Three ways the 2018 federal budget will impact the healthcare sector

The key to the Canadian political system’s success has always been, since Confederation, the unique balance of power and responsibilities between the provinces and the federal government. The healthcare system and its associated challenges – often the subject of intense media coverage – is the perfect example of the power distribution that exists between our different levels of government. For instance, the provision of services and the system’s management in each region lies solely on the shoulders of provincial governments, with their federal counterpart in charge of regulating access to care, managing the sector’s impact on international commerce and the production and distribution of life-saving medications. In practice, however, this delicate balance is threatened by the ever-increasing burden on provinces to fund their systems. Additionally, Canadians (more importantly, the electorate) are increasingly concerned with the quality of services provided.

In recent years, the federal government has actively taken decisions regarding to the investment in and regulation of the healthcare system, which fall perfectly in line with Canadians’ concerns. Minister Bill Morneau’s most recent budget, made public on February 27, is an example of this.

Listed below are three proposed government measures announced in the budget that will likely have the greatest impact the healthcare system.

1. The Evolution of Canada’s Health Ecosystem? Universal pharmacare program

Often considered a cause of the New Democratic Party and the social democratic left, the concept of a universal pharmacare program is gaining popularity on Parliament Hill. A sign of this is Minister Morneau’s announcement of the creation of an advisory committee that will study what the creation of such a program would entail, as well as identify all associated costs. To prove that they are taking this issue seriously the government named Eric Hoskins as leader of the project; Hoskins quit his Ontario cabinet post and resigned as a Member of Parliament to lead the program. It is clear that this topic will be at the centre of next year’s federal election campaign.

It is important to note that the total number of uninsured Canadians paying for medications out of pocket has been in steady decline. In particular, the launch on January 1 of Ontario’s new drug benefits program, OHIP+, has helped the situation by making prescription drugs free for all Ontarians under the age of 25 (about 1.2 million people). The Conference Board of Canada estimates that there remains 700,000 Canadians living without any prescription drug coverage.

This proposed program will assuredly have a profound impact on the country’s already evolving healthcare ecosystem. Many add it to the list of current trends, including: the ongoing operational review of the Patented Medicine Prices Review Board (PMPRB)/Le Conseil d’examen du prix des médicaments brevetés (CEPMB); the province-wide trend of generic drug price reductions; and the redefining of private insurers’ roles in light of an ever-increasing number of insurance claims.

2. Funding R&D: Increase in funding for Canadian researchers

The Trudeau government claims that this budget marks our country’s greatest ever investment in fundamental research. The substantial investment – $1.6 billion to be distributed over a five-year period – will seek to provide greater support for fundamental research, develop new research facilities and create new research chairs across the country.

These initiatives represent not only significant development opportunities for Canadian-based researchers, but also all organizations and businesses operating in the sector. Once more details are released on how this sum will be divided, it will be essential to rapidly assess the different options available to those interested players.

3. Mainstreaming Medical Marijuana : Regulation and taxation

Cannabis has been available to Canadians as a medical treatment for several years. At present, this is governed by the Access to Cannabis for Medical Purposes Regulations (ACMPR), which allow patients to receive medical cannabis with the written authorization of a medical practitioner. However, they can only receive it in one of two forms – dried flower (which is smoked) or cannabis oil. This has greatly limited its use, as many patients are reluctant to use and many doctors are reluctant to recommend a form of treatment that is smoked.

The government’s plan to legalize cannabis for recreational purposes has led to many questions about how medical cannabis will be treated. The legalization legislation has been amended to ensure that the government will be creating rules for edible forms of cannabis to be available to recreational users. This has naturally led patient groups and producers to ask for additional dosage forms of medical cannabis to be available to medical cannabis patients. There has also been a push to remove tax from medical cannabis products, particularly after legalization adds excise tax on top of HST. The argument is that prescription drugs are not taxed, so these taxes create a financial burden on patients wanting to switch to treatments that might reduce many side effects and the potential for abuse – particularly as most health insurance plans do not cover cannabis.

From the language in the budget, it appears that the government may be receptive to these arguments. The budget commits Health Canada to “evaluate the drug review and approval process so that Canadians in need have better access to an array of medicinal options.” This is tied to a statement that medical cannabis will not be taxed – but only once medical cannabis products have received a Drug Identification Number (DIN) and are available only by prescription, making them more like traditional prescription drugs.

In other words, governments would like to find a path to have cannabis products prescribed by physicians, meaning they would need to have a DIN; this is a major step towards the mainstreaming of medical cannabis. NATIONAL is engaged in discussions with Health Canada about shaping this path.

What’s next? The measures announced last week serve as an important reminder to closely monitor the federal government’s activities in the healthcare sphere. Decisions made at this level have an undeniable and direct impact on provincial government’s actions and decisions, as well as on those of companies operating in the sector.

For those operating in an environment with so many key players and moving parts – all of which can have a significant impact on your business’ success or failure – it is impossible, and inadvisable, to operate and make decisions in silos.

At NATIONAL, our comprehensive healthcare experience in Canada means we have a unique knowledge of the players and the ways in which they intersect and, sometimes, collide. We are proud of our pan-Canadian network, and regularly leverage the strength and knowledge of our professionals to provide our clients with the best possible services and counsel in response to various challenges and opportunities.

The 2018 budget lays the foundation for further intersection and partnership. The three budget areas discussed above are gateways to complex healthcare landscapes that also hold great opportunities for innovation and leadership. NATIONAL is ready to be part of that story. Are you?