Good first steps on healthcare from Council of the Federation
By Bruce A Stewart
Earlier this year Saskatchewan’s Brad Wall and PEI’s Robert Ghiz got to work to find ways for the provinces to cut health care costs.
They presented plans for bulk buying across provincial boundaries of various drugs and pieces of medical equipment to the Council of the Federation yesterday, and the assembled premiers decided to hang jurisdictional squabbles and band together to save some money.
Well, aside from Québec’s Jean Charest, of course, who has to face his Péquiste opponent in an election shortly and can’t be seen to be too cooperative, hien? He’s going to “study how it fits with our policies” before signing on fully to what even he sees as a way to help his budget a little.
No Council of the Federation, of course, would be complete without its moans about Ottawa not being at the table, and this one was no exception. But Ottawa didn’t need to be at the table for the premiers to do something that has been patently obvious to any Canadian who spent two minutes thinking about health care costs anytime in the past thirty years.
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Drug companies — even the generic ones — are in business to make a profit. They will charge as much as they can, like any business, keeping a weather eye on competitors in setting prices, but otherwise happy to take what the market will bear.
Governments, thanks to the provincial formulary approach and being the buyer in our single-payer health care system, provide a customer who has a little market clout of their own. (If you want to know why Americans pay upwards of ten times as much for the same drug as Canadians do, start here: even the largest HMO in the United States has a fraction of our smallest province’s purchasing power.)
Up until now provinces have decided for themselves what to fund. Original name-brand product or generic? Drug company A’s cholesterol drug or drug company B’s?
By bringing their lists of preferred drugs into line with each other, the provinces make it possible to create a national market: one price negotiation over a drug (yes, even in Canada you can “ask your doctor about …” a certain drug and have it prescribed if it would be — post-diagnosis — better for you; it just won’t be available at a good price). That’s going to make winning and losing the competitive sweepstakes much higher for the drug companies: no more “lost in Alberta but won in BC” to console their sales figures.
We win, especially since a third of health care costs are for chronic conditions managed through pharmaceuticals.
Combining on the purchase of medical equipment will also lead to other sensible decisions, like (for instance) cross-border test centres. Why shouldn’t BC’s Interior Health Authority send people from Golden or Field to Canmore in Alberta for an MRI, or Alberta Health send people from Sexsmith or Beaver Lodge up the road to Dawson Creek in BC for neuropathy testing, rather than buying duplicate equipment so close to each other?
It was smart as well for Ontario’s Dalton McGuinty and Alberta’s Alison Redford to sit down and talk about what we pay medical practitioners. Getting started on the provincial medical associations not being able to set province against province to keep ratcheting up labour costs is a good idea to save money, too.
Ottawa would have added nothing to these discussions (other than its bureaucrats wanting to carve out space for determining the drug formulary, picking the equipment locations or setting wages “in the national interest”, otherwise known as their own petty bureaucratic empires). When Stephen Harper said “here’s the funding formula, no strings, sort it out yourselves” back in January he did everyone a favour.
Good to see that Wall, Ghiz, and Nova Scotia’s Darrell Dexter (the Council of the Federation chair this year) could drive some progress through on the provinces’ number one agenda item. It’s a start all Canadians should be happy with.