Canada Reveals Drug Plan, Estimated Annual Cost in C$1.5 Billion Range

The drug plan meets a demand by a smaller left-wing party, the New Democratic Party, in exchange for its support in the legislature to prop up the minority Liberal administration. Canada’s parliamentary budget watchdog had estimated the annual cost of a universal drug plan – which would cover a gamut of medicines – starting at about 11 billion Canadian dollars, or the equivalent of $8.1 billion.

The initial proposal, as set out in legislation introduced Thursday, intends to initially cover a number of birth-control and diabetes medications. Canada Health Minister Mark Holland told reporters an early estimate of the annual cost could be in the C$1.5 billion range, although he warned that could change. “It’s not an insignificant cost.”

He added the cost is contingent on what’s negotiated with each of the individual provinces and territories, which in Canada have jurisdiction over delivering health care to residents. Holland added he didn’t expect Finance Minister Chrystia Freeland to book a cost in the 2024-25 fiscal year for the drug plan when the annual budget plan is revealed, expected in the coming weeks.

Fiscal-policy watchers awaited the cost of the drug plan, and how it might affect the federal government’s public finances in the years ahead. Freeland has pledged to keep the budget deficit this fiscal year to C$40 billion, and lower the debt-to-gross domestic product ratio after it peaks at 42.7% in 2024-25.

In a separate announcement, Canada said it would reallocate over the next three years about C$10.5 billion of spending from nonpriority items to top priorities, among them health care.

Holland said once initial negotiations are reached with the provinces and territories, that officials would examine whether other drugs could be covered.

Write to Paul Vieira at [email protected]