When sa国际传媒鈥檚 health ministers got together last week, federal Health Minister Rona Ambrose was notably absent. The reason is clear. The purpose of the meeting was to answer a question she would rather not face: How is the country going to pay its escalating drug bills?
Apparently, the federal government wants no part in that discussion. Ottawa鈥檚 policy is straightforward 鈥� let the provinces shoulder the burden.
But what kind of burden are we talking about? Part of the problem is the arrival of hugely expensive new drugs.
About 60,000 British Columbians have the liver disease hepatitis C. Perhaps as many as half could benefit from a new medication called Sovaldi. But in the U.S., a 10-week treatment costs $85,000 per patient.
If the sa国际传媒 government accepted the drug at that price, the cost to Fair Pharmacare would approach $2.5 billion. That鈥檚 twice the entire Pharmacare budget.
A second concern is that, already, one in 10 Canadians can鈥檛 afford their prescriptions. Provincial drug plans are too restrictive. They either demand an overly large co-pay or their low income cut-offs are too stingy.
In sa国际传媒, a single mother with after-tax income of just $29,000 must pay the first $600 before Pharmacare kicks in. That鈥檚 a tough challenge.
The solution discussed by the health ministers is to create a national formulary, meaning each province would cover the same medications in their drug plan. It鈥檚 hoped that would enable the provinces, acting together, to benefit from bulk purchases.
sa国际传媒 Health Minister Terry Lake believes meaningful savings can be made in this way. He points to the success his own ministry has enjoyed in managing costs down 鈥� sa国际传媒 has the lowest per-capita drug expenditures in the country.
Lake is an effective advocate for a national strategy. If anyone can get the ball rolling, he can.
But while this might enable more generous treatment of low-income recipients, it cannot solve the problem of hyper-expensive drugs. Bulk purchasing alone will never make Sovaldi affordable. A different approach is needed.
Pharmaceutical companies have tremendous latitude in pricing their products. While a course of Sovaldi sells for $85,000 in the U.S., it鈥檚 far cheaper in Europe.
The actual production cost of most drugs is minute 鈥� a few cents per pill. A knock-off version of Sovaldi is being manufactured and sold in India for $900 per 12-week treatment.
Production costs are only a small part of the investment a drug company must make to develop and market a new medication. Nevertheless, in the case of potentially life-saving treatments, the manufacturer can ask whatever the market will bear.
The provinces can鈥檛 deal with this pressure. They don鈥檛 have a big enough stick.
The only effective strategy is to create a gatekeeper with real clout. Ideally, that should be Ottawa. Only Health sa国际传媒 has the power to grant, or refuse, a licence. The ministry should have refused to license Sovaldi until the price came down. That鈥檚 how the Europeans do it.
Instead, Health sa国际传媒 approved Sovaldi, despite a whopping price tag that could have reached $110,000 for some patients. Fortunately, a federal/provincial committee of drug experts stepped in at the last minute, and the manufacturer backed off. The price was cut in half, to $55,000.
The new cost is still ruinously expensive. We are a long way from developing a genuinely affordable strategy.
But the basic message is clear. We need a national approach to managing expensive drugs, and the federal government has to be part of that.
If Ottawa sits on the sidelines, as Ambrose did last week, we will all pay the price.
