From the President: Government Must Look Beyond Direct Cost of Drugs
[The following was originally published in the Edmonton Journal on January 25, 2017. See the op-ed here]
As the voice of Alberta’s life sciences industry, BioAlberta feels compelled to remind our government and Edmonton Journal readers that discussions of pharmaceutical drug spending too often focus on the easy-to-read lines in a budget.
We can easily find the cost to the provincial treasury, but don’t take the time to measure or boast about the strategic impact of this spending: the real human and financial benefit to patients, their families, and the province as a whole.
In a recent interview with Minister of Health Sarah Hoffman published in the Edmonton Journal, “Alberta Health re-examining options to rein in rising drug coverage costs,” the rising cost of innovative medications, including new biologic drugs and hepatitis C treatments, are singled out as significant contributors to the rise in health-care spending. While the sustainability of the health-care system is a priority for Albertans, the government must look beyond the direct cost of medications and analyze their effect on other health-care spending, as well as their benefit to the economy as a whole.
For some patients, the new medications are the first effective treatments for their conditions. As an example, for a patient with Crohn’s Disease, a biologic drug that suppresses their symptoms and prevents flare-ups can be the difference between being able to work and a life on public disability payments. It is the difference between a working, taxpaying citizen and someone who, through trips to the hospital, surgeries, and other prescriptions (including pain killers), can cost the health-care system more than the cost of the biologic drug.
Not to mention, the working hours and tax dollars lost from family and friends who need to take time away from their jobs to look after sick loved ones. An effective treatment returns not just a patient, but their caregivers to the workforce where their tax dollars can help pay for new drugs.
In the case of new hepatitis C medications, the new treatments appear to have fewer side effects and better effectiveness against the virus than previous treatments. The treatment may effectively mean a full cure for some patients, saving them from potential liver cancer and the need for a liver transplant, both of which are significantly greater costs to the health-care system than a full course of the drug.
According to a 2016 report from the Ontario Chamber of Commerce, Care In Our Control, Ontario recoups approximately twice as much in benefits as it spends on pharmaceuticals. Across the world, it is estimated that every $1 spent on innovative medicines reduces non-medical spending by $7 — by reducing the need for hospital stays and surgeries, and by increasing patient productivity.
We would all benefit from learning more about the strategic impact of the province’s pharmaceutical budget rather than focus on a simplistic discussion of budget line items. Furthermore, according to the federal government’s Patented Medicines Price Review Board, new pharmaceuticals not only account for a small share of total health spending at 6.5 per cent, but the overall Patented Medicines Price Index (a measure of the overall cost of prescription drugs) has lagged behind general inflation every year since 1988.
While Alberta Health must strive to ensure the future of the health-care system, those decisions should be made based on a full cost-benefit analysis that encompasses more than just the direct cost of drugs. Albertans expect strategic thinking from government in challenging times.
The pharmaceutical budget is an excellent opportunity to show what the Alberta government is really achieving. Also, one has to wonder if much more could be achieved through a collaborative and partnering approach between government and industry.
Mel Wong is the President and CEO of BioAlberta, an association representing the province’s life sciences industry.