The Canadian National Pharmacare Act – What Employers Should Know?

Canada has taken a small step in refining healthcare accessibility with the introduction of the National Pharmacare Act. This legislation has promised to provide universal access to important prescription medications for all Canadians. The fundamental principle of the Act is a commitment to ensuring that every Canadian has access to vital prescription medications, regardless of their socioeconomic status. 

This first step is a small one, however, to achieving this spoken goal. With the launch of the program, the federal government has outlined its plan to cover treatments for diabetes and contraception only. With an estimated 3.7 million Canadians affected by diabetes and tens of millions more in need of contraception, the program is expected to appeal to many voters at the next election. Employers offering healthcare benefits to their employees will find themselves at a crossroads between Pharmacare and their existing benefits packages. In most cases, no benefit plan changes will be needed and these expenses that the new Act will cover will be removed from the employee benefit plan costs. While the Act provides a framework for universal drug coverage, the limitation of drugs included in the plan at least initially, means that only a small portion of actual drug costs will be shifted away from employer-paid plans to the government.  

Health care in the Canadian Constitution, falls under the jurisdiction of the provinces.  As a result, while the federal government can build the plan, the provinces must be the ones to deliver on it. This creates many challenges as both Quebec and Alberta have already shared their intention to NOT participate in the new plan. Instead, they are asking for the equivalent funding to be provided to their provinces and used as the province sees fit.  They often claim that the funds are needed more in healthcare overall vs. in pharmacare where private employer plans and public programs are in place for nearly 95% of their populations. Ontario is currently sitting on the fence. Other provinces including BC, Manitoba, and the Maritimes may be more supportive.  

Employers should familiarize themselves with the specifics of the coverage provided (or NOT provided by the National Pharmacare Act) before making any changes to their plans. Failing to do so may result in employees being left with no or reduced benefit coverage which is in contrast to the intention of many employers who are looking to attract, retain, and engage with their employees through their benefit plan offerings.  

The Act's estimated cost of approximately $1.5 billion for the initial phase only highlights the scale of investment required to achieve full pharmacare. Currently, there is no clear source of where this funding will come from.  General revenues are the expected source however an adjustment to, or the addition of, employer health taxes is another possibility.  Only time will tell who is left to foot the bill.  It may be that this provides savings to some individuals but none at all to businesses.  

The National Pharmacare Act represents a first step towards achieving universal drug coverage in Canada.  However, many uncertainties remain regarding future drugs that will be covered, the actual implementation across the country, and the long-term financial funding and sustainability of the program.  We will continue to keep you updated on this topic.  If you have questions, please feel free to reach out to our benefits specialist, Tyler Stott, at any time.