Reducing Provincial Drug Plan Costs Through Regional Pooled-Purchasing Agreements

Canada’s provincial health ministries are facing rising provincial drug plan costs that can be attributed to rising medication costs and increasing drug plan claims. Provinces currently employ a collection of policy tools that have not proven to be effective in reducing the cost of these essential programs. Current policy tools are generally designed and implemented unilaterally and are not conducive to inter-provincial collaboration. The result is that small provinces are hampered in their ability to lower drug costs as manufacturers will first attempt to set price levels in larger provinces. A new policy tool is needed that will enable both large and small provinces to reduce drug costs as drug plan utilization continues to increase. Creating purchasing pools with multiple provincial participants could be a promising model that would enable members to maximize supplementary volume rebates from manufacturers. New Zealand’s national purchasing pool lowered drug prices between 21% and 79% less than prices paid in British Columbia for the same products in 2005. Purchasing pools in the United States designed to reduce the cost of state-funded Medicaid pharmacy programs have delivered supplementary rebate rates to their members between 15% and 25%. Assuming that these rebate rates could be applied to purchasing pools in Canada through regional purchasing pools in Western and Atlantic Canada, approximately $562 million could be saved in Canada every year. Canadian agreements, similar to American purchasing pools, would preserve provincial autonomy over the formulary listing process and drug plan administration. In addition, regional purchasing pools in Canada could be integrated with existing federal and provincial drug regulatory bodies. Regional purchasing pools in Western and Atlantic Canada could form the foundation of a new prescription drug pricing and negotiation regime that could stabilize drug prices in participating provinces. The purchasing pools could also improve transparency and accountability by aligning the commitment to cost control of participating provinces.

Name thesis:degree_name

Master of Public Policy (MPP)

Level thesis:degree_level

Master's

Discipline thesis:degree_discipline

Health Systems Research

Grantor dc:publisher

Faculty of Graduate Studies and Research, University of Regina

Year dc:date.issued

2012

Author dc:creator

• Jurczak, Matthew Stephen

Advisor dc:contributor.advisor

• Marchildon, Gregory

Committee member dc:contributor.committeemember

• Dupeyron, Bruno

Language dc:language.iso

en

DOI

https://doi.org/10.82465/4036

OAI identifier oai:identifier

oai:uregina.scholaris.ca:10294/3758