THE STANDING SENATE COMMITTEE ON SOCIAL AFFAIRS, SCIENCE AND TECHNOLOGY
EVIDENCE
OTTAWA, Wednesday, September 18, 2024
The Standing Senate Committee on Social Affairs, Science and Technology met with videoconference this day at 4:15 p.m. [ET] to study Bill C-64, An Act respecting pharmacare.
Senator Ratna Omidvar (Chair) in the chair.
[Translation]
The Chair: Good afternoon, honourable senators. My name is Ratna Omidvar, I am a senator from Ontario and the chair of the Standing Senate Committee on Social Affairs, Science and Technology.
[English]
Before we begin, I would like to ask all senators and other in‑person participants to consult the cards on the table for guidelines to prevent audio feedback incidents. Please make sure to keep your earpiece away from all microphones at all times. When you’re not using your earpiece, please put it face down on the sticker placed on the table for this purpose. Thank you for your cooperation.
Today, we begin our study of Bill C-64, An Act respecting pharmacare. Before we begin, I would like to do a quick introduction of the senators in the room, starting with the deputy chair of the committee.
Senator Cordy: Welcome to the committee and to the Senate. I’m Jane Cordy, a senator from Nova Scotia.
Senator Kingston: Joan Kingston, New Brunswick.
Senator Moodie: Rosemary Moodie, Ontario.
[Translation]
Senator Cormier: René Cormier from New Brunswick.
[English]
Senator Bernard: Wanda Thomas Bernard, Nova Scotia.
Senator Burey: Sharon Burey, Ontario.
Senator Osler: Flordeliz Gigi Osler, Manitoba.
Senator Cardozo: Andrew Cardozo, Ontario.
[Translation]
Senator Petitclerc: Chantal Petitclerc from Quebec.
Senator Brazeau: Patrick Brazeau from Quebec.
[English]
Senator Senior: Paulette Senior, Ontario.
Senator Seidman: Judith Seidman, Montreal, Quebec.
Senator Dasko: Donna Dasko, Ontario.
[Translation]
Senator Mégie: Marie-Françoise Mégie from Quebec.
[English]
The Chair: Minister, as you can see, there’s a lot of interest in this bill. Thank you for joining us today and for making the time to do so. We welcome, of course, the Honourable Mark Holland, Minister of Health, and officials from Health Canada: Michelle Boudreau, Associate Assistant Deputy Minister, Health Policy Branch; and Daniel MacDonald, Director General, Office of Pharmaceuticals Management Strategies, Health Policy Branch. Thank you all for joining us today.
Minister, we’ll begin with your opening remarks of five minutes, and then my colleagues will be able to ask you questions. Thank you.
[Translation]
Honourable Mark Holland, P.C., MP, Minister of Health: Thank you, Madam Chair. I am pleased to join you and my colleagues in this crucial discussion regarding a bill that is essential for our country. The topic is thorny and complex, without a doubt. However, it is now time to greatly improve the quality of health care across the country.
[English]
It’s a part of many efforts — I only have five minutes, so I won’t talk about those much, but I think it’s an important context. Before the pandemic, we recognized that there were a lot of stresses and strains within our health system, and we did not examine many of those as deeply as we needed to as a society. But like all nations, when we went through the pandemic, it became very clear that there were many issues within our health system that were unaddressed and problems that allow it to now be — with burnout and folks coming out of the pandemic and backlogs — in a state of crisis. We need to move from being in a system that’s dealing with crisis — waiting for people to get sick and dealing with it on the back end — to being in a system based on prevention, care and avoidance of illness.
We know that 70% of chronic disease and illness is preventable, and much of what fills our hospitals and waiting rooms shouldn’t be there in the first place, which is critically important not only as a matter of cost but also as a matter of equity. We need to make sure that we arrive at a place where it’s not only equitable access to care but also more equitable outcomes.
There are many things we’re doing on that front. We’ve signed agreements with every province and territory on working together and aging with dignity. This is part of the $200-billion investment in health care, which the federal government is putting in over the next 10 years. We are doing what we’re doing in dental care, which is fundamentally not just about overall health, but it is a primary care play. People say, “We have a crisis in primary care. Why are you worried about dental care?” Because it’s a very important aspect of that. We’ve now seen 650,000 Canadians everywhere in the country receiving service. Now over 80% of oral health professionals are participating.
We have really critical work in the House — which I hope is coming to you soon — on interoperability and data. We know that data saves lives — being able to share that information, simplifying processes and making sure that professionals aren’t working with antiquated systems is critical.
We’re also doing really important work in the area of foreign credentials and many other areas, but I’m here today to talk about pharmacare. Oftentimes, folks are either despairing — it’s too much; you can’t take it on; stay away from it — or let’s jump to a perfect state where we’re exactly where we want to be and everything is fixed. Regarding health care in this country, we know that our progress is iterative. As a government, we’ve already done a lot. I think about the pan-Canadian Pharmaceutical Alliance as an example. We’ve saved over $4 billion a year in drug costs by being able to coordinate our drug purchasing. There’s a lot more to be done in bulk purchasing.
But this legislation is critical to really take an essential step to demonstrate what is possible when we have universal, single-payer access available for a certain number of drugs.
We’ve been talking a lot in hypotheticals — what if this, or what if that — and about a lot of theoretical models. This is not theoretical; it’s real. Senators, one of the reasons I thought having a memorandum of understanding with British Columbia was so important was to help the Senate — because I know there were a lot of questions — and show what this would look like. One of the things I explained was that diabetes medications and contraceptives — and the formulary you see is an addendum to this legislation — are the floor, not the ceiling. For the memorandum of understanding with British Columbia, as an example, you see that they’re adding — in the announcement we made at the B.C. Women’s Hospital & Health Centre — menopausal hormone therapy and drugs related to that. You also see the British Columbia government saying they’re very open to expanding the formulary beyond what is here.
This bill allows the flexibility to go make those deals with the provinces and use this as the floor to do more.
Maybe I’ll end on this, Madam Chair, because I’m cognizant of time: We have to put this out in the world to show that it works and makes a difference. Just take diabetes as an example. It costs this country about $30 billion a year. There are so many doctors who tell me, “I’ve got patients in front of me, and I tell them the medication they’ve got to take, but they can’t take it. Then, they come back much worse and much more ill, costing the system much more money.”
Putting this in the world, building evaluation and building data takes a lot of the fear away and demonstrates what is possible when we give people the medication they need. It is a concrete step in the direction we have to go as a country to make sure people can afford the medication they require.
Madam Chair, thank you for the time. I look forward to questions from colleagues.
The Chair: Thank you, minister. Lots of questions are rolling in.
Let me take the opportunity to welcome Senator Boudreau from New Brunswick to our committee.
You will have four minutes for every question and answer, colleagues.
Senator Cordy: I figured it would be a little amount of time when I looked around the table. Thank you, minister, for being here.
You talked about the dental program, so I’m just going to take a couple of seconds of my time to tell you that I have received significant feedback from people in Nova Scotia about the dental plan. I know it was initially stated that the uptake wasn’t that great; now it’s up to 80%, which is phenomenal for any federal program or any program of any kind. The feedback has been so positive, so thank you very much for your work in that area.
My question related to Bill C-64 concerns the committee of experts and the membership on that. In an opinion piece, Matthew Herder, a professor of law and medicine at Dalhousie University in Halifax — and he will be appearing before this committee tomorrow — argued that the government must put in place a firewall between the pharmaceutical industry interests and the expert committee proposed in Bill C-64. That concern was also echoed by the Canadian Federation of Nurses Unions.
How do you perceive or see the handling of the conflicts of interest among the membership? You want a board that is knowledgeable, but, on the other hand, there cannot be any perceived feelings by the public that there are conflicts of interest with board members.
Mr. Holland: Thank you, senator.
In the first order, I agree with you on dental care. This is kind of the way it’s going to go with everything. There’s a reason things were not done before, and it’s because they’re hard. You take a look at dental: Yes, a lot of people were saying we wouldn’t get more than 20% of dentists signing on. It was a lot of conversations and building of trust to reach the point where we’re now at 80%. Similarly, this will be an iterative process as we deal with pharmacare.
On the committee of experts, they’re going to be jointly named, as you’re aware, by two political parties — putting both of those names in. The chair will be equally agreed upon. I am absolutely committed to making sure the committee has no concerns around the idea of conflict of interest. It’s so critical that people see this as a group of experts who are squarely and entirely focused on ensuring we have medicine for folks in the most efficacious way that represents the interests of Canadians.
We’ve had very good and easy conversations on that with the NDP, who, in this instance, would be the ones we would be selecting that committee with. Therefore, I don’t believe there’s going to be a problem in terms of a conflict of interest. It’s not what we’re looking for.
Senator Cordy: Can you also ensure, minister, there’s proper representation from across the country? Being from Nova Scotia, I often find that when you’re looking at national committees, they tend to be Ontario-centric and Quebec-centric. Will you ensure there’s representation from across the country?
Mr. Holland: Absolutely, senator, yes.
Senator Cordy: Thank you.
The Chair: Senator Seidman, the critic of the bill, will ask her questions next.
Senator Seidman: Thank you for being with us, minister.
Bill C-64 states it will create a universal, single-payer, first-dollar system for products, yet you have stated that you don’t expect this coverage to displace Canadians’ private insurance coverage. However, by any other standards or convention, that’s not what those terms mean.
For example, the 2019 Hoskins report, commissioned by your government, employed those terms to describe a system whereby private insurance would be phased out over time. While there are lots of disagreements among both supporters and critics of this approach, it seems the one thing everyone can agree upon is the unnecessary confusion that the use of this terminology has created.
Minister, if you don’t intend to create a fully public, single-payer system, will you commit to amending this legislation to accurately reflect your public statements to create a fill-in-the-gaps program, which is the pilot project in Prince Edward Island?
Mr. Holland: Thank you for the question, senator.
What we’re doing here isn’t covering all pharmaceuticals; it’s covering a narrow range. What we’ve said is important because there’s much more that insurance covers than we’re able to cover in the first days of this — folks will have a choice between using private insurance or using a universal, single-payer model. I would imagine for folks who have a significant copay, as an example, or even a 10% or 15% copay, they might well make the choice to go use the universal, single-payer model.
On the idea that people would lose coverage, I don’t see that. People have a choice. They can use the existing insurance that they will have and need, because they will need much more than what is covered under this bill, or they can turn to — if you want to take a look at what it would look like, you can see what the memorandum of understanding in B.C. shows, which is that the patient doesn’t pay. In terms of the patient experience, a copay can be a significant barrier. We have a lot of people for whom a copay on their diabetes medication makes the difference between —
Senator Seidman: I don’t mean to interrupt you or be rude, but I only have four minutes.
Do you really expect that private insurers would continue their private insurance for the 97% of Canadians who have private insurance when the federal government is offering to pay fully for diabetes medications and contraception? Do you really believe private insurers will continue to cover us — 97% of Canadians?
Mr. Holland: What I was saying, senator, is that in the example where somebody is making the choice to use their insurance or not, the insurance covers much more than what we cover. From the perspective of somebody making this choice, do they use their insurer or do they use the universal, single-payer model? It doesn’t much matter because they wind up in the same place —
Senator Seidman: I don’t want to be rude again, but they might not have a choice because their private insurer might say, “Sorry, we don’t cover it any longer. Go to the province or the feds and get covered.”
That is the point. You’re saying that I, as an individual — for example, I have private insurance — have the choice to stay with my private insurer or go to the public insurer, meaning the federal government and the provincial arrangement. However, my private insurer might no longer cover me. In fact, it might start to be a gradual process of loss of private insurance.
Mr. Holland: The point here is to make sure that if somebody, for example, needs metformin, the following is possible: Of the hundreds of plans that are out there, if one of the plans says they aren’t covering metformin of this type because it’s available under the public plan, then the person would continue to have coverage under the public plan. They would continue to have coverage, which I think is the point. In the existing paradigm today, about one quarter of diabetes patients are citing cost as a significant barrier to them being able to have access to the medication they need. That means we have about a quarter of a million people who are not necessarily getting the medication they need because of affordability. This is going to end that. That’s a good thing. Whether they’re covered —
The Chair: Colleagues, I’m sure we’re going to return to this question. We must move on.
Senator Osler: Thank you, minister, for being here. I have two questions.
The Hoskins Advisory Council on the Implementation of National Pharmacare recommended following the model of the Canada Health Act, yet there’s nothing specified in Bill C-64 to ensure that the bilateral agreements between the Government of Canada and provinces and territories will be consistent across all jurisdictions and will harmonize national pharmacare.
First, why did the government decide not to include clear standards in Bill C-64, such as the program criteria around universality, accessibility and public administration, which are contained in the Canada Health Act?
Second, does the government intend to apply a most-favoured-nation policy to any future purchases of medicines covered as part of national pharmacare? As you know, that’s a policy approach such that private drug plans would receive the same discounts as those negotiated by public plans. If the answer is “yes,” how will a most-favoured-nation policy avoid increasing prices across both private and public plans, because that is what happened when Quebec tried this: Prices in Quebec didn’t go down, and prices elsewhere went up.
Mr. Holland: Thank you very much, senator.
In the first order, we absolutely need to work with the private sector. When I talk to the pharmaceutical industry or insurers, there’s a great deal of both in this: participating in bulk purchasing and finding ways to work together to bring down costs. We would look at any model that does that and not the counter.
I think there are a lot of opportunities through collaborating, bulk purchasing and working together to drive those costs down, not up.
In respect to — sorry, what was your first question?
Senator Osler: Criteria in Bill C-64 similar to the Canada Health Act around public administration and universality.
Mr. Holland: It’s extremely important — and I’ve said this from the beginning — that this is something we’re putting in the world to demonstrate how it’s going to function and how it’s going to work. We have a committee of experts that’s being struck, and that’s going to be populated, to look at what the cost implications are, and how this would be brought in on a universal, single-payer model going forward — and I think we have to be very careful to say we’re going in stages and gauge. We’re doing this, building evaluation and seeing how it works. You have my commitment — in fact, you have it in demonstrated print in the memorandum of understanding with British Columbia — that we’re seeking a universal, single-payer model for this agreement.
Then, in terms of the future state, one of the things we have to demonstrate — before we broadcast into the market what the federal government is going to do — is we have to understand how it’s going to function, how it’s paid for and how you will deal with the existing model; this committee and its work is very much centred on that.
It isn’t to be exclusionary; it’s to recognize that this is an iterative process.
Senator Osler: To use your analogy of a floor, Bill C-64 is building that floor. My concern is that floors will be uneven across provinces and territories. There might be holes in the floor because each province and territory will have a different agreement. At least in the Canada Health Act, we have those principles enshrined in federal law.
What I’m hearing from you regarding the most-favoured-nation policy — maybe, yes or no?
Mr. Holland: I wouldn’t want to opine on that.
I will say that, again, we are looking very carefully at evaluations, data and other experiences from other jurisdictions on what actions we can take that will reduce drug costs and not increase them. Certainly, collaborating and doing things like bulk purchasing make a lot of sense. I’m not going to talk about anything outside of that other than to say we’re not going to engage in something that’s been demonstrated through data to not be effective.
I don’t like uneven floors — they’re unsafe — but one of the things I will say about this floor is it establishes that we should not go below this point. What you’ve seen in British Columbia is it means that more can be done. I think that’s a good thing, and I think we would agree that’s a good thing. I was ecstatic. In fact, I was there at the B.C. Women’s Hospital & Health Centre talking with physicians about how important menopausal hormone therapy is, as is access to those drugs, and what that means for —
The Chair: Sorry, I need to be fair to my colleagues, so I must interrupt.
Mr. Holland: That’s your job, and I respect that.
Senator Moodie: Thank you for being here, minister. You mentioned the memorandum of understanding with British Columbia and pharmacare in anticipation of this bill passing. What are the implications of this agreement, especially for the other provinces and territories that will now come in line to form agreements? What have you learned from this process, moving forward, that you think may change what it looks like or can be added on to?
Mr. Holland: Thank you, senator. It’s a great question.
In the first order, it demonstrates we can do more. Also, we’re not going to punish leaders. There are certain provinces that are already acting in these spaces, so this money that we’re putting in, as a federal government, is creating a displacement of dollars. We’re not going to punish that. We’re going to work together in an aligned way to do more and to expand.
I thought that for B.C. — and it was B.C.’s decision to do it — to move in the direction of menopausal hormone therapy was really appropriate, because it’s dealing with women’s health, which is absolutely at the centre of what we’re doing in contraceptives and very symbiotic with that.
What lesson is there for other provinces? This is an opportunity to do more and show more ambition. That’s the first thing. The second thing is that it also gave us an opportunity to demonstrate in the diabetes formulary and the formulary on contraceptives that there is openness to do more. Just because this is the list we have doesn’t mean it’s what we’re going to do, but it ensures that we established a base and a floor from which we can build and do more. Certain provinces may have different needs and may need to dial that based upon the profile of drug use in their jurisdictions.
In the third order, it frankly shows it’s possible. Putting this out in the world demonstrates that it’s not — one of the criticisms you hear is that this is just talk and isn’t really going to happen, or we’re not really going to do this. We heard that with dental. You have to show people tangible things in the world. This is why nothing has happened with pharmacare before: You have to start somewhere. Everyone is saying they can start here or there.
I’m not saying it’s perfect, but it gives us a foothold; it’s a step up the mountain to where we need to go. If we don’t start walking up this mountain, we’re never going to get there.
Senator Moodie: Academics and experts have suggested amendments to this bill to most of us here, I think. Why should we not amend this bill?
Mr. Holland: I’m deeply respectful of your chamber, and you have such an important role to play in reviewing legislation and suggesting amendments. This is a bit different in that it was balanced on a pinhead. This is, by far — and I’ve been involved in a lot of complex things — the most difficult bit of business I’ve ever been in. Every syllable and word in this bill was debated and argued over. It is the result of really important collaboration. It was not one political party but two, with two very different views, finding a way to find common ground.
I freely acknowledge that it’s imperfect, but, in this instance, we have to be very careful of not allowing perfection to be the enemy of progress. We don’t have a lot of time. The reality is that opponents will criticize this as just being fantasy, so if we spend a long time wordsmithing and trying to make the legislation perfect, then the criticism that it’s not real starts to feel real for people because they don’t get drugs and an improvement in their life.
I’ll finish here, chair, because I know I’m being long-winded, but I do fear that people will look at this, and how difficult it was to negotiate and how difficult it was just to get to where we are, and somebody is going to say that they won’t touch that again. I think we have a window of opportunity.
[Translation]
Senator Mégie: Thank you for being here, minister. I will ask two questions that I hope will be brief.
From what I understand, Bill C-64 will be implemented approximately 18 months after the vote. Is it true that if it is adopted, it will be implemented in approximately 18 months?
Mr. Holland: Yes.
Senator Mégie: Quebec worked on the public pharmacare plan that was adopted in June 1996, and the first medications were delivered to people on January 1, 1997. That was about six months later. Is there any way to shorten the time lag so that Canadians can start benefiting from it sooner?
Mr. Holland: I am not sure I understand the question, but I will try to answer.
An agreement can be signed with each province and territory almost immediately after the bill is adopted by the Senate.
After an agreement is signed, Quebec and the other provinces may start distributing medications. There is no issue there. However, it is clearly not easy to negotiate an agreement with Quebec due to its existing system. We really need to work with the province of Quebec and stay within jurisdictions. The issue of drug availability is not a problem.
Senator Mégie: Thank you. My second question is the following: Did Bill C-64 undergo a Gender-based Analysis Plus?
Mr. Holland: Yes, it did.
Senator Mégie: Did we receive it? Okay.
[English]
Senator Brazeau: Minister, as you know, the federal government has a fiduciary obligation to provide non-insured health benefits to First Nations people. Could you expand upon or talk about how this piece of legislation may hinder, may complement or may not affect non-insured health benefits for First Nations people?
Mr. Holland: Thank you, senator. It is an incredibly important question.
Let me say that with respect to non-insured health benefits, there will never be an instance in this government where we would allow a service that would be available to the rest of the public to exceed that which would be available to First Nations people. I can absolutely affirm our commitment to maintain, at a minimum, the standard already there.
For example, the drugs that are covered under the Non-Insured Health Benefits program are obviously larger and broader than what’s being contemplated in this plan. We would never contemplate a situation where there would be an erosion of that as a result of this.
In fact, I would say that in the instance of dental care, because we have worked hard to create a better administration and smoother work with providers, that is having a positive impact on what is available for First Nations under the Non-Insured Health Benefits program. It’s quite the opposite; I see this as an opportunity to make care better.
Senator Brazeau: You do not see any potential issues where First Nations people may fall in between the cracks in terms of health? The federal government has jurisdiction over Indians and lands reserved for Indians. When it comes to health care, that is provincial jurisdiction. Do you foresee any situations in which First Nations people may fall in between the cracks with respect to this legislation?
Mr. Holland: Not with respect to this legislation.
Let me acknowledge that there are many barriers to First Nations people getting the medicine that they need, even with the Non-Insured Health Benefits program in place, and those are gaps that we must continue to work on.
One of the things that I have been doing is participating in an enormous number of trilateral meetings across the country — nation to nation — and having these conversations about how we fill those gaps.
Even though Indigenous Services Canada is delivering these services — or in some instances, the provincial government — as a federal health minister, I have to be at that table and understand how we close those gaps and bring them closer together.
There is nothing in this legislation that would reduce coverage for First Nations people. In fact, the learning and lessons by expanding public programs could be something that could benefit the Non-Insured Health Benefits program.
[Translation]
Senator Cormier: Welcome, minister. My questions concern the agreements with the provinces, given the differing jurisdictions. You mentioned flexibility, giving the example of British Columbia. What happens if a province decides not to take part in the plan? Will it receive full compensation? What conditions will be attached to the financial compensation? There is nothing in the bill that indicates the flexibility you are talking about. I would like to better understand the element of flexibility when it comes to a province opting out of the plan.
Mr. Holland: Thank you. That is a good point. A province may say no, thank you and decline to take part in the plan. I have had conversations with all of my provincial and territorial counterparts, and there is clearly a lot of interest. There are issues regarding jurisdiction.
However, some of the conditions in the bill are universal: it is single-payer, people do not pay for medications, and diabetes drugs and contraception are made available to start with. Beyond that, there is flexibility. There is a good spirit of cooperation.
Senator Cormier: If I understand correctly, you mentioned a floor when it comes to the list of medications. Will medications be added to the list?
Mr. Holland: Yes.
Senator Cormier: Does that flexibility mean that a province could choose not to include the much-vaunted medications that you will add to the list?
Mr. Holland: Yes, absolutely. The list can be added to, and that is clear from British Columbia. I hope that will be the case. I am not sure whether the same medications will be available in every province, for example, hormone therapy for menopause. I hope this medication will be available across the country, but that is not part of the bill. It is a very important medication, but a province may prioritize adding a different one.
Senator Cormier: You are trying to set something up that is uniform across the provinces by targeting the two medications, but at the same time you are providing wide flexibility for them to omit the medications?
Mr. Holland: Absolutely. There is a balance and the same minimum coverage for diabetes medication and contraception. Beyond that, things may be added. A province may take action to improve the quality of available services, not only for medications. Take women’s health, for example. It is not necessarily about adding to the number of medications. A province may want to add other actions, but diabetes medications and contraceptives are the minimum. That forms the basis for the provinces and territories.
Senator Cormier: Thank you.
Senator Petitclerc: Thank you for being with us today to help us study a bill that we all know is very important.
My question is about the process.
I have had conversations with medical professionals I know, including doctors. Many of them asked me why we were starting with diabetes and contraception and what the process was. A basis has been established, and I understand we are going step by step at the national level, but also by province.
First, what were the guidelines or criteria for deciding to start with contraception and diabetes?
Second, do the provinces have criteria? I will give you an example. Someone asked me whether the chosen medications are ones that cover diseases that affect a large number of Canadians or ones that treat rare diseases. These are very, very expensive, which means that people find themselves in a highly vulnerable situation.
I am trying to understand the process.
Mr. Holland: That is a good question.
First of all, we needed to start somewhere and make a choice, which was very difficult. I feel that diabetes is a something that is related to many other types of disease. If someone does not manage their condition, there will be consequences that lead to other diseases. That is the first point.
Then there is the absolutely eye-watering cost of treating diabetes across the country. Every year, it goes up by a lot. The ability to effectively manage diabetes is really an indicator of health outcomes across the country.
I have talked a lot about the matter of contraception, because we need to have a conversation about gender in general. Many mental health problems can arise when people avoid these awkward conversations. It is completely unacceptable to me for people not to have liberty over their own bodies.
[English]
It is a statement about the kind of country we are — that a woman can make a choice about when, if or how she has a child, and that somebody who is impoverished can have the same liberty over their own body as somebody with money. That is extremely important, and the conversation about sexual health is as well.
[Translation]
Afterward, I think we could add other elements, perhaps more essential medications. I feel that this is a good opportunity to have a specific conversation on certain issues, get a lot done and improve the quality of information and knowledge about a number of topics.
[English]
Senator Bernard: Thank you, minister, for being here.
For the record, I would like to ask what the government’s analysis was regarding which population groups are most impacted by the lack of access to prescription drugs. I would like to have that on the record.
Then, given that, and your decision — in terms of these two groups of prescription drugs — what is the expected impact on those population groups?
Mr. Holland: That is a great question.
This builds on the answer that I was giving on diabetes. We know that, disproportionately, some populations vulnerable in Canada are affected by diabetes and have higher rates of diabetes. Diabetes is often made worse by a lack of access to food and resources. It tends to be made worse by other socio‑economic conditions. It is an injustice on top of an injustice that somebody who doesn’t have access to quality food or regular primary care could contract diabetes and not have access to medication.
Senator Bernard: Which groups did the government identify?
Mr. Holland: To be specific, we know that the rate of diabetes is higher for South Asian and Black Canadians as well as for Indigenous people. Those populations are disproportionately affected by diabetes.
The comment I made about socio-economic status also disproportionately affects these groups, and that is the case with contraceptives as well. Oral contraceptives are ineffective compared to an IUD, and often someone who does not have resources is forced to make an inferior choice about their birth control, resulting in an unintended pregnancy because they did not have the money or freedom to do what they wanted to do.
The second part of your question is an important one. What impact is it going to have? I used to be the executive director of the Heart and Stroke Foundation. If you make the right investments in prevention, it will result in a better and healthier society. How fast and exactly when is unknown. But not giving people access to the medication they need makes them sick and costs us an egregious amount of money.
Improving an invisible thing — although we do know when they get medication — will enable us to demonstrate exactly how much is saved when this is out in the world.
A quick example is as follows: Birth control is already in B.C. — because they were out there and already did contraceptives — and they were already saving within the first year more money than it cost them to run the program. I am expecting that is what is going to be proven. We actually have to do it to prove it.
Many opponents do not want it to be proven because they are afraid of what this might mean. None of us should be afraid of people getting the medicine that they need and being in a society where everyone receives the care that they require.
Senator Dasko: Welcome, minister. Nice to see you.
I would like to return to the topic that came up earlier: a single-payer versus multi-payer system.
You used the terminology “single-payer,” yet you also acknowledge that it is not a single payer. The government is not paying for all of the medications in each of these two areas. The private insurers are paying. I know this sounds like a simplistic question, but what is it? Is it a combination? You are using this terminology, but it’s a multi-payer plan.
Mr. Holland: In the 1960s, when we started the public health care system in this country, it would have been nice if medicine had been included. It wasn’t. We built up all kinds of infrastructures around it. In order to move from where we are to potentially where we’re going to go, it will have to be iterative. There will need to be a number of conversations. There will be a number of elections. People will be weighing in on this.
The question now is about the universal, single-payer model. To be direct, that is somebody who goes in, as an example, and obtains their contraceptives or diabetes medication. They do not fill out forms or pay any money. They come in, and they get it. That is what we’re offering. Then we’ll build evaluation on it while, at the same time, private insurance exists as well as the mixed model that was referenced in P.E.I. A committee will be looking at the future of the universal, single-payer model. But there is no teleportation here and no light speed. You have to move from where we are to a different state.
Senator Dasko: But there are cost implications to the different systems.
Mr. Holland: Oh, absolutely.
Senator Dasko: The costs of your plan are based on a mixed model. For example, private insurers are paying 80% of this one set of medications, and you are going to pay 20%. That’s correct, right?
Mr. Holland: No. It is important to say this: In looking at the costing of these bills, we were anticipating displacement on those drugs. That is built into the costing. The costing would have been less if we had not built that in. The costing that we built in is anticipating that there is going to be that, for the reasons that I just said. You will still have access to your insurance. However, if you are, for example, looking to obtain metformin and you have a 20% copay on it, you will now have no copay, and people will probably go to the public plan.
We’re anticipating that there are people who will make those kinds of choices in the costing of that.
Senator Dasko: But you were anticipating fall-off in terms of coverage by private insurers. Your model assumes that X per cent of the costs now being paid by insurers will slip away from the system.
Mr. Holland: There will be some dispersement there because people will make a choice to use the public plan versus the insurance they’ll continue to enjoy. The point I’m making, which is an important one, is that people will continue to have a choice between those two things.
Senator Dasko: No, but I’m talking about the money.
Mr. Holland: Yes, we have budgeted that.
Senator Dasko: So you’ve costed it on a certain basis, and then you’ve also costed it assuming displacement — assuming private insurers will exit the field to some extent.
Mr. Holland: Not exit the field, but people will potentially use their private insurance differently, given the fact they’ll have more of a choice. That would require displacement to occur, and we’ve modelled that. By the way, so did the Parliamentary Budget Officer, or PBO, who looked at and came up with figures fairly similar on that basis.
We didn’t cost this on the basis of what we’re doing in P.E.I., for example; it would have been a lot less money. This was contemplating that there are a lot of people for whom a copay is a big deal, and we’re going to build evaluation around a genuine model that is based upon a universal, single-payer model.
Senator Burey: Thank you for being here, minister. This subject is a topic that Canadians have been wanting: a universal health care system. I applaud the work in taking the steps toward paying for essential drugs. I do have some questions, though, following what Senator Dasko asked about committing to ensure that if people choose to use the public system, they will not be automatically disqualified from using their own insurance.
As a physician, I’ve had a lot of experience with this in Ontario with our OHIP+ system. Will you commit to making sure that insurers don’t throw people off their plan? You might just want diabetes drugs from the public plan, but you have a whole suite of other things in another — maybe it’s mental health medications, for example. Will they have to choose between taking the diabetes medication with no copay and coming off all of that and not having access to their mental health or psychiatric medication?
Mr. Holland: No. Here is the thing: This is a very limited set of drugs. For most people, when they have a drug plan, it covers much more. The idea that an insurance company would turn around and say they’re not going to give coverage because someone has a couple of drugs that are covered is, frankly, unrealistic for a couple of reasons.
The insurance industry has made no secret of the fact that they want a mixed-payer model. They want what you see in P.E.I. There will be an argument on that. It’s no secret that we have elections in this country, and the Conservatives have a different opinion. These things will be adjudicated.
If the insurance companies start going in and cutting insurance for people, then they’re not exactly making a very good case for a mixed system where they work in collaboration with government to get people covered. That’s the first point.
Senator Burey: Minister, are you committing to have these discussions with insurance companies to make that plain?
Mr. Holland: Absolutely, senator. I want to make it very clear here today: This is about expanding coverage, this is about more people being covered and this is about more people having access to the medication they need, not less. That is 100% what we’re going to make sure happens here.
Senator Burey: Thank you.
The Chair: Minister, I will ask you a brief question. So much of what you have said hinges on cooperation and collaboration with the provinces. To me, it feels a bit like Groundhog Day because we’ve had these conversations with you and with other ministers on the dental benefit plan, the disability bill and, of course, the child care bill.
How confident are you, at this time, that all provinces will sign on? Some have said they will not.
Mr. Holland: I’m very confident. I’ve had very good conversations with all my provincial and territorial counterparts.
I go back to the Working Together bilateral agreements and the Aging with Dignity agreements. Madam Chair, you will recall that there were people who said we would never get a deal with Alberta, Saskatchewan or Quebec. It’s true that we weren’t first in those jurisdictions, but we got a deal in every single one of those jurisdictions. They were good deals with things that make a lot of sense and focus on common ground. Writ large, but especially with health, that is what Canadians want. They’re not interested in what we disagree on; they want to see us get things done and work together to find common ground.
The spirit I’ve seen among health ministers at the meeting we had in Charlottetown and the upcoming meeting in Halifax is really centred on that spirit of cooperation.
I believe in the same way — and people said I was crazy to say we were going to get all those agreements done when we were talking about working together and aging with dignity. Now we’re getting them done, by the way, on drugs for rare diseases and PSWs. We signed our first ones in British Columbia. There was a great conversation. We see a lot more of those in places you don’t expect.
So give me a shot, and I’ll go make it happen.
The Chair: Thank you, minister. Colleagues, we have a bit of a challenge: We have visiting senators, and second round questions are lined up. I propose that in the remaining time, we take all your questions and ask the minister to get back to us in writing.
Senator Cardozo: Thank you. I’ll be brief.
It’s the issue of which pharmaceutical. Clause 4(d) of the bill says it will “ . . . provide universal coverage of pharmaceutical products across Canada.” So that’s all, but it seems to me that at the end of clause 6(1), it reads, “ . . . for specific prescription drugs and related products intended for contraception or the treatment of diabetes.” It’s just the two very specifically.
Which one takes precedence? Is it all of them? Why did you, in a sense, bother to name two when it seems like you could have left it at clause 4(d)?
Senator Senior: My question is regarding the committee of experts that you’ll put together. This builds off of Senator Bernard’s question in terms of the groups you identified as well as Indigenous folks across the country, and the access and knowing that every legislation we have actually leaves certain people out. I’d love to see this be transformational.
I’d like to know that the committee of experts will actually take that into consideration in terms of who is at the table to make those decisions about accessibility and to make sure this actually reaches the populations you intend, knowing what the conditions are currently.
The Chair: Thank you, Senator Senior.
Minister, I know it’s really hard not to answer the questions once they’ve been asked, but we really have to do this.
Senator Osler: Minister, will national pharmacare be publicly administered?
The Chair: I would like to know the answer to that right away, but I’m going to hold off.
Senator Moodie: I am thankfully supportive of the creation of a universal pharmacare system. I believe this bill is a good start, but it doesn’t create the kind of system envisaged by the Hoskins report.
Recognizing that this is the first step, what is the end goal, and what are the next steps? You make reference to climbing a hill. What kind of system are we trying to build? In the end, is the end goal like what has been envisaged by the Hoskins report, or are we aiming for something closer to the Quebec model?
Senator Seidman: Minister, when the proposal to create a national pharmacare program was announced in February 2024, you also made another very important announcement about the creation of a federal diabetes devices and supplies fund. We know diabetes devices like insulin pumps are the biggest expense for most Canadians with diabetes who use them, and they have the biggest barriers to access, yet no further details on the program have been forthcoming. My question is this: How much money have you committed to the diabetes device fund, and when will it be announced? Thank you.
Senator Kingston: Thank you for being here, minister. My first question is this: What elements are included in the evaluation that they’re doing in B.C. regarding publicly funded contraception? What are they evaluating exactly? What other factors caused B.C. to be the first to sign, other than the fact that they already had some kind of contraceptive system? What were their incentives?
The Chair: We have three and a half minutes. Minister, take your pick. Answer a question.
Mr. Holland: I’ll work in reverse order and see how far I get. Why did B.C. sign first? Because they’re leaders. Adrian Dix and I had many conversations about diabetes and contraceptives, and we talked about the effectiveness of the pilot project in B.C. in terms of changing people’s health and how much money it was saving. We talked a lot about diabetes. I have to thank Don Davies who was instrumental in working on this bill. Adrian Dix was also instrumental in having a vision on this, and I want to thank him. With respect to diabetes devices, yes, absolutely, that’s contemplated within this. There’s a significant fund allocated for diabetes devices in order to work with the provinces and make sure that people who don’t have the money for the devices, syringes and strips be included. I’m not intending to be silent on that at all; it’s extremely important.
In terms of the question on the end state, that’s what this committee is about. We have to be careful. This committee is taking a look at the how, the how much and the practical elements of it so that we can have that laid out in front of us and have an informed conversation. By that point, we will have deals signed with different provinces, and drugs will be flowing, so we’ll have a much greater ability to answer that question in a meaningful way, including having a debate through an electoral process on that. But you’re right; we need to obtain that data set so that we can answer that question.
In terms of who is at the table, I completely agree with those comments and acknowledge them. Why specifically these drugs? When you’re working with another parliamentary partner, it’s difficult to take that on trust, so it’s present in the bill not as a limiting factor, but as a proof point that we’re actually going to do those things. I think that’s fair. This is unprecedented in terms of the level of collaboration between two different political parties who must set aside their differences and all the lack of trust we have for each other. For Mr. Davies and I to go into that room and find a way to arrive at a point of trust where we have something in which we both feel we’re being level and straight, that’s a peculiarity that arises from that.
The Chair: I’m curious about your answer to Senator Osler’s question.
Mr. Holland: I’ll come back to that. I’m ambivalent about that. That’s not going to get anyone excited; when somebody goes to a counter to receive their medication, they’re interested in the fact that they’re receiving their medication, not the jurisdiction. The provinces are focused on the fact that they’re the ones who are going to manage this. I think we have an opportunity as partners to say, “If you’re going to manage it, here are the conditions on what that must look like and how we have to work together to make that happen.” I don’t think that’s violating jurisdiction; I think that’s good cooperation and sharing priorities. But unlike dental care, which we’re administering — senator, you and I are going to have more conversations on this. This is an opinion; it’s not a settled matter. We’re at the beginning of this, and these conversations are important on an ongoing basis. Senator, I can see from your reaction that we are going to have a good conversation on this topic.
The Chair: Thank you, minister. You’ve been generous with your time and also with your flexibility in answering the flow of questions. Thank you, minister and officials.
Mr. Holland: Thank you.
The Chair: For our next panel, we welcome the following witnesses who are joining us in person: From Canada’s Drug Agency, we welcome Suzanne McGurn, President and Chief Executive Officer. And from the Office of the Parliamentary Budget Officer, we welcome Yves Giroux, Parliamentary Budget Officer; and Diarra Sourang, Director, Economic Analysis. Joining us by video conference is the following witness: From the pan-Canadian Pharmaceutical Alliance, we welcome Dominic Tan, Acting Chief Executive Officer.
I understand that Ms. McGurn, Mr. Tan and Mr. Giroux have opening remarks. We will proceed in that order — five minutes or less each, please. Thank you. Ms. McGurn, the floor is yours.
Suzanne McGurn, President and Chief Executive Officer, Canada’s Drug Agency: Thank you for the opportunity to appear. I’ll speak about our organization and highlight how we support health systems, particularly the pharmaceutical ecosystem in Canada. We are one of the pan-Canadian health organizations — an arm’s-length agency from the federal government. Canada’s Drug Agency, although a new name, was established 35 years ago under the name CCOHTA and was more recently known as CADTH. Our mandate is to ensure that the people of Canada are benefiting from advances being made in health technologies, including pharmaceuticals, by providing senior health care leaders with the critical appraisal of evidence they need to make decisions.
Specifically, our mandate is to coordinate, perform and facilitate the collection, analysis, creation and dissemination of information about the effectiveness and cost of drugs and other technologies, their impact on health and the appropriateness of their use. Our work is carried out in alignment with priorities set out by the Conference of Federal, Provincial and Territorial Deputy Ministers of Health.
We are governed by a 13-member board of directors that reports to the Council of Deputy Ministers of Health. Our board members include a non-jurisdictional chair, seven provincial and territorial representatives and five members who collectively represent health systems, academics, the public and, with a recent addition, patients, as well as an observer appointed by Quebec. I would like to underscore that we are not a decision-making body and that the recent change to become Canada’s Drug Agency doesn’t change the nature of our arm’s-length governance or the type of expert, evidence-based agency that we are.
The federal government provides 75% of our funding, the provinces and territories provide 11% and industry provides approximately 11%. We are a 280-person organization, and we anticipate a modest increase of another 15 additional positions to deliver the new Canada’s Drug Agency work.
Our role is to conduct what are called “health technology assessments” for drugs approved by Health Canada that are being submitted to public drug programs. We appraise the drug’s effectiveness against other treatment options using evidence such as clinical and economic data, and using other inputs such as patient perspectives, societal values, health system implications and other ethical and equity considerations.
Based on the evidence, we produce a recommendation for consideration by the decision makers of the public drug plan, and it informs the work of the pan-Canadian Pharmaceutical Alliance, or pCPA. Some think about this work as similar to the intent of a consumer report: to compare products to one another.
Additionally, our post-market drug evaluation answers questions from Health Canada and the provinces and territories about drug safety and effectiveness after a product launches in order to inform future policies and decisions. To do our work, we collaborate with federal, provincial and territorial governments; the pCPA; patients and communities; clinicians; industry; First Nations, Inuit and Métis people and organizations; other health organizations; and international partners.
We are recognized for our ability to convene diverse groups in order to bring people and organizations together to address common challenges in the pharmaceutical ecosystem through relationships, processes and effective use of evidence.
In December, the Government of Canada announced that Canada’s Drug Agency would be built out of CADTH. This change built on the strengths of our organization with three new work streams: establish a pan-Canadian appropriate use and prescribing program, enhance data collection and analytics, and improve system coordination and alignment. We would also have new work under Bill C-64, should it receive Royal Assent, which we are ready and well suited to deliver by working with our federal, provincial and territorial governments and the many interested parties. When undertaking the national formulary work, we’ll be able to build off our previous work, including our most recent work in 2022 when we convened interested parties to develop a potential approach to a pan-Canadian formulary. We will use our relationships with partners — particularly the pCPA — to identify opportunities for Canada to further harness its collective purchasing power, and we will deliver a pan‑Canadian strategy about appropriate use to improve appropriate prescribing in the use of medications, which builds on the work that was announced last December.
I’d be pleased to provide the committee with any further information it needs as it considers this bill. Thank you.
The Chair: Thank you, Ms. McGurn.
Mr. Tan, the floor is yours.
Dominic Tan, Acting Chief Executive Officer, pan-Canadian Pharmaceutical Alliance: Good afternoon. Thanks for having me. I appreciate the opportunity to take part in this important Senate committee hearing.
The pan-Canadian Pharmaceutical Alliance, or pCPA, is a true pan-Canadian success story. We negotiate on behalf of all Canadian public drug plans, combining their negotiating power to get good prices on pharmaceuticals. We don’t assess drugs. That’s the work of Canada’s Drug Agency and the Institut national d’excellence en santé et en services sociaux, or INESSS. We don’t purchase drugs either. That lives with the jurisdictions.
What we do is we negotiate for better drug prices, and we do it well. We’ve signed more than 600 agreements with drug manufacturers so far. The pCPA allows all jurisdictions — big or small — to sign agreements at the same lower price.
What does this mean? Well, in the last fiscal year alone, we saved public drug plans an estimated $4.6 billion, and, since our inception, we’ve saved an estimated $24 billion. That’s money that can be reinvested to support Canadians.
The pCPA is the only body responsible for negotiating drug prices for all 14 provincial, territorial and federal governments, so we welcome this opportunity to discuss Bill C-64 and the key role we must play in leading the negotiations that pertain to national pharmacare.
Sustainability will be key. Drugs are getting more sophisticated and a lot more expensive than ever before. This already impacts the public drug plans, and it will have a significant impact on the affordability of national pharmacare. The pCPA savings can range from between 0% to about 90%. Why 0%? Well, that means the manufacturers actually listened and priced their medicines really well. By coming to the negotiation table with a fair price, drug manufacturers can speed up the negotiations. When drugs are priced very high compared to the evidence, negotiations often take more time.
The first phase of national pharmacare will focus on diabetes medications and contraceptives. Past pCPA negotiations have led to important savings for these types of drugs, and we’re excited to put this expertise to good use so that governments can support more Canadians.
Our expertise will also be needed as other drugs are added. For example, if you think about new cancer therapies or drugs for rare diseases, these drugs can be very expensive. Sometimes we’re talking about millions of dollars for one patient. The job we’re doing is critical to ensure that national pharmacare is both affordable and sustainable.
As the formulary expands, Health Canada and Canada’s Drug Agency will have to be careful to ensure that only good drugs that are clinically relevant and cost-effective are added. There are a lot of new therapies, but new doesn’t always mean better. Not all new therapies work, or they don’t work better than previous or, oftentimes, more affordable drugs.
We also need to think about generic drugs. These drugs are essential to an affordable pharmacare program. Thanks to our work, many can be obtained at 25% of the brand name drug; that’s 75% off. Again, these are big savings, and that’s going to allow governments to do more with the budgets they have.
In a nutshell, we have the expertise and the experience to negotiate drug prices for all Canadians through national pharmacare. This would be an expansion of our already successful system. What we do works.
Innovative Medicines Canada, RAREi and the Canadian Generic Pharmaceutical Association — three associations that represent drug manufacturers — recommended to the House of Commons Standing Committee on Health to avoid duplication and leverage existing efforts. All three mentioned the important work of the pCPA.
We are looking forward to continuing to support all public drug plans and to support national pharmacare.
I’m happy to answer any questions you may have.
The Chair: We have a lot of questions for you.
Mr. Giroux, the floor is yours.
Yves Giroux, Parliamentary Budget Officer, Office of the Parliamentary Budget Officer: Honourable senators, thank you for the invitation to appear before you today. We’re pleased to be here to discuss our analysis of Bill C-64, An Act respecting pharmacare. With me today, I have Diarra Sourang, Director, Economic Analysis.
Consistent with the Parliamentary Budget Officer’s mandate to provide independent, non-partisan analysis to Parliament, in September 2017, my office published an estimate of the federal cost of a national pharmacare program in response to a request from the House of Commons Standing Committee on Health.
Following additional requests from parliamentarians, my office released an updated cost estimate of a single-payer, universal drug plan in October 2023.
[Translation]
As you know, Bill C-64 proposes, in the context of the first phase of a national universal pharmacare plan, to provide universal first-dollar, single-payer coverage of a range of contraceptives and diabetes medications. The program’s objective is to expand and improve rather than replace the existing provincial and territorial coverage.
I estimate that, if implemented, Bill C-64 will increase federal government expenditures by $1.9 billion over five years. This estimate assumes that all medications currently covered by the provincial and territorial governments, as well as private insurers, will have the same conditions.
Diarra and I will be pleased to answer any questions you may have concerning our analysis of Bill C-64 or any other work by my office.
Thank you.
[English]
The Chair: Thank you, Mr. Giroux.
We will turn to honourable senators for questions, with the first coming from the deputy chair, Senator Cordy. You will have four minutes for your question and the answer.
Senator Cordy: Thank you to all of you for being here today.
We are fortunate; when you work for the government, you have a good pharmaceutical plan. Not all Canadians are that lucky.
Ms. McGurn, do you know how many Canadians do not have any pharmacare coverage at all, and how many have what I would call “inadequate coverage,” where they have a copay, which means that they do not always have medications accessible to them?
Ms. McGurn: With apologies, we have not done that work. We are aware of the various pieces of research that have been published, whether by the private insurers, Innovative Medicines Canada or others. That is not work that has been undertaken by us as an organization, nor has it been historically.
Regarding the split between private insurers and public payers, out of 100% of spending, a little over 40% is funded by private insurers and about 38% is funded by public payers, and the remainder is a burden on individuals. Certainly, it depends on how you ask that question. I would not want to reflect on others’ specific research on that topic.
Senator Cordy: I looked at the title; it was officials from health care. I thought somebody would be able to do that. I’m sure that we will have witnesses who can.
I also wonder about the implementation of the pharmacare program. Ms. McGurn and Mr. Giroux, you touched on the medications that would be covered. Could you be more specific when it refers to “related products” — we all know there is a birth control pill, but there are also related. What related products would be covered under this legislation?
Mr. Giroux: Based on what was made available to us, there is the medication for diabetes. When it comes to contraceptives, there are the oral contraceptives as well as the intrauterine devices. There is a list that was provided too in the backgrounder. I can go through the list. I am not very knowledgeable on these.
Senator Cordy: Thank you. The Hoskins report spoke about the incremental process for implementation of Bill C-64. Whose responsibility will it be to follow along to see that? I understand the need for it to be incremental. You cannot go into something like this with everything in the first year or first while, I will say. Who is going to be overseeing that? Will it be the department overseeing it to ensure that it is, in fact, moving along in an incremental way?
Ms. McGurn: Canada’s Drug Agency, as I said, is an arm’s-length organization. We are not a decision-making body. Our work is done at the request of governments.
As an example to your previous question about which products might be covered, we would assess products that are being considered. For example, in the diabetes space, organizations like ours would assess products like FreeStyle Libre and make recommendations. We do not make the decision on whether they are funded.
Again, in the role of Canada’s Drug Agency as it is contemplated in the bill, our job is to provide specific pieces of evidence-based work to inform the future. Beyond that, we don’t have any ongoing responsibilities spelled out in the bill.
Mr. Giroux: I will add that the legislation as drafted is fairly vague. It provides powers to the minister, but it does not include much about accountability and reporting on the progress made. That would be up to the minister through various departmental vehicles and, presumably, committees — such as this committee — to ensure the government is held to account on the implementation of its commitments.
Senator Cordy: Thank you.
The Chair: Ms. McGurn, your agency — if I misunderstood, please correct me — is responsible for the national bulk purchasing strategy. Can you speak to that?
Ms. McGurn: The language of the legislation, as you are aware, is to bring forward that the minister must request recommendations on a bulk purchasing strategy. Without having had the direction, it would be fair to say that work would be accomplished the way we accomplish other pieces of work, which is by pulling together the best evidence possible.
It would be expected that we would look at what else is being done. Are there different models of securing products at better prices that perhaps Canada hasn’t used?
When you think about our population, which is about 2% of the world’s population, although we have a robust market — usually sitting in the top 10 — we actually divide our purchasing power, as Mr. Tan spoke about. The purchasing for the public drug plans is done separately from hospitals, which is done separately from many others.
I would anticipate our role is to look at the evidence and various other mechanisms that may be available that could be considered in Canada. There is nothing that would suggest that we would be responsible for bulk purchasing, as I read the legislation.
The Chair: Thank you for that clarification.
Senator Seidman: Thank you to all of the witnesses for being here today.
I have a question to ask Mr. Giroux, please.
I am looking at your legislative costing note that was published on May 15, 2024 — the five-year cost. You say this estimate assumes that any medications that are currently covered by provincial and territorial governments, as well as private insurance providers, will remain covered on the same terms.
My question for you is this: Can you explain why you chose to cost the program in the manner you did, assuming absolutely zero shifts in private insurance coverage? What information informed that decision?
Do you believe there is a market-based incentive for private insurers to reduce or eliminate their coverage for drugs that would be covered under a universal public plan? Why or why not? Thank you.
Mr. Giroux: A very good question, senator.
The reason we didn’t include any shift is that there could be agreements put in place with the provinces that would preclude them from off-loading these specific prescription drugs to the federal program. There could also be regulations made subsequently to prevent private insurers from doing that. There could be parameters included in the agreements — maybe not, but it could be done. It has been done before in Quebec, where if you can be covered, you have to be covered. There is no guarantee it will happen. I am totally in agreement with that.
If we were to include a shift, or factor in a potential shift, from private insurers or currently existing public plans to the federal regime, it would have been difficult to determine what portion, because there is not much evidence for these two types of drugs. But there is certainly an incentive for that to happen. In fact, without appropriate legislative safeguards, I do not see why that would not happen over time.
Senator Seidman: So you are saying that there should be some kind of safeguard to ensure this doesn’t happen?
I live in Quebec, so I know that we must use our private plans if we have them.
Mr. Giroux: Yes.
Senator Seidman: This piece of legislation does not include anything of that nature, and the way things will be shared between the provinces and the federal government is not really specified either. There is a concern that there will be drift, and there isn’t a built-in allowance for that. Now you are saying there is a market-based incentive, in fact, for private insurers to discontinue their coverage.
Mr. Giroux: Absolutely. If the government is providing a regime that covers 100% of prescription drugs for diabetes and contraceptives, whereas private plans have to incur these costs, there is obviously an incentive for them to say that they’re removing it through collective bargaining, for example, and to tell employees to go to the federal government to get the 20% that is not covered; you might as well go for 100%. You are kept whole as an individual. That is such an incentive that I am talking about and that you are referring to in your question, probably.
Senator Seidman: Exactly.
Your estimates are based upon fill-in, which is what is, in fact, the pilot project in P.E.I. right now. It is a fill-in-the-gaps pilot project, which is supposed to be a demonstration project for how this is going to work. Your estimates are based upon that.
What we heard earlier from the minister was that there was this: Okay, if we have a private plan, we could choose to keep our private plan, but then there would be some miraculous copay that would be paid, somehow.
So I am trying to understand how all these pieces are going to fit together. What are you saying about that?
Mr. Giroux: I am saying —
The Chair: Mr. Giroux, Senator Seidman’s time has expired. It is an important question. We want clarification. I hope others can pick up this line of inquiry as well.
Senator Osler: I have two questions — one for the pan‑Canadian Pharmaceutical Alliance and one for Canada’s Drug Agency — if there is time.
I will start with the pan-Canadian Pharmaceutical Alliance. This goes back to the question I asked our Health Canada experts. Pharmacare experts have cautioned that a most‑favoured-nation policy approach to future purchases of medicines covered as part of national pharmacare could increase prices across both private and public plans. Could you comment on that opinion?
Mr. Tan: Thank you for that question, senator.
In response to your question, I want to provide the clarity that for the pan-Canadian Pharmaceutical Alliance, right now, our mandate is to negotiate drug prices for public drug plans. It currently does not include the mandate to also negotiate for the private industry. There is a difference there. Unfortunately, I will not be able to comment more on that.
Senator Osler: I understand your role, but I wondered if you had an opinion or clarification on it. Thank you.
For Canada’s Drug Agency, you indicated that industry provides 11% of your funding. Bill C-64 does not establish Canada’s Drug Agency by law nor does the bill define its powers, functions or governance structure. Lacking that, how will Canada’s Drug Agency demonstrate transparency in decision making, guard against corporate interference and ensure accountability to Canadians?
Ms. McGurn: Thank you for your question, senator.
To make a reflection on your question to the pan-Canadian Pharmaceutical Alliance, I did make a note about your earlier question about a most-favoured-nation policy, and that would be the type of research we would anticipate having looked into as we develop what would be recommendations to come forward to improve our purchasing power. I appreciated that question being raised earlier.
Senator Osler: Thank you.
Ms. McGurn: Perhaps, to start off by clarifying what the industry contributes to our organization and why, for each new product that is considered for a public drug program, it is only considered at the request of industry so that we receive a portfolio file on a particular product for it to go through the health technology assessment.
When it was determined that this was a significant commitment to the provinces, territories, federal government and industry, it was originally established that there would be a 60-40 split in funding between the government officials and the industry. As we have continued to evolve that work over time, we are now at a 50-50 cost-sharing agreement with the industry, where they contribute up to 50% of the funds for cost recovery on the work we do to have their products considered for public listing. The federal government, provinces and territories make up the remainder.
As to how the agency will provide transparency, ensure corporate interests, et cetera, we do have a responsible board that is made up of federal and provincial representatives at the senior level — usually assistant deputy ministers or deputies. On top of that, we do have participants across a range of the health system who certainly provide guidance and oversight, including fiduciary.
As part of our funding responsibility for the federal government, which I indicated provides over 70% of our funding, we do have a contribution agreement with them that provides very specific and detailed accountability provisions that we must provide to them on a regular basis throughout the year to justify the spending and where those funds have been.
It should be noted that all of the money that we receive is not just for pharmaceuticals; a significant portion of our work is non-pharmaceutical work as well.
The Chair: We will have to stop there. I am sure we can return to this clarification.
[Translation]
Senator Petitclerc: My first question is for Mr. Giroux.
I would like to get some details about the figure of $1.9 billion over five years. We have read that, since we are going to buy in bulk or are thinking of it, there will be some potential savings. The Hoskins report mentions approximately 20%.
Was that taken into account in the estimate?
Diarra Sourang, Director, Economic Analysis, Parliamentary Budget Office: Thank you for your question. I would say yes and no. Yes, in the sense that we took it into account, and no, because either the provinces negotiate and obtain discounts themselves or the federal government negotiates and gets similar discounts. Therefore, the discount that is currently granted to the provinces will be potentially granted to the federal government if the provinces agree to have the federal government take their place in the negotiations and obtain the discount. It amounts to six of one, half a dozen of the other.
Senator Petitclerc: Are you able to say that there will be savings, or will you only find out later on?
Ms. Sourang: We would have to determine who would be the single payer. If it remains the provinces, as it currently stands, the federal government would make a transfer payment, so there would not be any savings. If the provinces agree to transfer their responsibilities, the federal government would get the discount instead.
Senator Petitclerc: I understand. Thank you, that is very helpful.
I would like to come back to Senator Osler’s question, since you mentioned that the industry would provide 11%.
I think I understand the answer, but have you made absolutely sure that the people who draw up the lists are independent? I would like to make sure that there will be independence and distance.
You also talked about who will be at the table when the choices are made and lists compiled. You may have already mentioned this, but will the clients and everyone involved in one way or another be represented?
[English]
Ms. McGurn: Thank you for the question. I apologize that I cannot respond in French.
Senator Petitclerc: It is okay.
Ms. McGurn: I will give two examples of how we do our work, and then I will come back to the financial question —
The Chair: You have to do that in less than 30 seconds.
Ms. McGurn: The first thing I would say is all of our work is done — it’s not just employees of our organization whom our committees represent. When they make decisions and when we have brought people together in the past, it includes Indigenous individuals, patients, clinicians and an ethicist. Our work is done in a multifactorial way. It is them who make recommendations, and those are the recommendations that we put forward to government decision makers.
The Chair: Thank you. We will leave it at that.
Senator Moodie: My question is to you, Ms. McGurn.
I am puzzled by the way you frame your expectation about how you will engage in the activity where this legislation suggests that you are going to be asked to engage. Under clause 8(1) entitled “National formulary,” and under clause 9 entitled “National bulk purchasing strategy,” both refer to the fact that — yes, I agree — the minister will ask you. But you are expecting this within a year of Royal Assent. You must be planning for this.
How is the agency getting ready to do this role — to create a national formulary — which you are being asked to do? You know it is coming, and you are being asked to provide.
The second part is a strategy for bulk buying. You are not at all passive in this. You are going to be leading this process, as I read this. To mention, as I understood it, Budget 2019 provided $35 million over four years for this organization to be formed, created and prepared to get the right kind of internal culture, innovative ability and guts to drive this process. Are you there?
Ms. McGurn: Thank you for the question. I will do this one in reverse order. For clarity, the $35 million announced in Budget 2019 was not for our organization; it was for the Canadian Drug Agency Transition Office which we are not. We are Canada’s Drug Agency. The funding that we will receive was part of the announcement from December of this past year which announced $89 million for our organization, which translates into just over $12 million for this year.
I will answer your other questions: Are we very aware that we have to deliver this work under extraordinarily tight timelines? Yes, we are. However, it would not be prudent for us to commence the work without being asked. But that does mean it has given us the opportunity to be prepared for the work. As an example, we have done work on formularies three times previously. We have been able to look at all of that work, the lessons learned and the key learnings from that. We have also been able to interview organizations, such as the World Health Organization on their WHO Model List of Essential Medicines, to be able to provide a foundation to kick off the work.
Similarly, with bulk purchasing, we are doing our homework on the various ways on which products are purchased in Canada already, and we are looking at best practices internationally. The way in which we do our work, though, is through deliberative committees that are made up of multi-stakeholders. We have not put those committees together yet, though we certainly have worked to develop what type of structures we would look at. And I would say it’s highly likely based on previous work — most recently on the 2022 formulary — where we look for a representative makeup across the country, various participants and interested parties, such as patients, clinicians, ethicists and representation from different communities. We are in the getting ready stage, but we would not commence the work until Royal Assent, and we would have a plan to move forward on it. Obviously, we need to tweak or adjust based upon the requests.
Senator Moodie: I would like to add a question here. I have been in touch with the folks in the transition office. I understand that protocols have been made and passed over. So there is already a flow and an exchange of information guiding the direction in which you should be moving.
Can you help us understand where that is at?
Ms. McGurn: It is important to recognize that what was announced in December from the Canadian Drug Agency Transition Office were three pieces of work that are not the same — one of them is — as what’s in the bill. What was announced in December for the $89.5 million were three streams of work related to improving data and analytics, developing an appropriate use strategy and improving system alignment.
We certainly have all of the work that they have transitioned over to us — where they were with that work — and have been able to initiate moving all of that work forward.
The Chair: Thank you, Ms. McGurn. I am sorry; I seem to cut you off all the time. I apologize.
Ms. McGurn: I don’t mind.
[Translation]
Senator Mégie: My question is for Mr. Giroux.
In terms of the study you did proving that implementing the plan will cost the federal government $1.9 billion, did you get a chance to look at the direct and indirect savings from preventing complications? For example, a diabetic person’s foot is extremely expensive for the health care system. Do you have data that take that into account to see if there are savings to be made by being proactive?
Mr. Giroux: That is a question I am often asked about other programs or cost estimates. Unfortunately, we have not done a cost-benefit analysis. We analyze costs, but are rarely given a mandate to estimate benefits, which could be difficult in some cases. The short answer is no.
However, we know that approximately 14% of costs are related to unfilled prescriptions, probably due to cost. That includes additional prescriptions that would be filled, since the medications would be provided or paid for by the federal government.
Senator Mégie: Great, thank you.
[English]
Senator Burey: Thank you for being here, Mr. Giroux.
To follow up on Senator Mégie’s question regarding a cost-benefit analysis, you say that is something that you normally do not do. I heard the minister say that the diabetes medication alone would have a saving of $30 billion in health costs. Okay. I wonder if this is something that your office should be looking at because of the cost-benefit. That is the first question. I will ask that question to you.
Mr. Tan, on the bulk purchasing strategy, what type of savings do you think that we could realize as a country if we had bulk purchasing across the board? That is for you, but I will start with you, Mr. Giroux.
Mr. Giroux: Thank you, senator. It is something that we could do if requested to do so by a committee.
Senator Burey: Okay.
Mr. Giroux: Our resources are limited. Doing a cost-benefit analysis requires making a series of assumptions and looking at many variables. It is quite intensive in terms of resources. If there is a committee in the House or Senate that requests us to do so, that goes much higher on the list of priorities for our work plan.
Senator Burey: Before that, since I have more time, would you make any specific recommendations?
You spoke with Senator Seidman about how important it is in the regulations to make sure that if you have private insurance, you keep it.
After all, we want the people who don’t have insurance to access it, which will lead to cost savings for the health system. Do you have any recommendations for that?
Mr. Giroux: First of all, we don’t make recommendations, generally speaking.
Senator Burey: Okay, I don’t want to put any words in your mouth.
Mr. Giroux: To respond to your question, currently we estimate about half of the costs that we estimated would go to people who already have coverage. On the $1.9 billion we estimated, about half would go to people who already have coverage for public or private plans.
If the government wanted to limit the potential to off-load costs, it could draft regulations very tightly to say, “If you have private insurance, go there first and we cover the remainder. If you have a provincial public plan, you go there first; we cover what’s not covered, and that’s it.”
Senator Burey: Thank you.
Mr. Tan, please share your response.
Mr. Tan: Thank you for your question, senator.
In terms of your question with respect to bulk purchasing, first I want to say that the pCPA does not purchase. We negotiate prices for reimbursement by the jurisdictions and drug plans.
Our mandate is to negotiate drug prices on behalf of the public drug plans for the entire country. What that means is our mandate is actually provided by our members as well. That being said, certainly we are eager to learn more about what bulk purchasing means because we certainly welcome efforts to collaborate with our partners. At the end of the day, we want to help improve the health of Canadians.
Senator Burey: I won’t go further. I am good.
Senator Bernard: I have one question for Mr. Tan, then I’m going to cede the rest of my time to Senator Seidman. I was intrigued by the question you asked earlier that wasn’t finished. Let me ask my question, then you can pick up where you left off.
Mr. Tan, there’s often a perception in the community — I often hear this — that the generic drugs are not as good as the labelled prescription drugs. Are you able to comment on that?
I know that in your opening remarks you referenced how much of a saving it was to purchase generic drugs.
Mr. Tan: Thank you for that question, senator.
With respect to generic drugs, our role as the pCPA is to negotiate prices for the drug plans so that we can provide the opportunity for better coverage.
There are differences between the brand name drugs and generic drugs. The pCPA does not get into those differences. In fact, these drugs get approved by the regulators, Health Canada. In fact, that question would probably be better answered by our colleagues from Health Canada.
Senator Seidman: Thank you. I’m going to try to go back. I thank my colleague Senator Bernard for allowing me to go back to the conversation we were having about the costing, and specifically the issues about how this is all going to be integrated when you have private insurance, provincial programs and coverage and now additional federal coverage.
In your costing, you have said to us there’s an incentive for private insurers to eliminate their coverage. You said to us that half the costs would go to people who already have plans, so you encourage regulation.
I am trying to understand all these pieces: private insurance, provincial coverage and plans and now the federal plan. How do you envisage that in the most cost-effective way of operating, with all those given pieces? As Senator Burey and Senator Bernard said, we want this coverage to go to people who aren’t covered. Why should half the costs go to people who already have plans?
Mr. Giroux: It’s by design. The legislation states it will provide full coverage. If you have a plan based on your work — like people in this room — it rarely covers 100%. If you go buy diabetes drugs, you are usually reimbursed for 80%. For the 20% difference, or the copay, you have to pay that out of your own pocket. Half of the cost goes to people who need the last 20% to be recovered.
If you want to limit the potential for private plans and public plans to off-load that to the provinces, legislation or regulations have to be drafted so that you have to go to your private provider or your province first. Then the feds cover only the remainder.
From what I’ve seen so far, there’s no such provision. There is that potential — at least based on the legislation so far — for a clever insurance company to say, “Look, there’s a payer with deep pockets.” Then they discreetly remove some of the coverage for diabetes and contraceptives, not — bang — the day of legislative Royal Assent, but over time progressively. It’s quite possible. Legislation or regulations have to be drafted carefully to protect that from happening.
Senator Seidman: Does the Quebec plan do that?
Mr. Giroux: I don’t know if it protects the slipping away or erosion of private drug plans. It prevents any individual who has access to a private plan through their employer, or other means, from opting out and going for the public plan.
The Chair: I have a quick question, Mr. Giroux. The way you’ve explained it does not seem to me that the federal government is the first payer. Am I right in understanding this? If the government comes in at the end to pay the part that fills in the gap, then it’s not the first payer.
Mr. Giroux: It’s probably a matter of terminology.
The Chair: Thank you.
Senator Cormier: This is quite complex to understand.
[Translation]
I am going to ask a very simple question that I should have asked the government. According to the information I have, 97.2% of Canadians have access to some form of drug insurance. Only 2.8% of Canadians are ineligible for any drug insurance. The federal government is proposing to radically transform drug insurance to give everyone access to these two medications.
In financial terms, would it not be in the federal government’s interest to target the part of the population that does not have access to these medications? In other words, is there a financial analysis that would help us assess the costs to public funds if the program had targeted only the 2.8% of Canadians who do not have access to drug insurance? My question might be overly simplistic, but there you have it.
Mr. Giroux: The simplest questions are often the ones that best hit the mark. To partially answer your question, we estimate that around 75,000 Canadians are not covered for diabetes but would be under Bill C-64. Therefore, 60,000 Canadians with no coverage would be covered, and 530,000 Canadians who probably have no drug insurance for contraceptives would be covered under Bill C-64. I do not know if the proportions are the same, but our estimates are based on the data available to us. A bill could be drafted that would limit coverage to people who have no coverage and avoid reimbursing people who are already reimbursed at 80% or who already benefit from coverage under a provincial plan.
However, provincial plans often tend to be very stingy in their coverage. They cover a small part of the medication’s actual cost. They have a ceiling. For instance, in the case of some contraceptives, Diarra told me that some provinces reimburse a maximum of 30 or 40 cents per pill for oral contraceptives, while the costs are much higher.
Senator Cormier: Thank you.
[English]
The Chair: Would that go against the principle of universality?
Mr. Giroux: That’s a good question. It depends on how you define universality. Is it free for everybody or coverage for everybody?
Senator Dasko: Thank you for being here. My first question is to Mr. Giroux. You costed Bill C-64 at $1.9 billion over five years with the status quo arrangements — private, provincial and so on. Have you costed a fully single-payer system with these medications? What would that cost? Are you aware of the costing if the government were to pay the full cost of the medication?
Mr. Giroux: We ran a simulation in which the federal government would pay for diabetes medication and contraceptives without any private sector coverage and without any provincial or territorial coverage, and it would cost from $1.9 billion to $5.7 billion.
Senator Dasko: It’s $5.7 billion; that’s great. I want to go back to Mr. Tan and pursue the questions that Senator Burey was raising earlier in terms of the savings anticipated in the agreements that might be negotiated with respect to the provisions of the bill. Do you have any sense of what the savings might actually be, given the work that you would bring to this file? Do you have any sense of the savings you might be able to achieve? You said that you negotiate agreements, but you did talk about making savings in the work that you do. Can you dig deeper on that?
Mr. Tan: Sure, senator. I did mention that the pCPA currently negotiates drug prices for jurisdictions, and we have significant savings in the billions of dollars. These are related to the negotiations that we have done for many years. That’s where the savings are accumulated, and these are based on both brand name and generic negotiations.
We are not yet clear on the details of bulk purchasing as stated within the bill currently. That’s what we need to better understand and collaborate with our partners on in order to understand whether or not this can be carried out.
Senator Dasko: Is it the case that you’ve not yet been able to calculate any potential savings for these medications?
Mr. Tan: That’s correct; no savings have been calculated because we don’t know what it entails. We have not been provided with the information, or the information is not yet available.
Senator Dasko: But the savings you’ve been able to achieve in the past are $4.6 billion. When you talk about those savings, what is your comparator price? Are you calculating savings on the basis of American pricing for these medications? Is that where the savings come in when you’re actually calculating that?
Mr. Tan: Good question. The savings are relative to the public list price or the pricing set by the manufacturer. The savings are the difference between the public price set by manufacturers and the price that we — at the pCPA — negotiate.
Senator Dasko: Is that the price for the American market as well as the Canadian market, or is there a difference?
Mr. Tan: We only negotiate for Canada and Canadian drug programs, and the prices that we negotiate are confidential prices, so it would only apply to Canadian jurisdictions.
The Chair: Thank you, Mr. Tan. The time for this part of our study is unfortunately over. If senators have questions, I’m sure the panellists would be happy to answer them in writing. Colleagues, we will resume our study of Bill C-64 tomorrow morning at 11:30 a.m. I look forward to seeing you there.
To our witnesses, thank you so much, and I apologize again, Ms. McGurn, for cutting you off so often.
(The committee adjourned.)