Drug spending continues to slow

Growth in drug spending lowest in 15 years

OTTAWA, May 3, 2012 /CNW/ - While drug spending continues to increase in Canada, overall annual growth has slowed to its lowest rate in 15 years, according to a new report released today by the Canadian Institute for Health Information (CIHI). Total drug expenditure is estimated to have reached $32.0 billion in 2011, an increase of 4.0% over 2010; this was equal to $929 per Canadian in 2011. The share of total health dollars spent on drugs is forecast to have been 16% in 2011—the same percentage that was spent on drugs 10 years ago.

"In the late 1990s and early 2000s, we saw double-digit increases in prescribed drug spending," says Michael Hunt, CIHI's Director of Pharmaceuticals and Health Workforce Information Services. "Spending is slowing down, which may reflect recent patent expirations of blockbuster brand name drugs used to treat common ailments like high cholesterol and hypertension. We've also seen the implementation of generic pricing policies by provincial drug programs." The latter half of the past decade also saw slowed growth in the use of cholesterol-lowering and antihypertensive drugs.

Drugs account for the second-largest share of total health spending, after hospital expenditures. Drug Expenditure in Canada, 1985 to 2011 is the country's most comprehensive report on spending trends in prescribed and non-prescribed drugs. It includes breakdowns by province/territory and source of funds (public versus private), as well as international comparisons.

Public/private split for prescribed drug spending remained stable

CIHI's report shows that prescribed drugs accounted for almost 85% of total drug spending in Canada, at an estimated $27.2 billion in 2011. Spending on prescribed drugs is forecast to have increased by 4.7% over the previous year.

Over the past 10 years, the public/private split for prescribed drug spending has remained relatively stable. An estimated 45% of prescribed drugs are financed by the public sector, with the remaining 55% financed by the private sector. In 2011, public-sector spending on prescribed drugs reached an estimated $12.1 billion, up 2.2% from 2010, while private-sector expenditure reached an estimated $15.1 billion, up 6.8% from 2010.

Growth in spending on prescribed drugs varied across provinces

CIHI data shows that there were significant variations in prescribed drug spending across the provinces in 2011. Per capita spending on prescribed drugs ranged from lows of $576 in British Columbia and $710 in Manitoba to highs of $937 in New Brunswick and $985 in Nova Scotia. The estimated annual growth in per capita spending on prescribed drugs varied from lows of 1.4% in B.C. and 2.0% in Ontario to highs of 7.4% in Saskatchewan and 9.4% in Newfoundland and Labrador.

"While prescribed drug spending is influenced by many factors, slower growth in Ontario and British Columbia suggests that their earlier implementation of generic pricing policies may be having an impact," says Michael Gaucher, Manager, Pharmaceuticals. He cautions, however, that "further research will be needed to assess the effects of generic pricing policies."

Canadian drug spending continued to be among the highest in comparator countries

Canada had the second-highest per capita drug spending among eight comparator Organisation for Economic Co-operation and Development (OECD) countries. Based on 2009 OECD data, the most recent year for which data was available, the United States had the highest per capita total drug spending at $1,145, followed by Canada at $890 and France at $767.

Out of these eight countries, Canada had the second-lowest share of total drug expenditure financed by the public sector. In 2009, the public sector funded 38.8% of total drug expenditure in Canada, compared with a high of 84.7% in the United Kingdom.

About Drug Expenditure in Canada, 1985 to 2011

Drug Expenditure in Canada, 1985 to 2011 updates trends in drug spending in Canada, primarily from retail establishments, between 1985 and 2011, in total, by public and private payers and by type of drug (prescribed and non-prescribed). Provincial and territorial comparisons are included. International trends are updated based on data from the OECD.

The report and the following figures and table are available from CIHI's website, at www.cihi.ca.

Figure 1: Annual Growth Rate for Total Drug Expenditure and Total Health Expenditure, Canada, 1985 to 2011 (Figure 2 in the report)

Figure 2: Annual Growth Rate for Prescribed Drug Expenditure, by Source of Finance, Canada, 1985 to 2011 (Figure 9 in the report)

Figure 3: Total Drug Expenditure per Capita, by Type and by Source of Finance, by Province/ Territory and Canada, 2011 (Figure 13 in the report)

Table 1: Public Expenditure on Pharmaceutical Goods per Capita and as a Percentage of Total Expenditure on Pharmaceutical Goods, Selected OECD Comparator Countries, 2009 (Table 4 in the report)

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