Drug Costs May Soar for Canada’s Seniors

UBC Reports | Vol. 49 | No. 6 | Jun.
5, 2003

Study urges major changes to pharmacare

By Hilary Thomson

Pharmacare — it’s a national ailment sorely in need
of a cure.

So says a group of health policy researchers at UBC’s
Centre for Health Services and Policy Research (CHSPR).

They have recently completed a study that argues, without
strong political leadership and comprehensive management of
how medications are prescribed and used, government spending
will escalate to the point where pharmacare for Canada’s
seniors will soon be seriously threatened.

“Seniors’ drug benefit plans are under intense
financial stress,” says co-investigator Steven Morgan,
a CHSPR expert in health-care economics. “Until recently,
provincial governments have provided generous drug coverage
to virtually all seniors but changes such as user fees and
eligibility requirements are seriously eroding that coverage.”

Morgan and Jonathan Agnew, postdoctoral fellows at the centre,
along with CHSPR member Morris Barer, a Canadian Institutes
of Health Research (CIHR) director, looked at provincial drug
benefit programs for Canadian seniors, focusing on coverage,
price control and how medications are prescribed and used.

The investigation found reduction of seniors’ drug benefits
amid a “cost crisis” in the pharmaceutical sector.
In the absence of effective cost-control, provincial drug
plans for seniors are fast becoming unsustainable, the researchers

Canada spent almost $15 billion on prescription drugs in
2002, and the cost of public drug coverage programs in Canada
has almost doubled since 1995, according to the Canadian Institute
of Health Information.

Causes of increased drug costs include greater use of drug
therapies and the type and quantity of drugs used to meet
health needs. Despite the high cost of new drugs, there is
often little evidence they deliver enough therapeutic value
to justify their price relative to older “tried and true”
medicines, Morgan says.

Drug prices must reflect therapeutic value and patients and
doctors need to have sufficient information to balance the
benefits of a drug against its cost.

“Without this type of decision-making, any system of
prescription drug financing will be plagued by uncontrolled
costs,” says Morgan, who is a CIHR fellow.

Part of the problem in containing costs is that provincial
drug plans do not take full advantage of their purchasing
power to negotiate discounted prices with drug manufacturers.
There needs to be considerable political will, however, to
confront drug manufacturers who often are major players in
provincial economies, adds Morgan.

Low-income seniors remain well covered in all provinces,
but it’s a different story for seniors with higher incomes,
says Morgan. Since the mid-1990s, they have experienced reduced
coverage because of co-payments, increased premiums, deductibles
and eligibility requirements.

Some higher income seniors are likely to find part of their
benefits shifted over to help young families pay for medication
costs. B.C.’s recently announced Fair PharmaCare program
uses a means test to determine how much seniors should pay
for their medications. Much of those cost savings help to
finance a universal plan for families with high drug costs
relative to the family income.

The provincial government has asked the research team, in
collaboration with researchers from the Harvard Medical School
and the University of Victoria, to evaluate the provincial
government’s PharmaCare program over the next three years.

For more information on the study, visit the Web site at