Overview
The Canadian discussion surrounding catastrophic drug coverage began in late 2002 with reports produced by The Senate Standing Committee on Social Affairs, Science and Technology, chaired by Senator Michael Kirby, and the Commission on the Future of Health Care in Canada, led by Roy Romanow. These reports outline a number of recommendations for improvement within our healthcare system, one of which being the creation of a national catastrophic drug insurance plan. This national plan would ensure that no Canadian individual or family would be exposed to undue financial hardship resulting from the costs of expensive and/or prolonged drug prescriptions.[1] Such coverage exists for certain populations such as; low-income seniors, recipients of social assistance, some Aboriginal populations and some armed forces veterans, but a national plan would extend this coverage to all Canadians.[2] The implementation of such a policy would offset the cost of provincial and territorial drug plans and reduce disparities in coverage across Canada.[3] A national catastrophic drug plan would shift the burden of expensive drug prescription costs from the individual to: the federal government, provincial/territorial government and private insurance providers. While sharing a common goal, the two reports propose different mechanisms of structuring such a plan and distributing the burden of high-cost drug prescriptions among government and private payers.
Kirby’s Senate Committee proposes a cap of yearly out-of-pocket prescription costs at 3% of a family’s annual income, with the remainder of the costs being divided between federal and provincial/territorial governments and private payers. If an individual has private supplementary insurance, the threshold would be 3% of family income or $1,500, whichever is less. The private firm would be responsible for the prescription drug costs from the out-of-pocket threshold up to $5,000. If an individual does not have private supplemental insurance, the costs up to $5,000 would be a combination of out-of-pocket costs and public insurance. The federal government would then be responsible for paying 90% of the prescription drug expenditures in excess of $5,000. The provincial/territorial government or private insurance would pay the remaining 10%. The Kirby Senate Committee estimates that implementing this model would cost approximately $500 million per year.[4]
The Romanow Commission recommends that the federal government would reimburse 50% of the costs of provincial and territorial drug insurance plans above $1,500 per person per year. The estimated cost of this transfer is between $749 million and $1.01 billion.[5]
The above reports began the conversation of a national catastrophic drug coverage strategy, one that would continue over the next decade without implementation. Upon considering the above reports, Canada’s First Ministers agreed that no Canadian should suffer undue financial hardship for needed drug therapy and therefore, additional investment needed to be made for a long-term sustainable healthcare system in Canada. They agreed to increase federal support in the 2003 Budget for health care, including $16 billion over five years through a “Health Reform Transfer” targeted to primary health care, home care, and catastrophic drug coverage.[6] While being mentioned in this policy, catastrophic drug coverage was not formally defined or structured, preventing implementation. In 2004, the First Ministers meet again and officially called for the development, assessment and costing of options for national catastrophic drug coverage.[7] This was done and presented in the Federal/Provincial/Territorial Task Force: National Pharmacare Progress Report in 2006. The Ministerial Task Force analyzed different methods for identifying the threshold of out-of-pocket costs to be used when considering catastrophic drug coverage: variable percentage (0/3/6/9%) and fixed percentage (5%) of family income, with and without maintaining private payers. The Task Force identified the variable percentage of income, with the maintenance of private payers, as the model that could more effectively protect lower-income families and thus, recommended that further analysis be focused on this model.[8] In 2012, The Senate Committee of Social Affairs, Science and Technology produced a report reviewing the 2004 Health Accord and the progress that had been made in the years since. This report noted that since 2006, there had been no further federal/provincial/territorial collaboration regarding a national catastrophic drug coverage plan. The Committee recommended that jurisdictions set aside financial discussions and focus on conversing with Canadians to determine what type of coverage they see meeting their needs as a way to best move forward.[9] Most recently in 2015, an Advisory Panel on Healthcare Innovation, chaired by David Naylor, spoke to the lack of action on catastrophic drug coverage in Canada over the last decade.[10] As evident above, productive conversation surrounding the potential impact and need for a national catastrophic drug coverage plan was short-lived, and it is patients who are losing.
[1]Canada. Parliament. Senate. Standing Committee on Social Affairs, Science and Technology, Michael JL Kirby, and Marjory LeBreton. The Health of Canadians--the Federal Role, Final Report, Volume 6: Recommendations for Reform. Ottawa: Senate, 2002. Accessed February 11, 2016. http://www.parl.gc.ca/37/ 2/parlbus/commbus/senate/com-e/soci-e/rep-e/repoct02vol6-e.pdf.
[2] Ibid., page 130.
[3]Commission on the Future of Health Care in Canada, Roy J. Romanow. Commission on the future of health care in Canada, Final Report. Ottawa: Government of Canada, 2002. Accessed February 11, 2016. http://www.hc-sc.gc.ca/hcs-sss/alt_formats/hpb-dgps/pdf/hhr/romanow-eng.pdf.
[4] Kirby, supra page 138-139
[5] Romanow, supra page 197-198.
[6] Canada. Department of Finance. “The Budget Plan 2003”. Ottawa: Department of Finance Canada, 2003. Accessed February 11, 2016. http://fin.gc.ca/budget03/PDF/bp2003e.pdf
[7] Canada. Health Canada. “First Ministers’ Meeting on the Future of Health Care 2004, A 10-year plan to strengthen health care”. Ottawa: Health Canada, 2004. Accessed February 11, 2016. http://www.hc-sc.gc.ca/hcs-sss/delivery-prestation/fptcollab/2004-fmm-rpm/ index-eng.php.
[8] Canada. Health Canada. “Federal/Provincial/Territorial Ministerial Task Force on the National Pharmaceuticals Strategy, National Pharmaceuticals Strategy Progress Report”. Ottawa: Health Canada, 2006. Accessed February 11, 2016. http://www.hc-sc.gc.ca/hcs-sss/pubs/ pharma/2006-nps-snpp/index-eng.php.
[9] Canada. Senate. Standing Senate Committee on Social Affairs, Science and Technology. “Time for Transformative Change, A Review of the 2004 Health Accord”. Ottawa: Senate, 2012. Accessed February 11, 2016. http://www.parl.gc.ca/content/sen/committee/411/soci/rep/rep07mar12-e.pdf
[10] Canada. Health Canada. “Unleashing Innovation: Excellent Healthcare for Canada. Report of the Advisory Panel on Healthcare Innovation”. Ottawa: Health Canada, 2015. Accessed February 11, 2016. http://www.healthycanadians.gc.ca/publications/health-system-systeme-sante/report-healthcare-innovation-rapport-soins/alt/report-healthcare-innovation-rapport-soins-eng.pdf
Bullet Point Overview
2002
“The Health of Canadians- The Federal Role”[1]
The Senate Standing Committee on Social Affairs, Science and Technology
Chaired by Senator Michael Kirby
- First, and foremost, the Committee wants to make sure that no Canadian individual or family is exposed to undue financial hardship as a result of having to pay all, or even a significant fraction, of the costs of extremely expensive and/or prolonged prescription drug treatments.
- Second, the Committee wants to create the conditions for long-term sustainability of current prescription drug coverage programs, both provincial public and private supplementary drug insurance plans, in the face of escalating prescription
drug costs and the anticipated introduction - Overview of the proposed plan:
- Cap of yearly out-of-pocket prescription costs at 3% of a family’s annual income
- The remainder of the costs are divided between the federal government, provincial/territorial government and private payers
- If an individual has private supplementary coverage, the cap is set at 3% of annual income or $1,500, whichever is less. The private firm is responsible for costs from this cap up to $5,000.
- If an individual does not have private supplementary insurance, the costs up to $5,000 are a combination of provincial/territorial government and out-of-pocket costs.
- The federal government are responsible for paying 90% of the prescription drug expenditures in excess of $5,000. This contribution would be paid to either the provinces or to the supplementary private insurance plans, not to the individuals.
- The provincial/territorial government or private insurance would pay the remaining 10% in excess of $5,000
- The estimated cost of this initiative is approximately $500 million per year.
2002
“Building on Values: The Future of Health Care in Canada”[3]
The Commission on the Future of Health Care in Canada
Roy Romanow
- There are serious disparities across Canada in terms of catastrophic coverage for prescription drugs. Under the proposed Catastrophic Drug Transfer program, provinces and territories would receive additional funds to help cover the costs of prescription drug plans and protect Canadians against the potentially “catastrophic” impact of high cost drugs.
- The proposed plan:
- The federal government would reimburse 50% of the costs of provincial and territorial drug insurance plans above $1,500 per person per year
- The estimated cost of this transfer is between $749 million and $1.01 billion
2003
The First Ministers’ Accord on Health Care Renewal[6]
Budget 2003, Finance Canada
- Canada’s First Ministers agreed that no Canadian should suffer undue financial hardship for needed drug therapy and therefore, additional investment needed to be made for a long-term sustainable healthcare system in Canada.
- They agreed to increase federal support in the 2003 Budget for health care, including $16 billion over five years through a “Health Reform Transfer” targeted to primary health care, home care, and catastrophic drug coverage
- No formal definition for catastrophic drug coverage was given
- Indicators for catastrophic drug coverage were “to be developed”
2004
First Minister’s Meeting On The Future of Health Care[7]
- Officially called for the development, assessment and costing of options for National CDC
2006
Federal/Provincial/Territorial Ministerial Task Force[8]
National Pharmaceuticals Strategy Progress Report
- Analyzed and costed plan structures for CDC
- Variable percentage of annual income (0/3/6/9%) and fixed percentage of annual income (4.3%) were both considered, each with and without the maintenance of private payers.
- Costing Results:
- Variable Percentage Model, Private Payer maintained: $7.8 billion
- Variable Percentage Model, without Private Payer: $10.3 billion
- Fixed Percentage Model, Private Payer maintained: $6.6 billion
- Fixed Percentage Model, without Private Payer: $9.4 billion
- Upon comparing, the variable percentage model could more effectively protect lower income families but is more expensive. Also, total public CDC costs would be lower if private plans continued to provide drug coverage for those who currently have private insurance.
- Recommendations:
- Further policy, design, and costing analysis should be focused on the model of variable percentage of income with maintenance of private payers.
- The fixed percentage model should also be analyzed and costed
- The impact and feasibility of maintaining a private payer coverage role be analyzed further
2012
Time for Transformative Change, A Review of the 2004 Health Accord[9]
Standing Committee on Social Affairs, Science and Technology
- Describes the history of CDC (as above)
- Notes that no further collaborative work followed the F/P/T Task Force in 2006
- Recommends that the financial discussion on CDC needs to be put aside and a discussion with Canadians needs to begin regarding what type of pharmacare program would best meet their needs.
- Recommends a national pharmacare program, that would encompass CDC
2015
Unleashing Innovation: Excellent Healthcare for Canada[10]
Report of the Advisory Panel on Healthcare Innovation
Chaired by David Naylor
- Gives a history of federal support fro healthcare reform and renewal since 2000. This includes the “Health Reform Transfer” from 2003
- Again discusses that with the 2003 and 2004 Health Accords the government acknowledged the need for improving prescription drug coverage. This included calling for and costing a CDC plan but not implementing it.
