Author(s)
Canadian Health Policy Institute (CHPI).
Introduction
The Canadian Institute for Health Information (CIHI) annually publishes an estimate of “drugs” spending that is commonly misunderstood to be largely accounted for by patented prescribed drugs (i.e. new medicines). But, the data reported by CIHI include the cost of patented and non-patented drugs, prescribed and non-prescribed drugs, wholesale and retail price mark-ups, pharmacy dispensing fees, sales taxes and the administrative costs of public drug plans. The way that CIHI reports drugs spending unintentionally confuses the public discussion about healthcare sustainability, and exaggerates the necessity to regulate patented drug costs and restrict access to new innovative medicines – decisions that limit health options for millions of Canadians.
Objective
To assess the 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
According to data from PMPRB, all spending on patented drugs in Canada totalled $13.6 billion in 2013. Patented drugs therefore accounted for (at most) only about 40% of the $33.7 billion in total (public & private) spending reported by CIHI for “drugs” in 2013. At $13.6 billion, patented drugs accounted for only 6.5% of the $210.4 billion reported by CIHI for total (public & private) health spending in Canada in 2013. Adjusting for population, per capita spending on patented drugs was $386.82 in 2013. Per capita spending on patented drugs accounted for less than 1 percent (0.72%) of per capita GDP ($53,506.50) in 2013. Per capita spending on patented drugs has declined relative to GDP since 2004 when it was 0.83% of per capita GDP. Spending on patented drugs has grown much slower than spending on the rest of healthcare. Over the most recent five years from 2008 to 2013, per capita spending on patented drugs grew by only 2.1% in total over the entire period. By comparison, per capita spending on all other health care (excluding patented drugs) grew by 16.7% from 2008 to 2013. Adjusting for general price inflation over time, per capita spending on patented drugs in 2013 was equal to $246.96 in constant 1990 $, declining -5.2% from $260.41 (in constant 1990 $) in 2008.
Conclusions
The costs attributable directly to patented drugs are only a fraction of the “drugs” related spending published by CIHI. Patented drugs impose a relatively small burden on overall healthcare costs. There is no spending crisis regarding patented drugs in Canada.
