Will Public Plans Pay for the Drugs You Need?

Macro of background made from pills and capsules

My husband just turned 65, so when he went to the drug store to renew a prescription this week he fully expected that the Ontario Drug Benefit Plan (ODB) would be first in line to cover the cost of his medications. Then 80% of the balance would be covered by my former employer’s retiree health care plan.

In fact, what the pharmacist told him is that Uloric, a drug that reduces uric acid causing gout, is not on the ODB formulary. It costs $205.34 for 100 tablets (1x day). Fortunately our private corporate drug plan kicked in and picked up most of the tab. But that got me thinking about how many other newer medications might not be covered by provincial public drug plans in Canada, and how seniors not covered by a private plan may not be able to afford them.

In fact, the 2014 edition of an annual study published by Canadian Health Policy Institute (CHPI) found that from 2004 to 2012, 412 new drugs were approved for sale by Health Canada, of which on average only 23.1% were fully or partially insured by public drug plans as of December 1, 2013. Of the new drugs that were eventually covered, it took on average 733 days for public drug plans to list a new drug on their formularies.

Furthermore, of the 39 new drugs approved by Health Canada in 2012, 36 (92%) were covered by at least one private drug plan compared to only 11 (28%) that were covered by at least one public plan – as of December 1st, 2013. It is estimated that in 2012, 11.3 million Canadians were eligible for coverage under public drug plans. By rationing access to new medicines, governments are limiting treatment options for millions of patients.

Seniors eligible for these plans need to pay for these drugs out of their own pockets if they do not have additional private coverage. Now paying $206.34 every three months for uloric would not really be that big a deal for us  in the grand scheme of things. But  biologic and other specialty drugs used to treat a wide range of diseases and conditions, including cancers and rheumatoid arthritis can cost thousands of dollars per year if they are not administered in hospital.

No one can predict what medications they will need in future or how much these life-saving medications may cost. But it is important to realize that provincial medicare and drug plans will not cover all your retiree health expenses. You may choose to purchase supplementary health coverage to bridge the gap for paramedical services, drugs and other expenses. but you will quickly learn that depending on your health status, this coverage can be expensive and much more limited than the group benefits you were used to when you were working.

In order to make sure you have the money you need to pay for retiree health expenses when the time comes you need to add a line item to your retirement planning. Allocating funds to purchase additional private coverage may be  part of the answer. While there is no specific tax-assisted way to save for retirement health care costs  in Canada, by maximizing your registered and unregistered savings you can also build in a cushion you need to help you pay for the health care services you need in your golden years.


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