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02 Jun


Unfilled Prescriptions: The Drug Coverage Gap in Canada’s Health Care System

June 2, 2015 | By |

While Canadians have universal access to public insurance that covers hospital and medical care, there is no universal public coverage for the drugs that doctors might prescribe as part of treatment. 

Canada is the only country with universal health care coverage that excludes coverage for prescription drugs.

The lack of adequate coverage creates barriers to access, as costs are one of the major causes of about 1 in 10 Canadians  not filling their prescriptions or taking medications as prescribed. The increasing cost of, and demand for, prescription drugs makes this missing component of the public health care system a glaring gap in Canada’s social architecture, and can lead to issues for population health, household finances and downstream costs to the health care system.

Policy Objective

A renewed approach to prescription drug coverage would see Canada’s federal and provincial governments work together to ensure improved access to prescription drugs in a way that does not create a financial burden for households, and complements the principles of the Medicare system and the Canada Health Act.

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Current Status

While there is no universal public coverage for prescription drugs in Canada, that does not mean governments do not spend any money on medications. Provincial health plans cover drugs when they are administered in hospitals. Provincial governments also provide some limited drug coverage based on age, employment, income or a combination of these factors, with each province having its own unique formulary (list of drugs eligible for coverage). Federal health plans provide similar coverage for on-reserve First Nations and Inuit populations, the Canadian forces and eligible veterans, and inmates in federal prisons. Catastrophic drug coverage, generally defined as the provision of a level of coverage that protects patients and their families from “undue financial hardship” (set at either a fixed dollar figure or a percentage of personal or household income), is also available in most provinces.

However, the extent of an individual’s publicly-funded coverage for prescription drugs in Canada depends primarily on his or her province of residence, means and age. It is a system largely designed to be a subsidy for the elderly and social assistance recipients. Apart from public coverage, many Canadians rely on employer-based or privately-purchased group insurance plans to avoid paying for medications out-of-pocket. These employer-based plans indirectly receive public support through tax deductions. Taken together, the current system has significant gaps that leave cost as a major barrier to access for many Canadians.

This patchwork coverage runs counter to the five principles that ground Canada’s public health care system and are enshrined in federal law by the Canada Health Act (1984). The Act requires provinces to insure services that are medically necessary, but prescription drugs are not specifically included in its definition of medically-necessary care and are in many ways left out of publicly-funded provincial health insurance. The inconsistency and shortcomings of coverage as a result of drugs being left out of the Act undermine the principles of the Canada Health Act; in particular, those of universality (covering all people) and portability (transferable coverage between provinces). The report by the Institute for Competitiveness and Prosperity for this project looks more broadly at ways that the health care system has struggled to keep pace with changes in Canadian society.

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Lindsay Handren

Release Date

June 2, 2015

Release No.