Government Introduces Pharmacare Act: What comes next?

What it Means

• Yesterday, February 29, Health Minister Mark Holland introduced Bill C-62, otherwise known as the Pharmacare Act. This was a condition of the government maintaining the Supply and Confidence Agreement through which the NDP supports the Liberal government on key votes.
• The legislation contains high-level principles for pharmacare but few details because so much depends on future discussions with provinces and territories (the Minister would not say whether it must be single-payer or what model the government prefers)
• The Government announced that it will negotiate agreements to provide provinces and territories with funding so that they can provide free access to contraception (birth control pills, IUDs, morning-after pills) and to diabetes medication. There will also be a fund for supplies for diabetes management.
• The Legislation introduced today contains:
• ~A list of high-level principles
• ~No specified funding allocation and no cost estimates
• ~Commitments to create:  
• ~~a national formulary (a list of essential drugs that all Canadians should have access to, first promised in Budget 2019)
• ~~a bulk purchasing strategy (to save money by having the federal government buy drugs on behalf of provinces: this was promised in the 2015 Liberal platform)
• ~~a committee of experts that will make recommendations on pharmacare (it’s not clear how this will be different from the Hoskins Advisory Council which did this in 2019)

A Long Road to Pharmacare

Political Background

The Government has a track record of modest steps towards action on pharmacare. They first announced that they were pursuing pharmacare way back in Budget 2018. Since then, we’ve had advisory councils, discussions, plans to move forward, reports, progress plans and “steps towards”, but the NDP threat to leave the supply and confidence agreement has forced the government’s hand towards stronger action now.

The most likely reason the Liberals have dragged their feet on this issue is that they’ve seen polling on the public’s lack of appetite for pharmacare. When Canadians are asked to rank their top issues, pharmacare never shows up. Even when Canadians are asked to name their top health issue, just 18% say pharmacare should be a priority.  

That is why the Government announced that insulin and birth control pills would be covered at the outset, to make pharmacare more tangible to the public and likely as a political wedge to force the conservatives to vote against women’s reproductive health (and the morning-after pill which is also included).  

Why do so few Canadians seem to prioritize pharmacare?

According to a study by the Conference Board of Canada, 95% of Canadians already have insurance to cover prescription medication. A study by Abacus Data shows that 86% of Canadians are satisfied their private/group insurance is making medicine affordable and 82% are satisfied with the range of medicines covered. A full 90 per cent of Canadians believe a national pharmacare policy should in no way put group benefits at risk of cancellation. The point is that a massive majority of Canadians feel they don’t need pharmacare (and their insulin and birth control pills are already covered).

Pharmacare is also overshadowed by other pressing issues in the Canadian healthcare system. To take children’s hospitals as an example, in Toronto, the average wait time at Sick Kids is often well over 12 hours, while in the nation’s capital’s CHEO it regularly stretches to 12-14 hours, and in Montreal, it’s often 15 to 20 hours. Surveys show widespread frustration with access to primary health care, as 22% of Canadians or 6.5 million people go without a family doctor or nurse, so essentially their only access to healthcare is through the extended waits in an emergency room.

Given the urgent need for more resources in Canadian healthcare, provinces have argued that now is not the time to create new programs and new demands such as dentalcare and single-payer pharmacare. Alberta and Quebec have already indicated they will opt out of pharmacare to invest in their own programs.

Costing

During the press conference Minister Holland initially declined to provide costing because so much depends on discussions with the provinces and territories. But when pressed he said that the cost would be somewhere near $1.5 billion annually and would not come this year because of the time needed to pass the bill and to negotiate with provinces. Funds would only begin to flow during fiscal year 2025-26.  

This is quite a distance from the price tag for single-payer pharmacare which was estimated in the $12B to $13B range, according to the Parliamentary Budget Officer, and which could potentially be far higher.  The PBO estimate assumes that coverage is limited to Quebec’s formulary (list of covered drugs).  While the province’s list is the most extensive of any public plan in Canada, it still covers about 7,000 fewer drugs than most private drug plans, including drugs that treat conditions like cancer and asthma. Any expansion of the formulary to include thousands of additional medicines would potentially balloon costs well beyond the PBO’s forecasts.

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The Legislation

A step forward, but few details

The Government made clear that this is a first step towards an incremental approach on pharmacare

• The bill “proposes the foundational principles for the first phase of pharmacare” and promises “to work with provinces and territories.”
• As opposed to being prescriptive, the bill’s purpose is to “guide efforts to improve” the accessibility and affordability of drugs
• The Canada Drug Agency must prepare a national formulary (list of drugs that should be covered) and a national bulk purchasing strategy within one year of the act receiving royal assent.
• The Minister must create a committee of experts to make recommendations on the operation and financing of pharmacare.

Where is the Money?

The Pharmacare Act does not make any mention of how a national pharmacare program will be paid for. The funding section contains no numbers, criteria or cost-sharing requirements, merely that funding must be provided “through agreements” with provinces and territories.

There is also a commitment to maintaining long-term funding to improve the accessibility and affordability of pharmaceutical products, including for those with rare diseases, to be provided through agreements with the respective governments.  

The only specific clause was that the Government may enter into agreements of the individual provinces and territories to increase existing public pharmacare coverage for specific prescription drugs and related products intended for contraception or the treatment of diabetes.

What Comes Next

The Future of Pharmacare  

It is difficult to say to say what the future holds for pharmacare in Canada because there are few details in the bill and because the Health Minister carefully avoided getting into specifics during the press conference.

When asked whether the pharmacare system had to be single-payer (a point the NDP had insisted on and which is not specified in the bill), the Minister said that the Committee of Experts would have an opportunity to assess the results of how it works and the effectiveness of different models.  

The Minister was asked if more drugs (in addition to contraceptives and diabetes medication) would be added to the plan. Minister Holland explained that the expert committee would look at this and have discussions. He insisted that we simply “don’t know where the information will lead us”.  The Minister said he would not “pontificate on what the future might hold” because the government will be led “by science and reason”.

However, the Minister seemed to suggest that once the public sees a successful “pilot program” of contraceptives and diabetes medicine provided by public pharmacare that this would drive public demand for more coverage. The Minister also emphasized the positive working relationship and constructive efforts of the NDP.

Supply and Confidence Agreement (SACA)

We now know (almost for certain) that there will be no election in 2024. The Supply and Confidence Agreement allows the Liberals to govern as though they have a majority, advancing legislation without worrying about confidence votes toppling the government, because they can count on NDP support. While this gets them through another year in government, the agreement may have downsides for both parties’ electoral chances next year.

Because of SACA, the Liberals see their middle-class agenda dominated by the priorities of the NDP (dentalcare, pharmacare, banning replacement workers) and although they very skillfully take credit for these policies, recent polling shows that there has been little political benefit for them. The agreement also has risk for the NDP because they are seen as propping up an unpopular government and with a strong majority of Canadians wanting change, they have been unable to benefit from the slide in Liberal popularity.  

Still the SACA will allow the Liberal government to get its legislative agenda back on track and pass more legislation, a major challenge in a minority parliament. In the last legislative session (From September to December 2023) just 3 bills made it to third reading, two of which were supported by conservatives with unanimous consent motions. So only a single bill, the government’s grocery benefit, passed over three months. There is now a backlog of 20 bills in second reading or at committee.

The most important ways the government can accelerate its agenda through Parliament is with programming motions (which prescribe dates for votes) or motions of adjournments or time allocation (which limit the time for debate). All of these require majority votes. Perhaps renewed NDP support will allow the government to move more legislation through Parliament.