September 10, 2013

Lessons on Pharmacare from Around the World

written by Josie Newman

What's Available in France

In France, residents' prescriptions are covered by statutory public health insurance. But the degree to which a drug is publicly subsidized varies, depending on the necessity and efficacy of it. For that non-subsidized portion of prescriptions, many people rely on private insurance provided through their employer.   

There are four levels of reimbursement based on the degree to which a drug is considered safe, effective and essential, how well it treats serious health issues, and how high its therapeutic value is -- 100%, 65%, 30% and 15%. The average publicly funded reimbursement rate in France in 2007 was 76.77%.       

Only pharmacies are allowed to sell non-prescription drugs, whether they are kept behind the counter or out on the shelves. Costs for these are not reimbursed by the government.


Astronomical health care spending in France has caused the government in recent years to favor subsidizing generic drugs, which are usually 30% cheaper, over brand names. By 2011, 71% of publicly funded drugs were generic. In fact, people on social security are only allowed to use generic drugs. By 2010, health care spending was so out of control there was a 11.6 billion euro shortfall in France's health-care system but that is predicted to decrease to a 5.1 billion euro shortfall in 2013, largely due to the move towards generic drugs.   

The majority of the French population has become so accustomed to public subsidies for brand-name drugs that a recent poll showed 46% of them thought the government push to generics was a violation of their freedom.

Similar to Pharmac in New Zealand, the French Comite Economique du Medicament (CEM) determines the reimbursement rate to pharmaceutical companies for their drugs based on the local and Europe-wide price of comparable drugs, size of the target population using the drug, and what ailments the drug is used for. The assigned reimbursement rate applies everywhere in France for five years and then the drug is re-evaluated by the CEM.   

But a recent anti-diabetic drug recall due to the drug's often fatal side-effects, dubbed the Mediator Scandal, has the French government  rethinking the way it assesses drugs and lists them on the public formulary. Under the current system, drugs are ranked and reimbursed based on a number of factors, including safety. Innovative, or new, medicines will now be subject to greater scrutiny and only included if they bring a moderate or greater added benefit than comparable drugs already listed on the formulary.       

What Ontarians can Learn from Other Nations

Although France's pharmacare system demonstrates what can happen when a country's residents are subsidized for whatever they want and a place in the formulary is given to almost every pharmaceutical proposed, New Zealand and the UK have systems which seem to work for pharmacare users and utilize public resources well. 

New Zealand's method of keeping the expenditure of public resources to a minimum by subsidizing prescriptions from regular GPs and public specialists and only subsidizing prescriptions from private specialists for people living on low-income is a good way of ensuring equitable treatment for all. 

Pharmac's advanced negotiation skills with pharmaceutical companies is also a good way of maintaining reasonable drug costs. The UK's move towards total subsidization is an outstanding example of a system which has learned from its previous mistakes. Previous lack of subsidization meant many people developed serious health issues because they couldn't afford to buy their prescriptions. That, in turn, resulted in higher hospitalization costs.       

The example of the UK moving toward total subsidization is encouraging for us in Ontario as many of our working poor continue to struggle even to purchase necessary prescriptions. The simplicity of the New Zealand system demonstrates how to cut administrative costs and make it easier for everyone to understand how they are reimbursed for their drug costs, something which the Ontario government does not currently do.     

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