Prescription drug spending reaches $29.4B in Canada

The growth in health spending in Canada is slow overall, but public-sector spending on prescription drugs has increased, according to two new reports.

The Canadian Institute for Health Information's (CIHI) overview of health expenditures from 1975 to 2016 showed the rate of growth of total health expenditure this year is expected to be 2.7 per cent.

In comparison, public drug program spending increased 9.2 per cent from 2014 to 2015.

Spending on prescribed drugs reached $29.4 billion in 2014, up 2.8 per cent from the year before.

In 2014, about 43 per cent of prescribed drug spending, or $12.5 billion, was paid for by the public purse to fund drug subsidy programs and social security plans such as workerscompensation boards.

Private insurers, such as employee supplementary health benefits, and individuals paying out of pocket picked up the rest of the tab of spending on prescribed medicines.

The report covered public-sector spending by the federal First Nations and Inuit Health Branch and by all provinces except Quebec.

Seniors account for a high proportion of public drug program spending.

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Growth in drug spending has slowed as patents have expired on blockbuster medications such as cholesterol-lowering statins.Public drug programs have also worked to limit prices for generic drugs.

"Although these changes have led to significant savings for public drug programs, the savings were offset by increased spending on specialized medications, such as biologics and antivirals (e.g., those used to treat hepatitis C); this is putting significant pressure on both public and private drug programs," the authors of the health expenditure trends report wrote.

Almost two-thirds of the growth in 2015 was attributed to the introduction of new drugs used to treat hepatitis C.

A biologic drug class used to treat conditions such as rheumatoid arthritis and Crohn's disease accounted for the highest proportion (8.2 per cent) of public drug program spending.

Pressures of high-cost medicines

The pharmaceutical report offers a partial snapshot of drug expenditures since it focuses on the minority of pharmaceutical costs that are financed by governments in Canada, said Steve Morgan. He teaches health policy at the University of British Columbia and has written widely on pharmaceutical coverage.

Combined with data on overall drug spending, the report "adds evidence to suggest Canada's reprieve from pharmaceutical budget pressures is over," Morgan said, referring to the slowing in spending that occurred around 2010 when patents on many top-selling generic drugs expired.

"High-cost medicines now coming to market are placing much bigger pressures on governments and, to be clear, on patients, businesses, and unions who finance non-government spending in this sector," Morgan said.

"The pressures on the private system not depicted in this report are critical for businesses who face an increasingly heavy burden of high drug costs without having the tools necessary to appropriately manage and equitably finance those costs. In Canada's otherwise universal, public health-care system, only government has that capacity. That question is, will government step up to the challenge?"

The reports come as federal, provincial and territorial finance and health ministers prepare to meet Monday to discuss a potential new health accord.

More broadly, hospitals, (29.5 per cent), drugs (16.0 per cent) and physician services (15.3 per cent) accounted for more than 60 per cent of total health spending in 2014, the latest available data.