend on CDA health technology assessment reports recommending drastic price reductions based on cost-effective analyses using an out-of-date and ridiculously low threshold of the “value” of a quality life year, which establishes a negotiating start-point for the pCPA to bargain with the manufacturer. Some negotiations fail, which means those drugs are not covered by government drug plans and, thus, not accessible by patients who need them. National pharmacare based on covering a short list of “essential medicines” will not be of benefit to Canadians with rare disorders.
Conclusions
The opportunity to introduce a national pharmacare scheme providing equitable access to all Canadians at a reasonable cost when they need it has long gone because the provincial and territorial governments have instituted their own processes and systems for drug coverage with a variety of copayments, deductibles and premiums that will make them reluctant to change or handover control to a federal program. Since the odds seem to be on a Conservative win in the next federal election, moving forward with a national program may now be a moot point (Kirkup 2025). Pharmacare should and likely will be left to the provinces and territories, which should focus on providing innovative medicines that can decrease the need for other services, reduce complications and suffering, extend lives and increase productivity – not on rationing medicines or even outright denying them to Canadians.
What Canadians really need is a major renovation of the processes for new drug access, including marketing approval, health technology assessment, price negotiation and coverage in government drug plans. There are too many gatekeepers costing a lot of money, taking too long to complete their work, and deterring drug developers from launching their new drugs in Canada, which delays or denies Canadians’ access to innovative medicines.
The premiers of Canada’s provinces and territories have recognized the need to accelerate Canadians’ access to new medicines (Rushowy 2024), although most of the gatekeeping processes that delay access have been put in place by the provinces and territories. The processes need to be more efficient and less time-consuming and to enable Canadians insured access to innovative medicines as early as possible, preferably while ongoing data collection and analysis evaluates their longer-term benefits. A paradigm shift in thinking is particularly important for the coming generations of high cost, high benefit drugs, including cell and gene therapies.
About the authors
Dr. Nigel Rawson is a pharmacoepidemiologist and pharmaceutical policy researcher. He is also an affiliate scholar with the Canadian Health Policy Institute and a senior fellow with the Macdonald-Laurier Institute as well as the Fraser Institute.
John Adams is a seasoned management consultant with a current focus on advocacy for unmet patient health needs. He has extensive experience in public policy, governance and senior management. A frequent author and commentator on healthrelated public issues, he is a senior fellow at the MacdonaldLaurier Institute.
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