This article provides plan sponsors and other stakeholders with an update on two key issues affecting benefit plans:
- Final passage of legislation to support the launch of a national pharmacare plan.
- Quebec adopts Bill 68 to reduce the administrative burden on physicians.
Any data and information included in this commentary has been compiled from official government documents and publications. Although we believe the sources to be accurate, readers should refer to the actual legislation if using this document for more than informational purposes
Pharmacare Legislation Passing – October 2024
Summary
On October 10, 2024 Bill C-64, the “Pharmacare Act” received royal assent and came into force. The legislation was introduced in February 2024 and the 2024 federal budget provided $1.5 billion in funding over five years to support the launch of a national pharmacare plan. The legislation provides a framework, though the details of implementation, operating and financing the program will be subject to further consultation and expert committees.
The legislation sets up the first phase of a national pharmacare plan and describes the federal government's intent to work with provinces and territories to provide universal, single-payer coverage for a number of select contraception and diabetes medications. Notably, the list does not include “GLP-1” diabetes medications such as Ozempic, which has increased drug costs for many private plans in recent years. At maturity, a national pharmacare plan would be expected to cover drugs for all therapeutic classes and the total annual costs was previously projected by the Parliamentary Budget Officer to be close to $40 billion.
The federal Minister of Health will seek to reach bilateral agreements with provinces and territories to provide access to the initial categories of drugs as the first phase of a national universal pharmacare program. As of this writing, only British Columbia has signed a Memorandum of Understanding with the federal government regarding funding, while several other provinces have come out in opposition to national pharmacare. This calls into questions whether and when Canadians in different jurisdictions will have equitable access to prescription drugs covered under the program. Given the current political environment, there is uncertainty about the impact a change in government may have on the pharmacare program.
The legislation calls for the Canadian Drug Agency to prepare, within one year, a list of essential medicines to inform the development of a national formulary. The legislation also calls for the government to establish a committee of experts to make recommendations regarding the operation and funding of a “national, universal, single-payer pharmacare” program. The expert committee is to be established within 30 days but there is no timeline on when the recommendations would be provided.
Plan Sponsor Perspective
There are few programs more complex than efficiently operating a national drug plan, let alone sustainably paying for it. The 2019 final report of the of the Advisory Council on the Implementation of National Pharmacare called for a universal single-payer drug plan for all Canadians but conspicuously lacked a funding plan and did not thoroughly address some major obstacles to implementation.
Though the legislation has now passed, little immediate action is expected and the short-term implications for private plan sponsors are minimal. That said, future developments demand attention. Key actions to monitor include agreements with provinces and territories, development of a formulary, clarification on operating and funding a plan, clarification on how national pharmacare may interact with private plans, and the political realities of carrying out further actions.
As reported in various news articles, the federal government has provided conflicting information regarding the delivery of national pharmacare. The text of the legislation refers a number of times to “national, universal, single-payer pharmacare” and the government has emphasized this in comments as well. However, elected officials have also stated that the legislation would not affect private drug plans, which typically include a much more expansive list of eligible drugs that what has historically been available through government programs in Canada.
The two categories of drugs to be covered in the first stage, contraception and diabetes medications, are to be covered by the federal plan as first-payer. For the first phase, savings for private plans are expected to be in the range of 3%-5% of prescription drug costs depending on the parameters of the plan. Savings are expected to grow significantly if and when other prescription drugs are included under the program.
The legislation also references funding for the National Strategy for Drugs for Rare Diseases. This is intended to “improve access to new and emerging drugs, as well as support enhanced access to existing drugs, early diagnosis, and screening for rare diseases”. If this program helps to mitigate the cost pressure and uncertainty associated with very high-cost drugs, it will be welcome news for private plans.
Quebec adopts Bill 68 to reduce the administrative burden on physicians
On October 8, the Quebec government passed Bill 68 which is intended to lighten the administrative burden on physicians. Under this new legislation, a number of changes will be introduced and will come into force following publication of the regulations in the coming months.
End of doctor’s notes for absences of three days or less
Employers will not be able to require a note from a physician for employee absences of three days or less, except for the fourth absence within a period of 12 consecutive months. The restriction also extends to absences to care for a parent or child or as a caregiver.
End of referrals required by insurance plans or employee benefit plans
An insurer or plan administrator will not be able to require a referral for reimbursement of the services of health professionals (e.g. physiotherapist) or social services or for reimbursement of medical supplies (e.g. crutches).
Physician autonomy in disability management
In the future, the attending physician will decide how often to see their patients who are on disability leave. In addition, the law allows the government to limit the health information required by a third party and require the use of a standardized form.
Impact on organisations
Given the pressures on the health care system, it is a laudable goal to reduce the administrative burden on physicians. For example, many medical appointments are simply to confirm an absence, often after the symptoms had disappeared. On the other hand, the new measures significantly reduce the autonomy of employers and insurers, which are intended to limit abuse and encourage disabled employees to return to work quickly. It is important to observe if similar measures are adopted in other jurisdictions.
It should be noted that the law is accompanied by sanctions and penal provisions for offenders.