Prescribing Federalism

Sep 06, 2018

September 6, 2018

The intergovernmental implications of a national pharmacare program

The federal government is currently choosing its approach on national pharmacare. New Mowat research finds that the success of any approach depends in part on how it interacts with the variety of existing provincial pharmacare programs. Following established principles of fiscal federalism should help the federal government navigate this complex terrain.

When the federal government embarks on a national pharmacare program, it will not be entering an empty policy arena. In fact, all provinces offer their residents some pharmaceutical coverage. We find that this varied lanscape of pharmaceutical coverage raises issues of access, affordability, consistency, cost, and impact on the private sector.

Any model the federal government chooses – replacing existing programs with a national universal coverage, focusing on plugging the holes in current coverage, or providing universal catastrophic coverage – will be better suited to addressing some of these issues over others.

But whatever model is chosen will also have to interact with the existing pharmacare landscape, and this will create winners and losers among provinces and their residents. This potential minefield is unavoidable, but can be navigated with the help of established fiscal federalism principles such as horizontal equity, maximizing on comparative advantages, risk-sharing, and asymmetrical federalism.

While some of these principles will likely need to be traded off against each other, and their use will increase the overall cost of the program, they offer a tried-and-true roadmap for proceeding on this intergovernmental initiative in a fruitful manner. We conclude by analyzing how these principles may play out for each of the models available to the federal government.

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