Medical Tuesday Blog

The Unintended Consequences of National Pharmacare Programs

Feb 19

Written by: Del Meyer
02/19/2019 8:13 AM 

The Experiences of Australia, New Zealand,
and the UK

The Frazer Institute— Published on December 13, 2018

Accordingly, the national systems for drug coverage in nations such as New Zealand, Australia, and the United Kingdom have been proposed for implementation in Canada. While these programs have reduced both expenditures and the average price paid per drug, they have also had some unintended consequences that may not be so favorable.

This paper seeks to analyze these consequences. Through an examination of the experiences of New Zealand, Australia, and the United Kingdom, this paper brings to light some of the difficult decisions that accompany a national publicly funded pharmacare scheme, and the consequences of such programs for patients, physicians, innovators, and the industry. Specifically, the potential consequences take the form of more limited access to new drugs, poorer healthcare outcomes, excess burdens of taxation, and reduced pharmaceutical innovation. While these consequences are not necessary, they are typical of such policies. As with many public policy proposals, the devil is in the details and the true consequences for Canadian patients remain to be determined.

First, the paper describes the national plans of Canada, the United Kingdom, New Zealand, and Australia, focusing on key characteristics of the programs. Next, the paper provides an overview of many of the cost containment strategies that are frequently incorporated into a publicly funded pharmacare program. These are policies that are relied upon to achieve the necessary cost savings required to administer such a program, but they do not come without a price. These policies generally limit patient (and physician) choice, restrict access, ration drugs and therapies, and reduce treatment effectiveness. The strategies considered in this section include sole tendering, reference-based pricing, restrictive formularies, and cost-effectiveness analysis. . .

Arguably, the single most significant benefit of universal pharmacare would be lower pharmaceutical expenditures for insurers and individuals. While the prices of new substances under the programs employed in New Zealand, Australia, and the UK are lower than in the United States and Canada, prices for generics and incremental innovations are higher than in the United States. . .

In reality, Canadians already benefit from the best aspects of a national drug coverage plan, and evidence suggests that the formal institution of such a plan will only increase bureaucracy and complicate delivery of services, without adding value for patients.


Kristina M.L. Acri, née Lybecker

Associate Professor of Economics, Colorado College

Read the entire article at

Canadian Medicare does not give timely access to healthcare, it only gives access to a waiting list.

–Canadian Supreme Court Decision 2005 SCC 35, [2005] 1 S.C.R. 791

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