Reference Drug Program

"A reference drug will be selected by the Health Resource Commission for each group of drugs based on peer reviewed and other literature and these reference drugs will make up the formulary. Criteria for selecting the reference drug is that it is as effective as other drugs in the group for initial treatment and is more cost effective than other drugs in the group."

No that quote doesn't come from the NDP's reference drug program that the Campbell government has promised to dismantle as it rewards the pharmaceutical industry. That quote comes from Oregon Governor John Kitzhaber's news release as he shows the leadership necessary to preserve that state's prescription drug program. The Campbell government seems to like to pick and choose from economic examples south of the border. Perhaps it should also look at how our southern neighbours are copying some of our ideas to save tax dollars.

July 30, 2001

Pharmacare - completing the treatment

The former government didn't do its legacy any favors by introducing a budget before calling the election that everyone knew it would lose. Fortunately, the Fiscal Review Committee had predominately favorable remarks about the last NDP budget. However, one of the serious flaws in that budget was in the grossly inadequate amount set aside for Pharmacare.

The last NDP budget provided $674 million for Pharmacare. The note (page 70) said "The ministry will manage growth to 2% over the 200/01 base." Of course that is absolutely impossible, and it is with some relief for those dependent on Pharmacare that the first Campbell - Collins budget increased the amount for Pharmacare to $719 million. Even that may not be enough. Page 44 of the notes to the Fiscal Update says "The ministry may be unable to manage growth to 9%. Total growth is projected to be 16%, based on user population growth (3.5%), utilization (4.8%) and price increases (7.7%)."

The Campbell Liberals have said that reference based pricing is on their list for change. Replacing it with greater user co-payments (deductibles and/or partial percentage payment) or with a reduced list of covered drugs is a dangerous and costly policy.

Before the axe comes down on the Pharmacare program, the Campbell government should do the kind of serious policy work it talks about having as part of all its reviews. Despite frequent criticism of the US system, the great variety of insurance coverage that exists there provides a laboratory from which we can learn before we repeat any mistakes. In reporting to the US Congress, the Medicare Payment Advisory Commission said: "Two studies illustrate the direct relationship between coverage and drug use. When the New Hampshire Medicaid program limited coverage to three prescriptions per month, chronically ill elderly and disabled enrollees significantly reduced the use of such medications as insulin, lithium, cardiovascular agents, and bronchodilators (Soumerai 1999). A more recent study found that those with drug coverage were more likely to purchase needed hypertensive medications (Blustein 2000). Even nominal cost sharing appears to significantly reduce treatment compliance for low-income groups. One study of elderly and disabled Medicaid participants found that beneficiaries with even nominal copayments ($3 or less per fill) had significantly lower levels of drug utilization, compared with similar beneficiaries with no copayments drug (Stuart and Zacker 1999)." (See Medicare Payment Advisory Commission, p. 14, pdf file)

Why pay for a visit to the physician's office, reward the physician for writing a prescription and then put a user fee in place to discourage the patient from filling the prescription? The alternative of introducing a means test simple throws money away on administration costs. Even with their massive tax cuts, the rich pay enough in taxes so that getting a few bucks back from Pharmacare is preferable to raising the cost of administration for all of us. Worse yet, any definition of "rich" that would save much for the Pharmacare program (overlooking the health impacts of noncompliance) would move the means test to around $25,000 per year. Try living on that in your retirement.