Drug pricing and reimbursement: Canada’s healthcare system

This video is the first in a series of four which will explain the legal framework of the health care system, and regulation of drugs and drug pricing, in Canada at the federal and provincial levels. The series is based on the Global Legal Insights publication “Pricing & Reimbursement 2020-Canada”. The second video in the series will be published next week.

Role of the federal and provincial governments in Canadian healthcare

Canada’s healthcare system, unlike that of the United States, is mostly publicly funded and is typically “free” at the point-of-use for Canadian residents. The Canadian federal government provides funding to the provinces to finance the delivery of healthcare, and the provinces, in turn, are responsible for delivering services and managing and administering their individual healthcare insurance plans. The provinces also offer additional benefits, such as prescription drug plans for eligible patients, under their respective health insurance plans, funded and delivered on the provinces’ own terms and conditions.

Physician services performed in a hospital and drugs administered in a hospital are paid out of the hospital’s operating budget managed by the hospital, with funds received from the provincial ministry of health in accordance with the minimum requirements of the federal Canada Health Act. Physician services performed outside of a hospital setting are also generally covered by the provincial ministries of health for provincial residents.

Role of the provincial governments in public prescription drug reimbursement

The cost of drugs that are administered to a patient in a hospital setting are covered by the public healthcare system, while the cost of a drug that is prescribed outside of a hospital setting is covered by either a public (government) drug plan, a private drug plan or “out of pocket” by the patient.

For prescription drugs that are used out of a hospital, each province maintains a public drug plan formulary, which lists the drugs and conditions for which the province will reimburse prescription drugs for an eligible insured person under the public plan.

Only a subset of the Canadian population receives government funded prescription drug coverage outside the hospital setting. The remainder of the population either pays for their prescription drugs out of their own pocket, or through private drug plans.