Pharmacare Program to Cost Governments Billions, but Offer Economic Relief, PBO Reports

Parliamentary Budget Officer Yves Giroux waits to appear before appearing at the Senate Committee on National Finance, on Oct. 25, 2022 in Ottawa. Adrian Wyld / THE CANADIAN PRESS

In a recent revelation, the parliamentary budget officer (PBO) highlighted that a single-payer universal drug plan is projected to cost federal and provincial governments $11.2 billion in its inaugural year. However, this spending will be offset by savings for the broader economy.

Economic Implications of Pharmacare Program

The PBO’s analysis, which was made public on Thursday, offers a cost estimate for a pharmacare program spanning from 2024-25 to 2027-28. By the fifth year, the cost to governments is predicted to rise to $13.4 billion.

Despite the anticipated 13.5% increase in the use of prescription drugs, the report identifies potential economic benefits. “The implementation of a single-payer universal plan would enable improved price negotiations, leading to a reduction in drug prices,” the report stated. These negotiations would result in a notable $1.4 billion savings on drug expenditures for 2024-25, which is expected to escalate to $2.2 billion by 2027-28.

Pharmacist Denis Boissinot checks a bottle on a shelf at his pharmacy on March 8, 2012 in Quebec City. It’s a buzzword in the medical community, although one that hasn’t quite caught fire yet with Canadians at large: pharmacare, a national program that would see prescription drugs covered through a publicly funded system rather than out of pocket. THE CANADIAN PRESS/Jacques Boissinot

Factors Under Consideration

The PBO’s projection takes into account the current investments by governments in public drug plans. Furthermore, it factors in the potential revenue that would stem from co-pays under the proposed pharmacare plan.

Liberals’ Commitment to Pharmacare

In light of their supply-and-confidence agreement with the NDP, the Liberals have committed to introducing pharmacare legislation this fall. The aim is to ensure that Canadians have greater access to necessary medications without the burden of prohibitive costs.

Exploring Alternative Coverage Plans

The PBO report didn’t stop at just the universal drug plan; it also delved into the implications of other potential coverage strategies.

  1. Catastrophic Medicines Coverage: A plan focusing solely on catastrophic medicines — those with prices that could cause financial strain — would demand an additional $400 million from governments in its first year. This figure is anticipated to hit $2 billion by the end of five years.
  2. Essential Medicines Coverage: Another model, concentrating on only essential medicines that cater to the urgent health needs of the populace, would entail an added expense of $2.4 billion in the first year, skyrocketing to $12.1 billion in five years.