Universal Drug Care Could Save Canada Billions?

A universal prescription drug plan could save Canada about $10.7 billion, or 43 percent of annual spending on medicines, according to a report from the Canadian Centre for Policy Alternatives. The projection is based on the premise that private insurance is more expensive to administer and consolidating existing coverage networks would allow the government to make lower-cost bulk purchases.

As an example, the report states that administrative fees for public plans in Ontario and Quebec were estimated at 2 percent, but were 8 percent for private plans. In total health spending, Canada’s public program had administrative costs of 1.3 percent compared with 13.2 percent for private plans. And so the authors "conservatively infer" that at least 6 percent of costs for drug insurance coverage could be saved if universal coverage were provided. This would save $560 million a year.

The report also finds that Canada is either the third or fourth most expensive country for brand-name drugs every year - after the US, Switzerland and Germany - because it deliberately inflates prices to attract pharmaceutical investment. And Canada has one of the highest annual growth of drug costs among industrialized countries, higher than countries that have universal drug programs, such as France, Australia and Sweden.

"Canada’s pharmaceutical policies are a total failure," the study's author, Marc-André Gagnon, a professor of public policy at Carleton University, tells CBC News. "The cost of such policies far exceed the benefits to Canadians from having a domestic pharmaceutical industry."

For instance, Canada spent $25.1 billion on prescription drugs in 2008 and the cost has risen at more than 10 percent annually since 1985. To reduce the burden on public finances, access to private insurance risen, along with deductibles and co-payments in government plans, and out-of-pocket expenditures (read the full report here).

But only 45 percent of total drug expenditures come from public spending, which is very low compared to other OECD countries. Canada is second among OECD countries, behind the US, in the participation of private insurers in drug expenditures. Meanwhile, a survey by Statistics Canada found that 24 percent of Canadians have no drug coverage, and 8 percent admit they did not fill a prescription in the last 12 months due to cost.