The Alward government has unveiled a major new social program, a prescription drug coverage plan, which it calls the most important piece of health legislation since the introduction of medicare.

The plan is designed to cover drugs for people who don’t have insurance through their employers. After the first year of the program, it will also force employers to raise their coverage standards to match the government’s plan.

Phase 1 of the plan — a transition period from April 1 2014 to March 31 2015 — is expected to cost the province $27 million. It’s not clear what the annual cost will be after that.

The plan will cover any prescription drugs that are on the provincial formulary, a list of covered drugs. That list includes some so-called catastrophic drugs like Remicade, but does not include others.

Health Minister Ted Flemming says despite the expense, the program is the right thing to do, and will also save money in the health care system.

“When people have access to the prescription drugs they need to manage disease or prevent or treat illness, they're healthier,” Flemming said.

“They take less time off work. They visit emergency rooms less. They're less likely to be hospitalized. We need to make sure a patient is in a financial position to follow his doctor's orders.”

The province estimates 70,000 families have no drug coverage and are not eligible for existing provincial coverage for people on social assistance.

Hailed as 'groundbreaking'

NDP Leader Dominic Cardy is applauding the plan as "groundbreaking."

“This is a shining example of government doing what it should be doing for the people — focusing on core services like health, transportation and education," he said in a statement.

Cardy is calling for the plan to be launched sooner than scheduled, however. "We have people who need this assistance right now," he said.

The New Brunswick Medical Society, which has had its share of differences with Flemming over doctor billings and medicare cuts, also supports the new plan.

"It's a very positive development," said president Dr. Lynn Hansen. "It's a good day for the province of New Brunswick."

The CEO of the Canadian Cancer Society in New Brunswick agrees.

"It will address both the financial barriers for people accessing drugs, whether it's cancer or a mixture of chronic diseases, for both people of low income and for people facing catastrophic costs. It seems to address both." said Anne McTiernan,

The New Brunswick Diabetes Association also spoke in favour of the plan.

Premiums based on income

In Phase 1 of the plan, any New Brunswicker with a medicare card will be able to enroll in the new provincial insurance plan.

They’ll pay a premium based on their income, ranging from $800 to $2,000 per year, and there will be a 30 per cent co-pay for drugs at the pharmacy to a maximum of $30 per prescription.

New Brunswickers with an employer plan that doesn’t cover a specific drug they need that is on the formulary will also be allowed to join the plan during Phase 1, which lasts only one year.

In principle, the content of the plan is a good plan. - Liberal health critic Donald Arseneault

"In principle, the content of the plan is a good plan," said Liberal health critic Donald Arseneault. But he questions "how it pays for itself."

In addition, an $800 premium is "quite hefty for someone living on a low income," said Arseneault.

By the time Phase 2 begins on April 1, 2015, all private drug plans offered by employers will be required to match the coverage offered by the provincial program. Anyone with an employer plan will no longer be allowed to join the government plan.

At the same time, anyone who does not have drug coverage through an employer will be required to join the provincial plan. The volume of people signed up could push down premiums below what they’ll be in the first year, Flemming said.

Premiums will be subsidized by government based on income, with some low-income earners getting a 100 per cent-subsidy.

The provincial plan will have no deductible. Private plans will not be allowed to have annual or lifetime caps on coverage, and will have to either cap the co-pay at $30 per prescription or cap the annual total of co-pays and deductibles at $2,000.

Business group relieved

In the first year, Phase 1, the cost of the program will be $27 million from government and $23 million from plan members.

The total annual cost after Phase 2 begins is estimated at $120 to $150 million. It’s not clear how much of that will be the government’s expense because it’s not clear how many people will be on employer plans and how many will enroll in the government plan.

The original proposal in 2012 was to have employers contribute to the cost of the program, but Flemming says he has put off that move because of the province’s weak economy.

An implementation committee will look for ways for employers to help pay for coverage, Flemming says.

The Liberal health critic says it's unfortunate there won't be any decisions about getting businesses to contribute until after the provincial election in September.

But the Canadian Federation of Independent Business is relieved employers are not being forced to contribute to the cost of the program yet.

"We're very pleased that the government has listened to small business owners and they've taken the employer payroll tax off the table for the time being," said senior policy analyst Richard Dunn.

The organization was contacting small business owners earlier this year to ask them if they wanted the drug plan.

As of September, Dunn said he had received more than 200 responses, with 80 per cent of those saying they were against a mandatory drug plan.