If the United States imposes 25 per cent tariffs on exports from Canada, nearly all economists agree a recession is inevitable. Estimates are that between 600,000 to 2.4 million jobs are at risk.
Based on previous recessions, the unemployment rate could rise to 10 per cent and stay stuck at that level for some time.
Adding insult to injury, about 55 per cent of Canadians are covered by employer-sponsored drug plans, which means that when these workers get laid off, they also lose their health benefits, including prescription drug insurance tied to their jobs.
Affordability of prescription drugs
During the COVID-19 pandemic, according to Statistics Canada, about one-fifth of the population reported not having insurance to cover prescription medications. This coincided with a soaring unemployment rate that peaked at 13.7 per cent in May 2020. The problem of not having insurance for prescription medications was especially acute among immigrants and racialized people. These are the same groups of people that will be at the highest risk of any recession-linked job losses.
Unsurprisingly, 23 per cent of those without insurance spent more than $500 out-of-pocket in 2022 on prescription drugs compared to 10 per cent for those with insurance. Canadians in the lowest income quintile spent more money on prescription drugs in absolute terms than those in the highest income quintile ($296 versus $268) in 2009, and it’s unlikely this disparity has significantly changed.
Already there are estimates that the lack of access to prescription drugs leads to 370 to 640 premature deaths due to ischemic heart disease, 550 to 670 premature deaths from all causes among people 55-64 years of age and avoidable deterioration in health status in 70,000 people age 55 and over.
When Canadians must choose between buying prescription drugs and paying for food and rent, it’s often no contest; patients skip their medications and suffer the consequences. The result is additional physician visits, more visits to already overcrowded emergency departments and more admissions to hospitals.
Tariffs and drug prices
Added to the threat of losing prescription drug coverage with job loss is the very real possibility that drug prices will increase. Thirty-two per cent of the active pharmaceutical ingredients that go into the medicines that North Americans take originate in China. U.S President Donald Trump has now threatened to slap U.S. tariffs on Chinese drugs and drug ingredients that were previously exempt.
Canada already imports $8.76 billion annually in prescription drugs from the U.S. To the extent that tariffed drugs go from China to the U.S. to Canada, the cost of both publicly and privately funded drug plans will increase.
(AP Photo/Ng Han Guan)
Those people at the bottom of the income scale who pay out-of-pocket — and can least afford to pay more — will be saddled with those higher prices. If Canada follows the U.S. in imposing tariffs on drugs made in China, as we have done with electric vehicles, then the price of generic drugs made in Canada from Chinese ingredients will also rise.
We can hope that any tariffs — on Canada or China — will be only temporary and we can avoid the ongoing effects on both access to prescription drugs and their price. But given Trump’s volatility and unpredictability, we can’t rely on that outcome.
With the passage in October 2024 of Canada’s new Pharmacare Act, the government of Canada committed to “making sure that you can get the medications you need, no matter where you live or your ability to pay.” We need to expand Canada’s federal pharmacare plan to cover all Canadians for all medically necessary drugs. Indeed, the need has never been as acute.
So far, only three provinces (British Columbia, Manitoba and Price Edward Island) and one territory (Yukon) have signed agreements with the federal government to cover contraceptives and diabetes drugs and devices — the only products currently covered under Bill C-64. The remaining provinces and territories urgently need to sign on. Prime Minister Mark Carney and the Liberals must decisively commit to expanding the range of drugs that is covered by pharmacare.
All the provincial, territorial and federal leaders have pledged to protect Canadians from U.S. tariffs. Expanding pharmacare is part of that protection.
