Author
Brett J Skinner, Ph.D.
Introduction
In Canada, the cost of patented drugs is often cited to justify government intervention in pharmaceutical markets including price regulation, monopsony drug purchasing, restricting insured access to new medicines; nationalizing drug insurance, and rejecting international trade standards for the protection of pharmaceutical related intellectual property rights.
Objective
To assess the actual economic burden of spending on patented drugs in Canada relative to population, general price inflation, GDP and other healthcare costs.
Data
The analysis uses the most recent data from the Patented Medicine Prices Review Board (PMPRB) and the Canadian Institute for Health Information (CIHI).
Results
The actual costs attributable directly to patented drugs are only a fraction of the total “drugs” related costs published by CIHI. Spending on patented drugs accounts for a small and declining percentage of total health spending and of GDP, and has been declining in real terms after adjusting for inflation. Other components of health spending are growing much faster and account for much larger shares of health spending than spending on patented drugs.
Conclusions
There is no spending crisis regarding patented drugs in Canada. Centrally planned cost containment efforts that reduce access to new medicines are not justified by the evidence, and are socially and economically counter-productive.
