Could proposed universal drug coverage create even more problems?

A study espousing universal drug coverage might suffer from faulty comparisons and issues with execution

Could proposed universal drug coverage create even more problems?
The argument sounds simple: a large drug-purchasing body will have enough buying power to negotiate with pharmaceutical companies for lower prices. That’s the fundamental point of a study published in CMAJ, which suggests billions of dollars can be saved through universal drug coverage. 

But a piece published by the Financial Post points out that what works in theory might not work so well in reality.  “The headline numbers look big. Examples of universal bulk buying of drugs reduced costs by 47% in the United States, 60% in Sweden and a whopping 84% in New Zealand,” said columnist Terence Corcoran, citing figures from the study. 

The statistics on Canadian-foreign price gaps, he noted, differed hugely from those reported by others: just last year, the Patent Medicines Prices Review Board said that the difference in generic prices between Canadian and foreign markets was around 19% in 2014, and was narrowing as generic prices continued to fall.

Focusing on New Zealand, Corcoran observed that the CMAJ study did not explain the substantial 84% discount compared to Canada that the country enjoys. “New Zealand is a unitary state with one level of government, a tiny population of 4.5 million, and no local pharmaceutical industry … Could it be that the international drug companies use New Zealand as a fringe market where products are dumped?

“The study also did not mention New Zealand’s persistent problems with shortages of prescription drugs,” he added.

Moving on to the example of Sweden, Corcoran pointed out that its 60% lower overall drug price was derived from its list of 28 drugs, 12 of which had higher or roughly the same prices. “The CMAJ study, in other words, extrapolated billions in savings on the basis of lower prices on 16 drugs … imposed on a country [known for] some of the world’s longest health care waiting lists and unavailable doctors.”

While only 12 out of the 55 drugs in the US formulary had equal or higher prices than those found in Canada, the data came from the US department of veteran affairs. “The US veterans affairs drug purchase system … is large enough to be big, but not so big it exerts market power or threatens national competition in the industry.”

Corcoran also noted examples where creating a government-run monopoly on healthcare goods and services did not create efficiencies or lower costs. A 2015 report said that a pharmacare-like program in Quebec required political intervention to bring it under control and cut back on runaway expenses. Likewise, the Ontario government’s monopoly on MRIs in the province has waiting times for MRI appointments at four to five months, compared to the official government target of 28 days.

Related stories:
Universal drug coverage could save millions of lives and billions of dollars 
Canada’s healthcare hampered by access issues, study says