Are you Counting on National Pharmacare

We are hearing more and more about National Pharmacare in Canada. The concept has been around for many years and has started to gain traction again, especially with a House of Commons committee report earlier this year. While the concept may seem simple and morally compelling – equitable and affordable access to prescription drugs for all Canadians based on the combined purchasing power of a single public payer – the “devil is in the details” as the system is complicated by a network of public and private plans.

We are hearing more and more about National Pharmacare in Canada. The concept has been around for many years and has started to gain traction again, especially with a House of Commons committee report earlier this year. While the concept may seem simple and morally compelling – equitable and affordable access to prescription drugs for all Canadians based on the combined purchasing power of a single public payer – the “devil is in the details” as the system is complicated by a network of public and private plans.

Could the path towards a cheaper and sustainable drug system really be that difficult? Yes, when you consider that it would require a significant change to the Canada Health Act and significant negotiations between the federal and all provincial governments. History has shown that these different governing groups rarely agree on things and right now the provinces have control over health care and drug coverage. The types of government coverage provided have evolved differently in each Province for various reasons. Ask yourself, do you truly trust the various governments of Canada to get this right and create something entirely new?

Group benefits plan sponsors have a major role to play and have a major stake in the discussions, as it is estimated that approximately 70% of Canadians have full or partial coverage through private benefits plans with their employers. That said, this leads to many of the perceived inequities in the system – what about the other 30% of Canadians and what about the variations in coverage between the various employer plans? As well, we have a global inequity as Canada currently faces higher drug prices, in general, than other developed countries throughout the world.

So it begs the question as to whether employees would be willing to trade in the drug coverage they currently have through private plans for a universal drug care program? Would it be better? Or would it be worse? Hard to say at this early stage. It is likely though that private plans would continue in some form to supplement the coverage provided by the government plan, like benefits plans already do in so many other areas (e.g., paramedicals, vision, dental). Given that benefits plans, including drug coverage, play a key role in attracting, retaining and engaging employees, would employers really want to give that up? As well, the combined cost of private coverage combined with government coverage, likely funded by way of higher corporate taxes or a new payroll tax, is really hard to estimate at this time.

Ultimately, if plan sponsors are looking for some kind of windfall to come out of any national pharmacare program, they could be sorely disappointed. Even if this type of program results in lower overall drug costs, in aggregate, would that be acceptable to private plan sponsors if they had to accept a lower level of coverage than they currently have? If plan sponsors take a wait and see approach, they cannot lose sight of managing their current plans. Current drug benefits will continue to be the biggest driver of plan inflation while at the same time continue to be the most valued part of the overall benefits plan. Stay informed while the discussions continue in the House of Commons but do not be distracted from your current responsibility for managing your own benefits plan.

We would be pleased to discuss your specific situation with you to identify the best strategy with respect to your employee benefits and retirement programs. Should you have any questions on the above, please don’t hesitate to contact me or a member of our team.

ZLC Financial is one of the fastest growing employee benefits advisors in Western Canada and we are fortunate to have the best people, resources and clients. We provide value to you by leveraging one of the most skilled benefits teams – collectively almost 300 years of experience within our team of 15 employee benefits specialists. We have been working with businesses ranging from 3 to over 65,000 plan members for over 30 years.

By Dan Eisner

This information is designed to educate and inform you of strategies and products currently available. As each individual’s circumstances differ, it is important to review the suitability of these concepts for your particular needs with a qualified advisor.