Canadian provinces team up on drug purchases

Author: Alexander Stack Professional Corporation |

Interesting though perhaps not surprising development on the drug purchasing front: the Canadian provinces have "teamed up" to purchase drugs for their respective provincial drug plans.

Globe and Mail article

"The premiers unveiled plans on Friday to set up a national agency that would be responsible for purchasing $10-billion in prescription drugs a year as well as medical supplies and equipment.

Having one entity responsible for drug purchases for all 13 provinces and territories would lower costs on a major contributor to the growing tab for health care.

Rising health-care costs dominated the premiers’ two-day annual meeting in Winnipeg. For the first time as a group, the premiers tackled the question of whether the country can sustain a system many Canadians appear to take for granted."

Easier said than done, I suppose - but its maybe inevitable. A) if purchasing power lowers drug prices, presumably more purchasing power can lower them further, and B) this can eliminate two problems: beggar-thy-neighbour provincial drug policies, and changes in one province's policies having unintended negative results in other provinces (i.e. negative externalities, for the economically-inclined ;) ).

A long term concern, however, is whether this will stifle policy and regulatory innovation. With parallel provincial programs comes the opportunity for one province to take the initiative and try something new - maybe it works, maybe it doesn't but at least something new was tried. And if it worked, then all the other provinces could copy it. With a national program, however, there is less scope for experimentation (i.e. Canada can only run one "experiment" at a time), and an innovation might need to gain wider acceptance before actually ever being implemented. This may not make any difference in a 2-3 year timeframe, but over a 20 year timeframe? This may end up not being a good idea in the long run.

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