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Placing an actuarial seat at the pharmacare table

By Erin Crump, FCIA, member of the CIA’s Single Topic Task Force on Pharmacare

The principle that all Canadians should have access to affordable health care is a deeply rooted Canadian value. This is why, for more than 50 years, studies commissioned by the federal government have come back saying the same thing – prescription drugs should be part of medicare. And, if you asked most Canadians today, they would support the principle that all of us should have access to the drugs we need.

However, how to best design and fund a prescription drug plan for all Canadians is complex. Which is also why, for more than 50 years, very little progress has been made towards this goal. Instead, the provinces have developed programs for their populations and realities, and private plans have grown in scope and importance – and are now a key component in employee attraction and retention and organizational health.

Drug plan design is an inherently actuarial topic, and I am glad to say that actuaries are adding their voice to this conversation. After all, drug plans are about sharing risk. Most drugs today are relatively low cost and predictable, with a small but growing portion being high and extremely high cost, and too much for one individual to afford. Our goal is to find a way to share costs across all parties in a sustainable way to achieve a desired set of outcomes – the best health outcomes for all at the lowest cost for all.

Building a framework for drug coverage

The CIA has put forward a proposed framework for prescription drug coverage that recognizes the complexity of our current system and takes a step forward. It does not attempt to start from scratch, but builds on what is already working. It includes:

  • negotiating drug prices collectively and transparently, for all public and private plans which optimizes the work already being done today by the provinces and large private payers, and eliminates inequities;
  • defining a national formulary to ensure all Canadians can access the medicines they need, fairly and equitably;
  • exploring options for improvements to prescribing habits and public health alternatives to pharmaceuticals;
  • maintaining provincial/territorial flexibility to design their own plans for their own population, building on what they already have, and coordinating with private coverage based on design and budget; and
  • spreading the risk of high-cost drugs to ensure the sustainability of provincial/territorial and private drug plans. This includes the notion of the federal government acting as a reinsurer for high-cost drugs.

We believe a prescription drug framework that follows the above principles will:

  • be much quicker to implement than a universal, single-payer approach;
  • cost less than a program that pays for all drugs from first dollar (a first-dollar plan would require new sources of financing for the federal government, potentially landing on taxpayers and employers); and
  • ensure the sustainability of private drug plans, allowing them to flourish and continue to innovate, without the unpredictability of high-cost drugs.

Reflecting actuarial voices

The CIA looks to inform and influence decision-makers by offering an actuarial perspective on important socio-economic topics. The question of pharmacare has been tumbling around in the public space for a few years now, so, in December 2019 the CIA Board appointed a group of volunteers to explore the topic and determine what insight actuaries could offer.

It has been a rigorous process to get from there to here, and the release of our final statement!

Our task force first consulted all CIA members to help orient the direction of the statement and its scope. Then we reviewed a lot of research and information, notably the final report of the Advisory Council on the Implementation of National Pharmacare, details about provincial pharmacare programs and international experiences, and studies on drug costs, prescribing habits, and insurance mechanisms.

We completed a first draft in mid-2020 and invited a few members and external contacts to review it and offer their inputs. This helped us produce a second draft that was then circulated to all CIA members in late 2020 for comments. Based on member feedback, we finalized our draft for review and approval by the CIA’s Public Affairs Council in late January 2021, followed by ratification by the CIA Board to release it.

These multiple rounds of inputs and reviews really ensured that we reflected the profession’s voice, and not that of the task force. Each of us in the group entered into this from different backgrounds and with different ways of thinking, and I believe we are proof that even tough questions can be answered when you have diverse voices around the table.

Looking ahead

I’m so glad to have been part of this experience, and to have contributed even slightly to the national conversation on this topic. I learned a great deal from my fellow task force members, and had to challenge my own thinking on a variety of topics.

Personally, my greatest hope for our proposal is pretty simple. Every time I read about pharmacare in the news, there always seems to be a one-size-fits-all solution presented, and that the federal government must pay for everything or do nothing. My hope is that our proposal shows there are other pathways forward worth considering, and that we can achieve improved health outcomes for all Canadians in a way that works for everyone.


The CIA would like to recognize and thank the members of the Single Topic Task Force on Pharmacare for their incredible dedication and contribution to this work:

Rob Brown, FCIA, Professor Emeritus, University of Waterloo, and Task Force Co-Champion. Rob is a Past President of the CIA and a long-suffering Leafs fan.

John Dark, FCIA, Actuary, The Co-Operators, and Task Force Co-Champion. John, a Past President of the CIA, is celebrating 42 years of CIA membership and important contributions to life insurance practice in Canada.

Erin Crump, FCIA, Vice President, Individual and Mental Health, Green Shield Canada. Erin is a group life and health actuary with experience in consulting, direct insurance, reinsurance, and HR.

Bruno Gagnon, FCIA, Actuarial Science Lecturer, UQAM. Bruno is a retired consulting actuary with 40 years of experience in group life and health insurance.

Denis Garand, FCIA, President, DGA. Denis is a consulting actuary working on Canadian group insurance and health insurance globally for improved outcomes and lower cost.

Paul Kennedy, FCIA, Chief Health Actuary, Mercer Marsh Benefits Canada. Paul provides public and private sector employers with actuarial analysis pertaining to the financial management of group benefit plans.

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