Canada's current "patchwork" system of prescription drug coverage is pushing up costs, creates massive confusion and results in significant financial hardship for some Canadians, insurance leaders have warned.

The nation's prescription drug coverage system is in urgent need of a major overhaul, with unequal pricing, rising costs and a patchwork of cover offered to citizens - and if action is not taken soon, it will not be around for future generations, warns the Canadian Life and Health Insurance Association (CLHIA)

Canada's per capita drug costs are the second-highest in the world, after the US, and bringing them down to the average level of Organisation for Economic Cooperation and Development (OECD) member-nations - which pay 30% less on average than Canada for medicines - would slice C$9.6 billion off the national drugs bill each year, says the group.

The industry body has released a public policy paper setting out recommendations for reform. It emphasises in particular that:

- the Patented Medicine Prices Review Board (PRMPB), the federal agency that regulates prices for new drugs in Canada, should be fundamentally reformed to drive prices down. The Board's current remit to ensure that drug prices are "not excessive" should be changed to ensuring that the prices of both brand-name and generic drugs are "as low as possible." The CLHIA is calling for "one price for prescription drugs for Canadians, regardless of whether they have public coverage, private coverage or pay out-of-pocket;"

- discussions must begin on the creation of a common, national, minimum formulary list of drugs that will be covered for all Canadians; and

- provincial governments should lead a discussion to work towards the creation of a new, collaborative approach to approving and paying for very rare orphan drugs.

Another insurance executive also warned recently that Canada's private drug plans are not sustainable long-term because of the skyrocketing costs of new biologic and specialty drugs.

59% of Canadians currently have private drug plan insurance, and private insurers reimburse 53% of all prescription drug spending, Barbara Martinez, practice leader for drug benefit solutions in the Toronto sales office of Great West Life Assurance, told a conference recently.

But while the costs of maintenance drugs such as treatments for high blood pressure and cholesterol-lowerers have risen 58% since 2005, they still account for costs of just C$525 a year per insuree on average, compared to C$15,000 annually for newer drugs, whose costs have gone up 325% since 2005, she said.

Better ways have to be found to manage these costs, said Ms Martinez; these can include using case management for very high-cost drugs to monitor the patient's use and the clinician's prescribing of the treatment, and specifying from which pharmacy the drug should be obtained, she said.

And a recent study by the Canadian Health Policy Institute (CHP) found that, as of December 1, 2012, only 20.5% of the new drugs approved by Health Canada during 2004-11 were being provided through Canada’s public drug insurance programmes, on average, and that patients were waiting 659 days for insured access. 

In a private-public comparison across the country, 81% of new drugs were insured by at least one private plan at that date, compared to 47% by at least one public plan, and patients covered by private plans waited 127 days for insured access, compared to 467 days for patients covered under public plans, the Institute reports.