Gerry Jeffcott | 3Sixty Public Affairs |
ABSTRACT –
Background: Public discourse often frames innovative medicines as unsustainably costly. However, the latest National Health Expenditure Trends (NHEX) data from the Canadian Institute for Health Information (CIHI) show a decades-long decline in medication’s share of total health care spending and consistently moderate growth rates in both government programs and total (public and private) spending, even as hundreds of innovative medicines have been developed and commercialized during the past decade.
Objective: To use CIHI’s 2025 NHEX estimates to demonstrate that (1) there is capacity within Canada’s health system for higher medication spending and (2) despite the emergence of many more specialized and higher-cost therapies, public spending on medications has been growing moderately. We interpret these findings in light of the United States’ proposed most favored nation (MFN) pharmaceutical pricing policy, which increases pressure on Canada’s pricing and access environment.
Findings: Medicines are projected to account for 13.3% of total health care spending – now the fourth-largest category – down from a peak 16.8% share in 2010–11. Growth in total medicines spending (3.3% in 2025–26) is expected to trail overall health care spending growth (4.4%). Public medication spending is anticipated to represent only 6.6% of public health expenditure in 2025–26 – its lowest share since 1997–98 – and is expected to grow just 1.4% year-over-year. Provincial/territorial (PT) prescription medicine spending growth averaged 3.3% annually during the past decade and it is estimated that will rank no higher than fourth among PT health categories in 2025–26, with several provinces allocating <5% of their health care budgets to medications. Per-capita trends are similarly moderate.
Conclusions: Canada’s medication spending is proportionately smaller and growing more slowly than most other health care sectors, indicating capacity to invest in medicines that improve outcomes and efficiency. Given the US government’s MFN policy – which proposes to benchmark US medication prices against lower-priced countries including Canada – Canada should consider investing more to deliver more timely and optimal access for patients. This would be an important shift from the past twenty years, which has seen payers focused largely on cost containment and aggressive price negotiations.
CITATION
Jeffcott, Gerry (2026). Canada’s medication spending has been relatively low; may need to be reconsidered because of US “most-favored nation” pharma pricing policy. Canadian Health Policy, March 2026. canadianhealthpolicy.com.