Defend Public Healthcare

A Great West Life Assurance executive recently claimed that private insurance for drug plans was becoming unsustainable -- unless changes are made. Almost all private drug insurance plans are paid through employer paid  insured benefit plans (often bargained with trade unions). In fact, although there were significant increases during the 90s and the first decade of this century, drug costs for insured benefit plans have leveled off. For 2010, 2011, and 2012 private drug insurance costs have risen just less than 3.1% per year on average, according to the Canadian Institute for Health Information  (Table A). This is a small fraction of the increases in the 1990s (where the average annual increase was 10.5%) or the first decade of this century (10.3% average annual increase). Part of the slowdown in costs is that some high priced blockbuster patented drugs are coming to the end of their patent protection and are now facing competition from lower priced generic version...

According to the newly released  Budget Estimates , the provincial government plans to increase OHIP spending (basically, spending on doctors) by $652 million over the current estimate of last year's spending.  That's a 5.3% increase.  Since 2009-10 (two years ago) the increase is $1.35 billion, or 11.5%.   A pretty hefty increase, continuing the generous increases in OHIP spending over the last number of years. For many years, the drug companies also did well through provincial government spending increases.  This year, the government plans to increase drug spending 4.6%  ($165 million) over the current estimate for last year. This is only modestly higher than the overall budgeted health care increase of 4.24%. Moreover, with a cut in drug spending in 2010-11, drug spending will still be $40 million less than it was two years ago in 2009-10.

OCHU has repeatedly flagged the role of for-profit providers in driving up the costs of health care, and more often than not, the main offender is transnational pharmaceutical drug companies. Supporters of these corporations have often justified the expense of their drugs by citing  research and development costs.   $1.32 billion per drug is often bandied about So it is interesting to see Andre Picard's review in the Globe and Mail  of a  study that examined these, alleged, costs.  Picard reports that the study suggests a more realistic cost (after accounting for things like the true cost of financing, government tax subsidies, and public support via basic research from government and university labs) might be closer to $59.4-million.   That's quite a difference.   The actual costs are 4.5% of the amount claimed by the supporters of this for-profit industry. So, where does all that money we spend on drugs go?

The Ontario Hospital Association (OHA) has just released a fairly interesting report entitled The Changing Face of Ontario Healthcare .   Here's what I draw from the report: Provincial government health care spending in 2010  is $173 per capita less in Ontario than other provinces.  That means $173 less for every person in the province for the year.  And that means a saving of $2.3 billion province-wide. All of this ( and more ) is accounted for by spending less per capita than other provinces on hospitals.  Ontario spends $262 less per capita than the other provinces.  In total that is a saving of $3.5 billion for all of Ontario. The gap between what Ontario spends and what other provinces spend has increased every year since 2005 when the difference was only $86 per capita. Unlike hospitals, Ontario spends more per capita than any other province on physicians: $192 more per capita than the other provinces. The gap between what Ontario sp...

With most of the focus on squeezing hospital budgets, it's good to see that some others are beginning to pick up on the rapid increase in public spending on drugs and doctors, a point OCHU has been making for some time.  Following the release of a health care spending report from the Canadian Institute for Health Information (CIHI) even Toronto's national newspaper (of the Establishment), the Globe and Mail, has raised concerns: Public spending on physicians has become the fastest-growing expense to Canada’s health-care system, a trend sparking growing calls for an overhaul to the payment system for doctors. The findings are contained in a new report released Thursday by the Canadian Institute for Health Information, which also found drug costs are eating up an increasing portion of Canada’s health-care budget. The report provides a stark glimpse of the future of Canada’s health-care system in a world where recessionary forces are squeezing hospital budgets but demand fro...

Here's what one drug plan consultant wrote in Benefits Canada about how the proposed generic drug reforms could affect pharmacy dispensing fees: Dispensing fees will increase materially to compensate for the adverse financial impact of these proposed changes on pharmacies. In fact, during the week of April 19th, dispensing fees in Ontario immediately increased to $14.99 in some stores. They could easily move materially higher in the weeks and months ahead. For plans without fee caps, an escalation in costs due to higher fees is anticipated. I might  add that in cases where employer-based drug plans impose dispensing fee caps,  union members may well end up on the hook. Indeed, with the likelihood of increased dispensing fees, some employers are being told to add a dispensing fee cap to their plan if they don't already have one. So while employers may get a break on drug plan premiums, employees may get dinged ...

Hewitt and Associates, a corporation which advises employers on insured benefits, estimates that Ontario’s proposed changes regarding generic drugs will mean Ontario employers will see prescription drug plan costs drop by approximately 8% immediately, and by 16% within two years, with additional savings available depending on benefit plan design. Unfortunately, there are reports that the Liberals may cave-in and provide more (of our) cash to the pharmacy corporations.  In the last round of drug reform (with Bill 102 in 2006), the then Health Minister, Geroge Smitherman, did just that -- he caved in to demands from the brand name drug companies.  Not surprisingly, the brand name pharamceutical corporations will also be untouched by these latest reforms -- despite the fact that 75% of government drug money goes for their products and they are making a very handsome 25% profit rate. The result of the last cave in?  Drug spending by th...