Is national pharmacare coming to Canada?

In 2018, the Canadian government created the Advisory Council on the Implementation of National Pharmacare (the Council) to advise the government on introducing a national insurance program for prescription drugs, known as pharmacare.¹ On June 12, the Council published its final report on the Implementation of National Pharmacare recommending that Canada implement universal, single-payer, public pharmacare.²

What you need to know

• The Council recommends that the federal government work with provincial and territorial governments to establish universal, single-payer, public pharmacare in Canada (national pharmacare).
• If this recommendation is accepted by the federal government, it is proposed that national pharmacare would be enacted through new legislation, which would be drafted between 2020 to 2022, and introduced in 2022.
• The Canadian Drug Agency would be established to create a national formulary, which would contain a list of drugs to be covered by national pharmacare. The initial list of drugs is proposed to be available by January 1, 2022, and a full, comprehensive national formulary is proposed to be in place no later than January 1, 2027.

The details

The Council was tasked with advising the government on introducing a national drug program through undertaking a dialogue with Canadian stakeholders on how to best implement an affordable model.

In March 2019, the Council published an interim report to the Minister of Health and the Minister of Finance that included the Council’s recommendations on core principles that should underpin the national program.³ Guided by the Council’s consultations and initial recommendations, budget 2019 announced the government’s intention to move forward with a national plan and proposed implementation steps. The Council has now put forth its final recommendations for the development of national pharmacare.

Role of the Canadian Drug Agency

It is proposed that national pharmacare would be implemented through the creation of the Canadian Drug Agency, an arms-length organization governed collaboratively by the federal, provincial and territorial governments that would also have patient representation on its board.

The Canadian Drug Agency’s functions would include:

• assessing the clinical effectiveness of drugs compared to other treatment options;
• assessing the cost-effectiveness of drugs compared to other treatment options;
• deciding which drugs and related products (such as devices and supplies) should be on the national formulary;
• negotiating prices and supply arrangements with manufacturers;
• providing advice to prescribers, pharmacists and patients on how best to use drugs; and
• monitoring the safety and effectiveness of drugs in real-world use.

The Council recommends that federal, provincial and territorial governments work collaboratively to determine which existing resources and expertise should be brought into the Canadian Drug Agency from Health Canada, including the pan-Canadian Pharmaceutical Alliance, the Canadian Agency for Drugs and Technologies in Health, the Patented Medicine Prices Review Board, and the Canadian Institutes of Health Research – all of which are currently involved in one or more of the functions that the new Canadian Drug Agency would manage.

A national formulary

The Canadian Drug Agency would be tasked with developing and maintaining a comprehensive, evidence-based list of prescription drugs covered by pharmacare (national formulary). When considering whether a drug will be included on the national formulary, the Canadian Drug Agency would evaluate:

• the clinical benefit that the drug offers patients;
• its value for money;
• its alignment with patient and societal values, including diversity and equity considerations; and
• its broader impact on health care and health outcomes.

The Council recognized the necessity of a prioritization framework to determine the order in which drugs will be evaluated, negotiated and added to the national formulary. It is proposed that the Canadian Drug Agency would consider therapeutic areas where there is a high degree of consistency across public drug plans (tried-and-true drugs that are widely accepted as effective choices); therapeutic areas where there is greater variability (such as cancer drugs); as well as national health priorities (such as mental health).

The Council recommended that policies be implemented to encourage the use of generic drugs – for example, generic substitution policies, where pharmacists automatically fill prescriptions with generic, rather than brand name, drugs. Similar policies would be put in place to encourage biosimilar use, including biosimilar substitution in place of original biologic drugs. We note that this would align with a recent policy shift in British Columbia, which expanded the use of biosimilars in place of original biologic drugs for the same indications.⁴

Financing a national formulary

The Council recommends intergovernmental financing arrangements for national pharmacare be determined through mutual agreement among federal, provincial and territorial governments. The federal government would provide funding through general government revenue to provinces and territories sufficient to cover the incremental costs of national pharmacare. The Council also recommends federal, provincial and territorial governments to engage with private insurers to ensure a smooth transition to national pharmacare, and that private insurers be allowed to provide coverage for copayments, as well as for drugs not on the national formulary. Accordingly, manufacturers could continue to negotiate with private insurers for drugs not listed on the national formulary. If implemented, the Council estimates that spending by private plans would decrease by about $3.3 billon (from $14.7 to $11.4 billion) and by $16.6 billion (from $19.8 to $3.2 billion), by 2022 and 2027, respectively.

What’s next?

It remains to be seen whether the federal government will adopt all or some of the Council’s recommendations. The outcome of the federal elections this fall could impact timing for adoption, or adoption altogether depending on which party is in power.

We have yet to hear from the provinces and territories on how they envision the implementation and transition to national pharmacare. Development of national pharmacare will no doubt be a challenging process as the priorities and needs of each province/territory will likely vary. It appears that private insurance will continue to play a role in national pharmacare, but to a lesser degree than in the current drug coverage landscape if the Council’s recommendations are formally adopted.

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¹ For additional details, see "Canada: Another step towards national pharmacare."

² See “A Prescription for Canada: Achieving Pharmacare for All, Final Report of the Advisory Council on the Implementation of National Pharmacare.”

³ See interim report from the Advisory Council on the Implementation of National Pharmacare.

⁴ See more.

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