1. National Pharmaceuticals Strategy and National Pharmacare Program Ali Suleiman Director, Research & Pharmacy Analysis PMCQ Education Day October 20, 2005

2. Presentation Outline  Prescription Medications in Canada  National Pharmaceuticals Strategy  Discussion Items –National Formulary –National Pharmacare Program  Concluding Remarks

3. Prescription Medications in Canada

4. Source: National Health Expenditures Trends 1975-2004 (CIHI) National Health Expenditures Trends 45% 75% 19% of the $40.4B increase in HCS in Canada were attributed to cost of prescribed drugs

5. Where the Money Goes Source: National Health Expenditures Trends 1975-2004 (CIHI)

6. The Shift in Cost Source: National Health Expenditures Trends 1975-2004 (CIHI) 55.4%44.6% 52.7%47.3% 19992004

7. Why Prescription Medications is an Issue Now…..?  More elderly with chronic conditions  Previously untreatable diseases now treatable  More drugs  More drug therapy instead of surgery  More patients recover at home not hospital  Change in drug utilization & prescribing habits Result - increase in prescription drug expenditures

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

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

10. What is the National Pharmaceuticals Strategy?  A collaborative, integrated & comprehensive approach to pharmaceuticals in Canada  Governments working together with input from providers, researchers, policy makers, industry, patients and the public  First report to First Ministers due June 2006 Source: Presentation by NPS Co-Chair Jurisdictions: Ian Shugart & Penny Ballem

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

12. Expected Benefit from NPS  Better coverage & equal access for Canadians  Safer, more effective drugs  Better evidence for: –Listing decisions & post listing assessment –Best practice prescribing –Patient information needs & self-management  Greater value for patients & health system in return for significant investment Source: Presentation by NPS Co-Chair Jurisdictions: Ian Shugart & Penny Ballem

13. Progress to Date  Ministerial Task Force established  Priority areas identified  Project plans developed & approved by CDM  Background research underway  Policy development work initiated  First consultation opportunities: –Working Conference on Strengthening the Evaluation of Real World Safety and Effectiveness (September 14, 15) Source: Presentation by NPS Co-Chair Jurisdictions: Ian Shugart & Penny Ballem

14. Five Focus Areas  “Real world” drug safety & effectiveness  Expensive drugs for rare diseases  Drug pricing & purchasing  Catastrophic drug coverage  Common drug formulary Source: Presentation by NPS Co-Chair Jurisdictions: Ian Shugart & Penny Ballem

15. Next Steps  Fall 2005/Winter 2006 – Ongoing consultation on specific priority areas  Fall 2005 – Interim Report to Health Ministers  June 2006 – Report to First Ministers Source: Presentation by NPS Co-Chair Jurisdictions: Ian Shugart & Penny Ballem

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

17. Discussion Items  National Formulary (NF)  National Pharmacare Program

18. Discussion Items National Formulary (NF) A prerequisite to a sustainable full- fledged national Pharmacare program

19. What is a NF ?  Who are beneficiaries (i.e. seniors, welfare, catastrophic, other???)  Which drugs are benefits  Financing (who pays)  Who decides, controls, administers  Decision making process?? Answers define the “National Formulary”

20. What is a NF ?  Answers depend on perspective  Provincial ministers of health –Financial commitment from feds –Province defines beneficiaries –Province controls benefit list & administers financing (who pays)  Feds –Control/influence over beneficiary definition & benefits –Funding will be ongoing issue

21. What is a NF ?  Either a list of drugs that member plans will reimburse –Example : most provincial drug plans  Or a list of drugs that member plans should reimburse –Example: WHO Essential drug list

22. NF…. is it Needed ?  Protecting current public drug programs  Bring drugs into Medicare ‘basket’ of universally covered health care goods & services  Indispensable to cost-controllable & cost-effective nation-wide Pharmacare  Reduce disparity among beneficiaries to various plans  Prerequisite to full-fledged national Pharmacare program

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

24. Potential Benefits of a NF  Cost Containment …..? –Depends on: Provinces respond (e.g. control over eligibility, financing & how to list) Prescribing physicians respond (e.g. off-label prescribing) Decision-making criteria to list drugs (cost- containment vs. cost-effectiveness and / or political influence)

25. Potential Benefits of a NF  Improving purchasing power Larger price reduction in exchange for national listing is not guaranteed; discount prices to one buyer could trigger lower prices elsewhere Reduced transaction costs by avoiding individual negotiations with suppliers

26. Potential Benefits of a NF  Standardizing drug coverage –Considerable variation between current provincial drug plans (e.g. eligibility, copay, deductibles, drugs covered and financing) –Costly; significant additional funding needed to raise all provincial programs to the same level of coverage

27. Potential Benefits of a NF  Elimination of duplication –Already incorporated through the expansion of the role of CCOHTA; CDR –CDR Intention: centralize review for all provinces Reality: one additional step in market access – if recommended, provinces still decide listing

28. Barriers to a NF  Current Variations between provinces –Unequal fiscal resources to commit to drug coverage –Different populations with different coverage needs –Current provincial formularies (significant investment) –Different political outlook

29. Barriers to a NF - Analytical Issues –Who are beneficiaries (i.e. seniors, welfare, catastrophic illness) –Impact of various copayment, deductible amounts on utilization –Which drugs are benefits –How to list –Who decides, controls, administers –Costs and financing (Who pays)

30. Cost of NF  One size fits all?  Loss of experimentation  Mismatch between decision making authority and expense

31. Discussion Items National Pharmacare Program

32. National Pharmacare Program Challenges  Inadequate coverage for small part of population  Balancing health care priorities, cost and benefit  Rapid growth in drug expenditures  Evidence for need for improved prescribing and utilization and post listing surveillance

33. National Pharmacare Program Objectives:  Equity of access  Safety & efficiency  Cost containment

34. National Pharmacare Program  National standard for –Beneficiaries –Benefits –Feds major role –Administration - status quo or new –Control - feds via $

35. Cost Impact of the Pharmacare Public Funding Model  A publicly-funded Pharmacare program providing first-dollar, universal coverage  Highest increase in prescription drug expenditures  Private & individual spending would undergo the largest decrease due to a dramatic shift in funding from private sector to public sector

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

37. National Pharmacare Program Public/Private Model  Eligibility for public coverage All currently eligible provincial beneficiaries plus universal plan with high deductible  Administrators Provinces with compulsory national formulary  Who pays Provinces & Federal (Feds contribution increases) Patients & employers pay premiums, deductibles, co- pays, and co-insurance

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

39. National Pharmacare Program Implications  Price controls through drug life and on generics  Expect attempts to leverage buying power (tendering)  Very expensive  Erosion of provinces’ constitutional power

40. Concluding Remarks  National Pharmacare –Unlikely  National Formulary –Helps high cost drugs –Negative for pharma –Price controls –Limited listings

41. QUESTIONS ???