National pharmacare plan would ensure Canadians get the medication they need

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This article was published 28/02/2025 (266 days ago), so information in it may no longer be current.

One of the best ways the federal government could expand its coverage of universal health care would be through a national pharmacare program, including taking over what provinces already offer through their limited coverage of prescription drugs.

Ottawa has taken the first steps toward such a plan by signing a bilateral agreement with Manitoba to cover a range of contraceptives and diabetes medication. It’s the first such agreement in Canada and will also include funding for hormone replacement therapy for women and gender diverse people and some coverage of drugs for rare diseases. The announcement was made Thursday.

It’s a small step, but the first in what the federal government says could eventually be a more comprehensive program that would include a wide range of prescription drugs.

But Canada should rethink how such a plan would work. Rather than funding existing provincial plans, which the current model does, the federal government should take over the program entirely.

All provinces and territories have drug benefit plans. But it’s a patchwork across the country of income-based programs and other coverage for certain groups, such as seniors and people on social assistance. Coverage is limited and excludes many people in need.

Prescription drugs are an important part of health-care delivery. More often than not, treatment plans for patients include a trip to the pharmacy for medication. If you’re lucky enough to have a drug plan through your employer or some other private coverage, or you have the income to pay out of pocket, you can usually get by.

But many Canadians don’t have that luxury. Even with the limited coverage of provincial pharmacare plans, people don’t always have access to the prescription drugs they need.

One in five adults in Canada does not have the insurance needed to cover medication costs, according to Statistics Canada.

A comprehensive national plan could solve that.

It would also allow the federal government to play a more prominent role in Canada’s universal health-care system. Health care is a provincial jurisdiction. And while the federal government helps fund provincial programs through transfer payments (under the criteria set out in the Canada Health Act), it’s the provinces — not Ottawa — that provide universal health coverage.

It’s the federal government, though, that has the richer tax base. Ottawa is better positioned to fund health care — the most expensive individual social program in the country — but it doesn’t fall under its jurisdiction.

The way around that is to send transfer payments to the provinces through the Canada Health Transfer. It works, sort of, but there are endless squabbles between Ottawa and the provinces on funding levels and how the money should be spent, with each blaming each other when things go wrong.

It’s a lot more efficient and transparent for one level of government to provide a service, fund it and be held accountable for it.

But to make it work for a national drug plan, and to ensure it’s fiscally sustainable, it should be an income-tested program. In other words, it should be similar to what the provinces already offer but expanded to be more comprehensive. And it should be federally run.

Those with private plans and those who can afford to pay out of pocket should continue doing so. Otherwise, a universal, single-payer national pharmacare plan, where everyone gets free drugs all the time regardless of income, would be too expensive.

Canadians spent $37 billion on prescription drugs in 2021, according to a 2024 report by the consulting firm Deloitte. Public coverage accounted for 43 per cent of that, while private insurance paid for 37 per cent. The rest, 20 per cent, was paid for out of pocket.

How much would a comprehensive, national pharmacare program cost? That would depend on many factors, including whether it was a single-payer system, a public-private blend, if there were deductibles and what range of coverage would be offered.

But if a federal program picked up the 43 per cent cost the provinces already pay, along with some portion of the out-of-pocket costs, it might be in the neighbourhood of $20 billion a year.

Is that fiscally sustainable? It could be. It’s a lot of money (a single-payer system would be far more, likely double).

To put it into perspective, Ottawa will transfer $54.7 billion to the provinces in health-care funding this year through the Canada Health Transfer. If a national drug plan were phased in over time, it could be fiscally sustainable.

There are also savings that would go along with such a plan. Early diagnosis of illnesses and easy access to medication can result in less-serious ailments down the road, saving government more expensive health-care costs.

A federally administered national drug plan would also take fiscal pressure off the provinces, allowing them to redirect existing health-care resources to acute-care services and primary care.

It would allow the federal government to provide direct health-care services to Canadians without provincial involvement, much like employment insurance or Old Age Security.

What the federal government is proposing now is not that. It’s similar to the transfer payments Ottawa sends to the provinces and will likely be subject to the same squabbling between Ottawa and the provinces over time.

A stand-alone federal program would eliminate that and Ottawa would be held accountable for the service it provides.

tom.brodbeck@freepress.mb.ca