Canadian Health Policy Institute

Canadian Health Policy Institute

September 20, 2013 08:00 ET

Study Compares Insurance Coverage for New Medicines Between Canada's Public and Private Sector Drug Plans

TORONTO, ONTARIO--(Marketwired - Sept. 20, 2013) - A new study published by the Canadian Health Policy Institute (CHPI) compares insurance coverage for new medicines between Canada's provincial and federal public drug programs; and between public sector drug programs and the benchmarks currently set in a competitive market by private-sector drug insurance.

Using data from Health Canada and IMS Brogan, the study specifically examined insurance coverage for new medicines in five (5) select therapeutic classes - allowing Canadians to see how they are uniquely impacted by differences in drug insurance benefits across plans, according to the treatment areas that affect them most directly.

The data show that there is significant variability of insurance coverage for new drugs across provincial and federal plans. Quebecers tend to have much better and quicker access to new medicines in their publicly funded drug plan relative to the public plans of other jurisdictions. Also, the generosity of drug insurance coverage under the private sector drug plans in Canada is far better than that of the public sector drug plans.

These findings are relevant to three recent developments with implications for drug insurance policy in the public and private sector:

  1. Some private sector unions (e.g. BC Nurses Union) have negotiated drug insurance coverage on the basis of equality to the public sector drug plan in their province, perhaps without realizing that this will mean far more restricted drug insurance coverage for new medicines.
  2. Some academic groups are advocating for the nationalization of private drug insurance in Canada and its replacement with a government-run monopoly program billed as Pharmacare. The findings of this report are strongly indicative of the low generosity of benefits that can be expected from a government-run Pharmacare program, and confirm that greater benefits tend to accrue to patients from a competitive market for drug insurance in Canada.
  3. The Canadian Life and Health Insurance Association (CLHIA), which represents the private sector drug insurance industry in Canada, recently began advocating for governments to impose a single minimum national formulary, which is a defined list of the drugs that would be covered by both public and private sector insurance. This study shows that the private sector currently insures a far greater number of new drugs compared to the public sector - a result of competitive market pressures that encourage generous coverage. If implemented, a government-imposed single minimum national formulary would further politicize drug insurance in Canada and reduce private-sector competition, creating a 'race to the bottom' that will drive insurance coverage in the private sector down to the minimum benefit defined by governments.

The study, How Good Is Your Drug Insurance? Part 2: Comparing Access to New Medicines by Therapeutic Class in Public and Private Sector Plans in Canada, is available for free download from Canadian Health Policy, the online journal of the Canadian Health Policy Institute (CHPI) and can be accessed at the following web link:

About CHPI

Canadian Health Policy Institute (CHPI) is a non-profit think-tank funded by independent research grants and unrestricted operating grants from public sector, private sector and non-profit sector sources. CHPI is dedicated to conducting, publishing and communicating evidence-based socio-economic research on health system performance and health policy issues that are important to Canadians.

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