Author
Canadian Health Policy Institute (CHPI)
Introduction
The cost of patented drugs is often cited to justify the regulation of pharmaceutical markets and to restrict public and private insurance coverage of new medicines.
Objective
The objective of this annual CHPI study is to establish the facts about the specific impact of patented drugs on the cost of health care in Canada.
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
Total direct spending on patented drugs accounted for $12.8 billion or only 6.2% of the $205.9 billion spent in total on all health care in 2012. Total direct spending on patented drugs grew by only 4.1% from 2007 to 2012, while total spending on all other health care (excluding patented drugs) grew by 30.5%. Per capita total spending on patented drugs actually declined -1.8% from 2007 to 2012, while per capita total spending on all other health care grew by 23.2%. Per capita spending on patented drugs was $366.97 in 2012 accounting for less than 1 percent (0.70%) of per capita GDP ($52,248.98). Per capita spending on patented drugs has steadily declined as a percentage of per capita GDP for the last 8 years, falling from 0.85% in 2004 to 0.70% in 2012. Per capita spending on patented drugs was roughly the same percentage of per capita GDP in 2012 (0.70%) as it was in 2001 (0.69%). Total provincial/territorial (P/T) direct government spending on patented prescribed drugs (excluding hospitals) was estimated at $4.7 billion or only 3.5% of the $134.7 billion total spent by P/T governments for health care in 2012. Total P/T direct government spending on patented drugs declined -2.8% from 2007 to 2012, while total P/T government spending on all other health care increased by 31.7%. Per capita P/T direct government spending on patented prescribed drugs declined -8.2% from 2007 to 2012, while per capita P/T government spending on all other health care increased by 24.3%.
Conclusions
(1) the small impact of patented drugs on total health costs means even the most extreme rationing of new medicines will not return significant overall savings for the health system, (2) the economics and evidence on patented drug prices do not suggest significant savings can be gained by further regulation or by leveraging the monopoly buying power of governments, (3) cost containment efforts that reduce access to new medicines are socially and economically counter-productive.
