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Study Compares Private Versus Public Drug Coverage in Canada: Experience Shows Competition and Choice are Better than Government-Run Pharmacare

TORONTO, CANADA -- (Marketwired) -- 02/25/14 -- A new study published by the Canadian Health Policy Institute (CHPI) provides hard evidence from Canadian experience that private competition and choice in drug insurance plans has been good for patients and that a government-run Pharmacare monopoly will reduce access to new medicines.

The study used data from Health Canada and IMS Brogan to compare coverage in private versus public drug plans, for all of the new drugs that were approved for sale by Health Canada during the years 2004 to 2012. It found that drug coverage was far better and faster in private drug plans than it was in public drug plans.

Of the 39 new drugs approved by Health Canada in 2012, 36 (92%) were covered by at least one private drug plan compared to only 11 (28%) that were covered by at least one public plan - as of December 1st, 2013.

For the new drugs approved for sale by Health Canada in 2012 that were eventually covered under at least one private plan and at least one public plan, private drug plans took 143 days on average to approve coverage compared to 316 days for public drug plans.

Private plans consistently out-performed public drug plans over the entire period from 2004 to 2012.

The findings are important because there are proposals currently being advanced to replace private drug plans in Canada with a government-run monopoly known as national Pharmacare.

The study concludes that government-run drug plans tend to restrict access to new medicines. By contrast, competition drives private drug plans in a socially beneficial "race to the top" to provide the best possible access to the most advanced treatments available.

The study recommends that if governments want to achieve universal drug insurance, it is better to directly subsidize low-income individuals so they can get private coverage - not to replace private plans with a government-run, publicly-funded Pharmacare monopoly. A drug insurance system that expands access to private drug plans, that enhances competition between insurers, and that enables informed consumer-driven choice among plan designs will produce a higher level of benefits for Canadians.

The study also warns about the erosion of quality in private drug plans. Some private drug plan sponsors (e.g. employers) have begun to select plan designs that restrict or discourage access to new medicines. Some have even selected plan designs that match the public drug plans in their jurisdiction - perhaps without their beneficiaries being aware of the significant loss of coverage for new drugs that this entails. This trend has the potential to deprive drug plan members (e.g. employees) of access to the most advanced treatments available and could have a negative impact on health outcomes. It is important that Canadians know what their drug plan sponsors are doing to their drug benefit plans.

The study was published at CHPI's free access online journal, Canadian Health Policy and can be downloaded for free at http://www.canadianhealthpolicy.com/research/full-text/private-versus-public-drug-coverage-in-canada.html.

About CHPI

Canadian Health Policy Institute (CHPI) is a non-profit think-tank funded by independent research grants and unrestricted operating grants from public sector, private sector and non-profit sector sources. CHPI is dedicated to conducting, publishing and communicating evidence-based socio-economic research on health system performance and health policy issues that are important to Canadians.

Open Access Permission

CHPI grants open access permission to republish this news release in whole or in part for use in news articles including a reference to Canadian Health Policy Institute (CHPI) as the publisher.

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