National Pharmaceuticals Strategy and National Pharmacare Program

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National Pharmaceuticals StrategyandNational
Pharmacare Program

• Ali Suleiman
• Director, Research Pharmacy Analysis

PMCQ Education Day October 20, 2005
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Presentation Outline

• Prescription Medications in Canada
• National Pharmaceuticals Strategy
• Discussion Items
• National Formulary
• National Pharmacare Program
• Concluding Remarks

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Prescription Medications in Canada
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National Health Expenditures Trends
19 of the 40.4B increase in HCS in Canada were
attributed to cost of prescribed drugs
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75
Source National Health Expenditures Trends
1975-2004 (CIHI)
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Where the Money Goes
Source National Health Expenditures Trends
1975-2004 (CIHI)
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The Shift in Cost
1999
2004
52.7
47.3
55.4
44.6
Source National Health Expenditures Trends
1975-2004 (CIHI)
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Why Prescription Medications is an Issue Now..?

• More elderly with chronic conditions
• Previously untreatable diseases now treatable
• More drugs
• More drug therapy instead of surgery
• More patients recover at home not hospital
• Change in drug utilization prescribing habits

Result - increase in prescription drug
expenditures
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Background Leading to NPS

• 1997, National Forum on Health recommended a
  national pharmacare program.
• Sept 2000, First Ministers working to ensure
  access to new, appropriate and cost-effective
  drugs.
• Sept 2001, National Prescription Drug Utilization
  Information System (NPDUIS) established.
• Sept 2002, Common Drug Review (CDR) established.

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Background Leading to NPS

• Feb 2003, First Ministers Health Accord to create
  system with timely access to quality health
  services.
• July 2004, Canadas premiers and territorial
  leaders press Ottawa to spend billions on a
  national pharmacare program.
• Sept 2004, as part of 10-year plan, First
  Ministers agreed to the National Pharmaceuticals
  Strategy.

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What is the National Pharmaceuticals Strategy?

• A collaborative, integrated comprehensive
  approach to pharmaceuticals in Canada
• Governments working together with input from
  providers, researchers, policy makers, industry,
  patients and the public
• First report to First Ministers due June 2006

Source Presentation by NPS Co-Chair
Jurisdictions Ian Shugart Penny Ballem
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Nine Key Elements

1. Options for catastrophic drug coverage
2. Common National Drug Formulary
3. Access to breakthrough drugs accelerated
4. Evaluation of drug safety and effectiveness
5. Purchasing strategies for best prices
6. Influence prescribing behavior
7. Broaden the practice of E-prescribing
8. Access to non-patented drugs prices
9. Best practices in drug plan policies

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Expected Benefit from NPS

• Better coverage equal access for Canadians
• Safer, more effective drugs
• Better evidence for
• Listing decisions post listing assessment
• Best practice prescribing
• Patient information needs self-management
• Greater value for patients health system in
  return for significant investment

Source Presentation by NPS Co-Chair
Jurisdictions Ian Shugart Penny Ballem
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Progress to Date

• Ministerial Task Force established
• Priority areas identified
• Project plans developed approved by CDM
• Background research underway
• Policy development work initiated
• First consultation opportunities
• Working Conference on Strengthening the
  Evaluation of Real World Safety and Effectiveness
  (September 14, 15)

Source Presentation by NPS Co-Chair
Jurisdictions Ian Shugart Penny Ballem
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Five Focus Areas

• Real world drug safety effectiveness
• Expensive drugs for rare diseases
• Drug pricing purchasing
• Catastrophic drug coverage
• Common drug formulary

Source Presentation by NPS Co-Chair
Jurisdictions Ian Shugart Penny Ballem
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Next Steps

• Fall 2005/Winter 2006 Ongoing consultation on
  specific priority areas
• Fall 2005 Interim Report to Health Ministers
• June 2006 Report to First Ministers

Source Presentation by NPS Co-Chair
Jurisdictions Ian Shugart Penny Ballem
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Challenges

• Early in process too soon to judge
• Entire policy focus currently on drug cost
• Weight given to therapeutic advantage??
• Feds taking policy lead - no legislative mandate
  or authority
• Industry relegated a minor role
• Industrial benefits not yet a factor
• Private sector plans not fully engaged

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Discussion Items

• National Formulary (NF)

• National Pharmacare Program

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Discussion Items
National Formulary (NF) A prerequisite to a
sustainable full-fledged national Pharmacare
program
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What is a NF ?

• Who are beneficiaries (i.e. seniors, welfare,
  catastrophic, other???)
• Which drugs are benefits
• Financing (who pays)
• Who decides, controls, administers
• Decision making process??

Answers define the National Formulary
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What is a NF ?

• Answers depend on perspective
• Provincial ministers of health
• Financial commitment from feds
• Province defines beneficiaries
• Province controls benefit list administers
  financing (who pays)
• Feds
• Control/influence over beneficiary definition
  benefits
• Funding will be ongoing issue

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What is a NF ?

• Either a list of drugs that member plans will
  reimburse
• Example most provincial drug plans
• Or a list of drugs that member plans should
  reimburse
• Example WHO Essential drug list

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NF. is it Needed ?

• Protecting current public drug programs
• Bring drugs into Medicare basket of universally
  covered health care goods services
• Indispensable to cost-controllable
  cost-effective nation-wide Pharmacare
• Reduce disparity among beneficiaries to various
  plans
• Prerequisite to full-fledged national Pharmacare
  program

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Current Public Drug Program Formularies

• All provinces have their own formularies
• Most cover bulk of drugs for the poor, the
  elderly, patients facing catastrophic drug costs
  and or certain conditions
• Formularies revised several times a year
• Formularies used to implement cost reduction
  policies (e.g. Limited Use, generic substitution,
  Reference-based pricing)

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Potential Benefits of a NF

• Cost Containment ..?
• Depends on
• Provinces respond (e.g. control over eligibility,
  financing how to list)
• Prescribing physicians respond (e.g. off-label
  prescribing)
• Decision-making criteria to list drugs
  (cost-containment vs. cost-effectiveness and / or
  political influence)

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Potential Benefits of a NF

• Improving purchasing power
• Larger price reduction in exchange for national
  listing is not guaranteed discount prices to one
  buyer could trigger lower prices elsewhere
• Reduced transaction costs by avoiding individual
  negotiations with suppliers

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Potential Benefits of a NF

• Standardizing drug coverage
• Considerable variation between current provincial
  drug plans (e.g. eligibility, copay, deductibles,
  drugs covered and financing)
• Costly significant additional funding needed to
  raise all provincial programs to the same level
  of coverage

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Potential Benefits of a NF

• Elimination of duplication
• Already incorporated through the expansion of the
  role of CCOHTA CDR
• CDR
• Intention centralize review for all provinces
• Reality one additional step in market access
  if recommended, provinces still decide listing

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Barriers to a NF

• Current Variations between provinces
• Unequal fiscal resources to commit to drug
  coverage
• Different populations with different coverage
  needs
• Current provincial formularies (significant
  investment)
• Different political outlook

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Barriers to a NF - Analytical Issues

• Who are beneficiaries (i.e. seniors, welfare,
  catastrophic illness)
• Impact of various copayment, deductible amounts
  on utilization
• Which drugs are benefits
• How to list
• Who decides, controls, administers
• Costs and financing (Who pays)

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Cost of NF

• One size fits all?
• Loss of experimentation
• Mismatch between decision making authority and
  expense

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Discussion Items
National Pharmacare Program
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National Pharmacare ProgramChallenges

• Inadequate coverage for small part of population
• Balancing health care priorities, cost and
  benefit
• Rapid growth in drug expenditures
• Evidence for need for improved prescribing and
  utilization and post listing surveillance

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National Pharmacare Program

• Objectives
• Equity of access
• Safety efficiency
• Cost containment

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National Pharmacare Program

• National standard for
• Beneficiaries
• Benefits
• Feds major role
• Administration - status quo or new
• Control - feds via

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Cost Impact of the Pharmacare Public Funding
Model

• A publicly-funded Pharmacare program providing
  first-dollar, universal coverage
• Highest increase in prescription drug
  expenditures
• Private individual spending would undergo the
  largest decrease due to a dramatic shift in
  funding from private sector to public sector

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Is it Feasible?

• Overall increase in expenditures due to removal
  of existing cost sharing arrangements
• Ramifications for private insurance market
• Removing the drug plan portion from private
  insurer may increase cost of offering remaining
  benefits (dental, vision care, etc)
• Reduction in consumer choice
• Loss of private control over some health care
  spending
• Erosion of provincial jurisdiction

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National Pharmacare ProgramPublic/Private Model

• Eligibility for public coverage
• All currently eligible provincial beneficiaries
  plus universal plan with high deductible
• Administrators
• Provinces with compulsory national formulary
• Who pays
• Provinces Federal (Feds contribution increases)
• Patients employers pay premiums, deductibles,
  co-pays, and co-insurance

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National Pharmacare ProgramImplications

• National formulary necessary
• Limited list of benefits likely due to cost
• Extensive criteria for payment (LU policy)
• Lead to pressure for appropriate use
• Slow listing time
• Many players - different priorities
• Feds new player in decision process
• Companies will be unable to effectively negotiate
  listing

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National Pharmacare ProgramImplications

• Price controls through drug life and on generics
• Expect attempts to leverage buying power
  (tendering)
• Very expensive
• Erosion of provinces constitutional power

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Concluding Remarks

• National Pharmacare
• Unlikely
• National Formulary
• Helps high cost drugs
• Negative for pharma
• Price controls
• Limited listings

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• QUESTIONS ???