A dizzying pace of innovation from American pharmaceutical companies has swamped the ability of our stodgy public healthcare system to regulate and control access to drug therapies. Many Canadian cities now house “infusion clinics,” where individuals can bypass bureaucrats and purchase promising IV treatments out of their own pockets. To their credit, provincial health authorities have quietly recognized the value of such expanded choices for patients and let them operate outside Medicare.
That makes sense because drugs have become the most effective and economical way to cure or manage many diseases. The infusion clinics will mostly offer new cancer-fighting chemicals not approved for public payment, remedies patients could previously obtain only outside our borders. Health authorities are reluctant to offer these treatments inside Medicare because they are so expensive. Patients who petition for public payment must wade through professional review panels for approval, a process many desperate cancer victims may not survive.
No discussion of health spending omits a mention of the spiraling prices of drug therapy. With breakthroughs announced almost daily, “Big Pharma” is often discussed as if it were a twin to the tobacco industry, profiting from the unhealthy habits of the public. But these companies pump billions of dollars into research to create and refine new drugs, with no guarantee that this work will pay dividends. When new drugs work, their successes are publicized, but for every breakthrough treatment, scores of potential drugs prove unsuitable.
That makes new medication very expensive but, when used properly, drugs can lower the overall cost of medical care quite radically. By reducing the crises that result in hospitalization, even the most pricey drugs end up saving the system money.
A recent paper from the Consensus Group at the Atlantic Institute for Market Studies looks at how spending on medication influences other healthcare spending. For every dollar spent on drugs, physician costs rise by $1.54, but hospitalization costs fall by $3.65 and other costs are reduced by $1.11.
With their conditions stabilized by medication, most patients no longer need the intensive monitoring and support provided by hospitalization. Their progress on drugs needs to be tracked, so outpatient visits to doctors’ offices increase. Still, if drugs were used to maximum efficiency to control and treat chronic diseases, for example, they would more than pay for themselves in reduced in-patient days. The compartmentalization of healthcare in Canada is a disadvantage here. Typically, different offices are responsible for drug costs and hospital costs, so sub-optimal decisions are made with the best interest of department budgets, and not overall health spending.
Periodic visits to the doctor are not only less expensive than hospital stays, they are also less intrusive and disruptive. Also unmeasured is a second major advantage of effective medications, that they tremendously improve patients’ quality of life. This can be demonstrated with actuarial tables that take into account the side effects of various treatments, as well as pain, fatigue and the ability to carry out the activities of daily life. Even in cases where a condition is incurable, pharmaceuticals still have the potential to extend life and alleviate suffering.
Psychiatry is a good example of a field transformed by pharmaceuticals. Between 1990 and 2000, when Prozac and similar drugs were widely used, and more sophisticated versions constantly developed, the annual cost of drugs to counter depression increased by almost $1,000 per patient. In the same interval, the annual hospital costs for in-patient treatment for depression dropped by more than $1,500. So this represents a tremendous financial step forward in managing and treating depression and related disorders and, because the medications helped patients avoid hospitalization and function as well as possible, immeasurably improved their quality of life.
Canadians thereby benefit from the development of new drugs by American companies and, because health authorities often pay lower prices for these drugs, we are effectively subsidized by those who research, market and use new pharmaceuticals. The penalty is that we often wait much longer than American patients to use the most effective new treatments available. The FDA requires an onerous approval, but still Canadians are forced to wait until the federal government has approved a new drug before it is prescribed for them.
It takes longer still for new drugs to be added to provincial formularies, the index of drugs for which Medicare will pay. The rules about which drugs are covered in what province, and even who is eligible for subsidized prescription drugs, differ across Canada. Consumers have a right to know exactly what medications will be paid for by their province, and the basis on which new drugs are included in this list.
The indirect costs and benefits of treatments must also be taken into account, so that tunnel vision doesn’t lead to the false economy of restricting expensive medication that saves money in the long run. More importantly, Canadians should have access to the treatment that best serves them and their needs. Until the public system is better able to perform that function, the infusion clinics offer Canadians with the means to buy a way around it a welcome alternative.