Putting drug costs in line

When the government says it hopes to save Albertans up to $100 million a year on the cost of their generic drugs, it sounds like a lot of money. In general terms, you could say that it is. But seen against the backdrop of our total spending on pharmaceuticals, it’s really a drop in the bucket.

When the government says it hopes to save Albertans up to $100 million a year on the cost of their generic drugs, it sounds like a lot of money. In general terms, you could say that it is. But seen against the backdrop of our total spending on pharmaceuticals, it’s really a drop in the bucket.

As good as it sounds to reduce the costs of generic medicines to roughly 50 per cent of the cost of the name-brand drugs they can replace, not all that many Albertans will see the savings as an improvement on the quality of their lives. In fact, the first and major beneficiary of the changes in the regulations will be health insurance providers who offer drug plans — and even they probably won’t see enough of a savings to result in lower premiums for their customers.

Seniors, who are undergoing a two-phased change to the support plan for their prescription medicines, will not see their costs go down that much, either.

That’s because only about a third of prescriptions are for generic drugs, and since many seniors are taking more than one medicine, their total monthly cash layout for drugs will in a large number of cases exceed the ceiling after which government supports kick in.

So if there’s any savings, government itself gets first dibs.

In all, Albertans spend about $1.2 billion a year on prescription medications.

Against that figure, saving $90 million (Health Minister Gene Zwozdesky’s new target) is a rather small slice of the pie.

Just the same, Albertans should be grateful for at least this step forward. We are among the last of provinces to negotiate lower costs for generic drugs. And even a small slice of a pie worth $1.2 billion is real money.

There is an additional benefit to this program as well, as it is tied to negotiations the province had with its pharmacists.

How many of us have looked at our bill for prescription drugs and wondered what the markup is on a bottle of pills? Well, it’s not much. Close to zero, actually. Pharmacists can charge a dispensing fee for medications but not a markup.

Think about that when you imagine the inventory costs of keeping hundreds of different medicines on hand, in every pharmacy in every small town in the province.

So the new agreement with the pharmacists, giving them more power to use their professional knowledge in consulting with customers on the effects of drugs (and the combined effects of everything else they’re taking as well), and to also give inoculations, will improve the possibility that small towns can actually keep their local pharmacies open.

All that’s to the good. But if we want to reduce the cost of medications to Albertans — and thereby the total cost of our health care — some additional changes will be required.

Opposition parties have been calling on the government to join with other provinces in a national pharmacare plan.

It would be similar to the insurance plans we’re familiar with now, mostly through our employee benefit plans. It would require all of us to agree to monthly premium payments, in exchange for coverage of drug costs when we need them.

The biggest change would be that instead of receiving this coverage as an employment benefit, with different employers having different levels of coverage and different premiums that must constantly be reviewed, there would be just one plan that covers everyone — even the unemployed.

Healthy people would be subsidizing sick people (which is the case now in employer plans), but the load would be spread over a wider population — and hopefully there would be lower total administration costs in having just one plan.

Thus, instead of merely saving about 13 per cent of the total cost of all medications with cheaper generics, employers would also save on the cost of their employee health plans because they won’t need to include drug coverage.

Those might become the kind of savings that would actually end up in your pocket.

Greg Neiman is an Advocate editor.

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