Opening Statement to the Standing Committee on Public Accounts

Management of Federal Drug Benefit Programs
(Chapter 4 - November 2004 Report of the Auditor General of Canada)

2 February, 2005

Sheila Fraser, FCA
Auditor General of Canada

Mr. Chairman, thank you for this opportunity to discuss Chapter 4 of my November 2004 Report—Management of Federal Drug Benefit Programs. I am accompanied by Ronnie Campbell, Assistant Auditor General and Frank Barrett, Director, both of whom were responsible for this audit.

The use of pharmaceutical drugs is a fact of life for many Canadians and has fundamentally changed the face of health care. Federal drug programs spent $438 million in 2002–03, funding drug benefits for about one million Canadians. The cost of these programs has risen 25 percent over the past two years.

Six federal organizations manage drug benefit programs: Health Canada for First Nations and Inuit, Veterans Affairs Canada for veterans, National Defence and the RCMP for their members, Citizenship and Immigration Canada for certain designated classes of migrants, and Correctional Service Canada for inmates of federal penitentiaries and some former inmates on parole.

Health Canada, Veterans Affairs Canada, the RCMP, and National Defence all share responsibility for improving or maintaining the health of their respective clientele. They also have claims processing databases, which capture detailed information on some 13 million individual transactions of their clients each year. Nevertheless, we found that most of these programs fail to provide pertinent information about prescription drug use to health care professionals—information that could benefit clients.

For example, we found that the number of Health Canada clients that received more than 50 prescriptions in a three-month period had almost tripled since our Report in 2000, even after correcting for growth in the number of clients in the program. As well, in 2002–03, Health Canada had hundreds of clients obtaining multiple narcotics from more than seven doctors and more than seven pharmacies. The same is true with the tranquilizer benzodiazepine. Unlike that of Veterans Affairs Canada, Health Canada’s system was not programmed to send alerts to pharmacists for these situations when these events occurred.

In our 2000 follow-up of a 1997 audit of Heath Canada’s program on First Nation’s health, we found that Health Canada had been making satisfactory progress in its drug use analysis and had shown a decline in the number of cases involving access to large amounts of central nervous system drugs. This intervention was stopped in 1999, however, pending resolution of the Department obtaining consent from their clients. Our audit found that no analysis had been conducted between 1999 and 2004. This is the third time we have raised this issue with Health Canada. We are disappointed that it has not been resolved.

We also found that the government is paying tens of millions of dollars more than necessary each year because it does not take advantage of some well-known cost-saving measures.

While we had many concerns, we also found some good practices in each of the organizations we examined. For example, Health Canada uses comprehensive risk-profiling techniques to identify pharmacies for audit. If these and other good practices were used by all the programs, we believe there would be significant benefits for the programs, without negatively affecting health outcomes or compromising operational activities.

We made several recommendations, including that the federal government establish an arrangement to develop a core formulary, pursue cost-saving opportunities, and establish a single-fee schedule for dispensing fees. This recommendation also entailed that the federal government develop a common auditing process of the 7,400 pharmacies in Canada. We believe that prompt action to these recommendations is in the interest of people who depend on these programs. It is also in the best interest of taxpayers.

In their overall response, the federal organizations agreed with all of our recommendations and committed to providing our Office with specifics and timing of actions to be taken within a few months. I understand that the Federal Healthcare Partnership plans to table a joint action plan, representing commitments from all six organizations, by the end of this month. We suggest that the Committee ask that it also be provided with this action plan and regular updates, and conduct appropriate follow up sometime in the future.

Mr. Chairman, this concludes my opening statement. We would be pleased to answer any questions from the Committee.