Brett J Skinner, PhD | Founder and CEO, CHPI; Editor-in-Chief, CHPJ |
ABSTRACT – Few new medicines are covered on federal and provincial formularies within a reasonable timeframe. Research suggests that expediting insurance coverage for new drugs is likely to reduce costs more effectively than rationing – after accounting for patient health outcomes, overall healthcare costs, and economic productivity. A multi-variable linear regression was used to test the correlations between overall public healthcare spending and a set of explanatory variables comprised of sub-components of healthcare spending including patented medicines expenditures (PMEX). Changes in annual spending on patent medicines were negatively correlated with overall public healthcare expenditure, such that over the period 1990 to 2024, every $1 million increase in spending on patent medicines was offset by a $3.4 million decrease in overall spending on public healthcare. The relationship holds after controlling for variation in spending on hospitals and physicians, changes in the economy and population, and the advancement of time. The analysis supports the value proposition in favour of early adoption of pharmaceutical innovation. The cumulative incremental annual changes in the level of national direct spending on patent medicines were $20.4 billion, but were very likely offset by $69.3 billion in overall public healthcare cost savings accumulated over the same timeframe, as a result of the increased spending on innovative pharmaceuticals. The findings are consistent with the conclusion that there was a virtuous technological substitution of innovative medicines for other component uses of healthcare resources.
CITATION – Skinner, Brett J. (2026). The impact of innovative medicines on healthcare costs in Canada 1990 to 2024: $20 billion cumulative annual variation in spending on patent drugs saved $70 billion in overall public healthcare expenditure. Canadian Health Policy, MAY 2026. canadianhealthpolicy.com