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A solution for rising drug costs?

Tuesday March 17, 2015 Written by  University of British Columbia
Canada could save $7.3 billion annually with universal public coverage of prescription drugs – and a lot of those savings could be passed on to employers.

Canada is the only developed country with a universal health care system that does not include prescription drug coverage. But new research from the University of British Columbia and University of Toronto, published today in the Canadian Medical Association Journal, shows that universal public drug coverage, also known as universal pharmacare, is within reach for Canada even in times of government fiscal constraint.

“It’s a win-win,” said Steve Morgan, lead author of the study and professor of health policy at UBC’s School of Population and Public Health. “A universal pharmacare system would improve the quality and accessibility of health care, while saving the Canadian economy billions of dollars every year.”

The study shows that the private sector, predominantly the employers and unions that sponsor work-related drug benefits today, would save between $6.5 billion and $9.6 billion annually with comparatively little increase costs to government. Under many plausible scenarios, total public spending on medicines would actually fall if Canada had a universal pharmacare system.

The cost of universal pharmacare

The study modelled the cost of universal pharmacare based on data from $22 billion worth of prescription drug purchases in 2012-2013. The study’s calculations included the cost of increased use of prescription drugs by Canadians who currently can’t afford to fill those prescriptions.

Researchers found that increasing the use of generic drugs and bringing Canadian drug prices in line with other countries where universal drug plans achieve better prices through bulk purchasing and negotiation, would add up to significant savings.

Government costs would be driven down by reducing the cost of medicines already paid for under public drug programs – which currently cost taxpayers almost $10 billion – and by reducing public spending on private insurance for public sector employees – which currently costs taxpayers over $2 billion.

“Our study shows that universal pharmacare would save private citizens and corporations more than $8 billion at a cost to government of less than $1 billion. No government, no matter how fiscally conservative, should turn down that bargain,” said Morgan. “To put this another way, failure to implement a universal pharmacare system that is simply on par with comparable countries around the world will cost the Canadian economy nearly $100 billion over the course of a decade.”

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