Introduction
Pharmaceutical policy is a set of healthcare rules that govern the provision, development, and use of drugs. In Canada, various policies regulate drug plans. They include, among others, ones governing patents, pricing, licensing for marketing, and reimbursement. The policies have become an important part of the healthcare system. In addition, they attract a lot of debate from various stakeholders. The legislations are supposed to meet the universal and publicly funded healthcare plan across Canada. However, the move to reach the universal dream is patchy and has generated a lot of controversies (Milicic, Mulvale, and Petersen 8).
In this paper, the author provides a critical analysis of the reimbursement of drug expenses in Canada. To achieve this objective, the author will compare the prescription drug plans in various provinces in the country. Reimbursement is characterized by various disparities in terms of accessibility. The variations are largely associated with differences between various public plans and unequal access to marketed drug products among patients across Canada.
Pharmaceutical Reimbursement Policy in Canada
Reimbursement Plan: An Introduction
In Canada, reimbursement for outpatient prescription drugs is covered by provincial legislation, but not in federal legislation. To understand the workings of these policies, it is important to analyze the various healthcare systems across Canada. It is also important to review the effects of these variations on patients about their annual expenditure on drugs (Husereau and Cameron 37).
In various studies conducted around drug policies, information was collected on publicly funded prescription drug plans in the ten provinces. One of the studies used data from 2006 to 2012. The findings revealed that there were significant disparities in drug reimbursement across the country. Clinical scenarios were analyzed to reveal the impact of provincial cost-sharing mechanisms on personal annual expenditure. The differences were also evident in the personal financial burden in the various population groups. For instance, members of the non-senior population (which includes individuals aged between 18 and 65 years) paid more than 35% of their prescription drug costs in all the provinces. The seniors (those individuals who are 65 years old and over) incurred less than 35% of their prescription costs in two provinces. Social assistance recipients paid less than 35% of costs in five provinces. It was noted that this group did not incur any costs in the remaining five provinces (Demers et al. 406).
Pharmaceutical Policies in Canada: General Overview
As already indicated, there are significant inter-provincial variations in publicly funded prescription packages. The differences have resulted in huge discrepancies in annual expenditures among Canadian citizens. The situation is especially aggravated for patients from different provinces who have similar prescription burdens. A revised review of Canadian pharmaceutical policies might help in reducing these inequalities (Morgan, Daw, and Law 26).
It is noted that the Canadian healthcare system is geared towards universal coverage for all individuals for doctors and hospital services. The policy does not take into consideration the health status or capabilities of the patients involved. However, despite the universal policies, prescription coverage has been largely neglected over the years. For example, there is a lack of comprehensive federal legislation to cater for prescription drug coverage for outpatients. Such gaps in legislation have contributed to the noted reimbursement discrepancies (Morgan et al. 27).
In 2012, prescription drugs were ranked second in overall expenditures on healthcare services. What this means is that the drugs prescribed by health practitioners are expensive. According to Morgan et al. (43), more than $20 billion was spent on prescription medicines. The amount cited by Morgan et al. includes expenditures incurred by those patients purchasing drugs over the counter.
Public Funded Plans
Canada’s publicly funded universal Medicare system has received a mixture of positive and negative feedback from across the country. For example, the approach adopted to provide public and private outpatient drug coverage is highly criticized. There are various reasons behind this criticism. In addition to the aforementioned reimbursement disparities, the existence of many rules governing the policies is cited as one of the reasons why many people are opposed to new plans. Others cite the unequal balanced market access among patients as another weakness of the policy (Bell et al. 31).
Universal publicly funded policies are important aspects of healthcare legislation in any country. However, such a policy is lacking in Canada about drug coverage. The cost of the medications provided to people in the hospital is covered. In 2004, the Patented Medicine Price Review (PMPR) launched a study where prices of drugs in Canada were compared to those in other countries. Most of these surveys have concluded that other countries in the Organization for Economic Co-operation and Development (OECD) charge lower prices for drugs compared to Canada (Husereau and Cameron 42).
At the federal level, there are several drug coverage plans designated for various groups of people. At the provincial level, specific sub-populations have their drug coverage plans. For instance, the province and the territorial administrations provide coverage for patients over the age of 65 years. In addition, the plans provided by the province include patients receiving social assistance. Some provinces also cover catastrophic drug needs. Disability benefits are also included in the social assistance group. The cost of the drugs is determined by the individual’s level of income. Most of the private and public coverage plans require the patients to shoulder some of the burdens in different forms. For instance, beneficiaries are required to partially pay in the forms of co-payments, deductibles, and premiums (Grootendorst and Hollis 21).
In 2008, a study on private and public reimbursement plans noted that expenditure on drugs at the federal level stood at three percent of prescription drugs. However, at the provincial level, the expenditure was considerably higher at forty percent of the drug budget and treatment. The cost of outpatient prescription drugs is not catered for in medicare budgets. As a result, most employers have opted for a private plan for their employees. A study conducted by OECD noted that ten percent of Canadian citizens, who are usually referred to as the “working poor”, are not insured. They can access neither public nor private drug plans (Husereau and Cameron 39).
Each province conducts its public plan formulary review. In these assessments, a formula for the inclusion of a drug on the formulary is provided. It determines the drugs that will be covered and the reimbursement arrangements. In the event of a new drug in the market, a review is carried out about the findings made during a pharmacotherapy and pharmacoeconomic evaluation. In the process, the authorities will determine how effective and safe the drug is and a pharmaco-economic review to determine if the drug is good value for the money (Demers et al. 407).
Reimbursement Variations about Income across Canada
Low-income earners
Seniors with low incomes benefit from provincial drug reimbursement plans. However, the mode of payment varies across the provinces. A case in point is the scenario in Labrador, Ontario, British Columbia, and four more provinces. In these areas, the seniors pay between 0% and 35% of their yearly prescription expenditure irrespective of their burden. In Alberta and Nova Scotia, senior citizens have to cover a percentage of the costs. For example, they are required to cover between 35% and 100% of their prescription expenditure requirements. The requirement does not take into consideration their annual burden. In addition, the 35% and 100% include all the professional costs accrued in this package (Demers et al. 406).
Regarding regards to price, Demers et al. (407) high lights variations between different groups. For example, depending on the treatment plan, some individuals may incur an average of $454 per annum. In Ontario, out-of-pocket expenditure fees are as low as $9. Manitoba has the highest rate at $602. The total fee comprises professional costs incurred in the various provinces. Expenditures in one province may be higher than the cost of drugs in a different region.
Non-seniors who are low-income earners have their prescription costs fully covered in some of the provinces. Individuals who are not beneficiaries of provincial coverage are expected to cover their prescription costs themselves unless their employer provides a private insurance plan for them.
High income above the national average
Non-seniors in this category pay over 35% of their prescription drug expenditure in four provinces. However, six provinces do not have any form of reimbursement plan for patients in this group (Demers et al. 407). Seniors with high incomes in New Brunswick and Prince Edward Island have coverage that is different from that in other provinces. For instance, they have to pay between 0% and 35% of their prescription costs irrespective of the price. The same individual will incur costs of more than 35% in Ontario and Nova Scotia. Patients with a high prescription burden are exempt from reimbursement drug coverage plans. The costs are high in Quebec were patients who earn more tend to pay higher amounts than those with a low income. The reason is that Quebec does not impose a premium on most of its medical prescriptions (Demers et al. 407).
There are comprehensive reimbursement plans for the senior population in some of the provinces. Some areas like Ontario have an appealing public prescription drug plan for the aged members of society. However, reimbursement plans in provinces vary with prescription expenditures and levels of income. A beneficiary of social assistance has to pay a specified percentage of the expenditure. They are expected to cater for 0% to 35% of their expenditure in most regions. However, patients in Manitoba will pay less than 35% of their yearly burden is more than $1390. Patients residing in Quebec incur high expenses as a result of their annual prescription burden (Demers et al. 409).
Limitations and Strengths of the Pharmaceutical Policies
There are different drugs listed in the provincial ‘formularies’ where variations are exhibited. An analysis of reimbursement plans does not take into consideration the pharmaceutical reimbursement and price policies put in place in different provinces cater for different situations. The differences limit the feasibility of universal public funding policy (Grootendorst and Hollis 43).
The other pharmaceutical policies like pricing and licensing may help improve the reimbursement policy. The Common Drug Review (CDR) of 2003 plays a vital role in reimbursements. The CDR conducts a pharmacotherapy and pharmacoeconomic analysis of new drugs. As a result of these reviews, publicly funded drug plans formulary has changed significantly. The nine provinces have opted for a central assessment policy of their coverage drug plan except for Quebec which has an independent CDR. The policy is efficient as it meets the healthcare needs of most outpatients. The CDR makes recommendations to various provinces on whether or not they should put a specified drug on their formulary. Each of the provinces makes unique decisions to implement its drug coverage plan (Grootendorst and Hollis 44).
Conclusion
The disparities between provincial pharmaceutical reimbursement plans were highlighted in this paper. The plans for various beneficiaries differ across Canada. The variation is seen in the expenses incurred by individuals with different prescription drug burdens across the provinces. The resulting inequalities may compromise the quality of the services provided by the Canadian healthcare system.
There are differences in the coverage provided for individuals in the three categories. Senior citizens receive comprehensive coverage, which is not the case in the other two groups. Non-senior citizens incur high expenses even in provinces where there are plans to cater for them. With regards to recipients of social assistance, it was indicated that they are not covered in some of the provinces.
The increased jurisdiction of the Patented Medicine Price Review Board and the corresponding monetary burden that patentees impose on the government have caused an increase in the reimbursement policy in Canada. As such, different stakeholders, including professionals, patent policies makers, and CDR should come up with structures that will alleviate reimbursement disparities and pricing policies in Canada.
Works Cited
Bell, Chaim, Health Council of Canada, SECOR Consulting, et al. Generic Drug Pricing and Access in Canada: What are the Implications?: A Commissioned Discussion Paper, Toronto: Health Council of Canada, 2010. Print.
Demers, Virginie, Magda Melo, Cynthia Jackevicius, Jafna Cox, DimitriKalavrouziotis, StephaneRinfret, Karin Humphries, Helen Johansen, Jack Tu and Louise Pilote. “Comparison of Provincial Prescription Drug Plans and the Impact on Patients’ Annual Drug Expenditures.” Canadian Medical Association Journal 178.4 (2008): 405-409. Print.
Grootendorst, Paul, and Aidan Hollis, 2011, Managing Pharmaceutical Expenditure: An Overview and Options for Canada. PDF file. Web.
Husereau, Don, and Chris Cameron 2011, Value-Based Pricing of Pharmaceuticals in Canada: Opportunities to Expand the Role of Health Technology Assessment?. PDF file. Web.
Milicic, Sandra, Gillian Mulvale, and Stephen Petersen. Accelerating Healthcare Improvement in Canada: A Review of Policy Options to Sustain, Improve and Transform Healthcare, Ottawa: Canadian Foundation for Healthcare Improvement, 2013. Print.
Morgan, Steven, Jamie Daw, and Michael Law. Rethinking Pharmacare in Canada, Ontario: C.D. Howe Institute, 2013. Print.