Growth in drug spending continues to slow: Report

Total drug expenditure reached $947 per person in 2012
||Last Updated: 04/15/2013

Spending on drugs continues to rise but at a much slower annual growth rate — 3.3 per cent, the lowest in 16 years — according to a report by the Canadian Institute for Health Information (CIHI).

Total drug expenditure is estimated to have reached $33 billion, or $947 per person, in 2012.

Drugs continued to account for the second-highest share (15.9 per cent) of health spending, behind hospitals and ahead of physicians, according to Drug Expenditure in Canada, 1985 to 2012. However, drug spending has grown more slowly than those two categories over the past decade.

The slowed growth in prescribed drug spending is due to patent expirations of several blockbuster pharmaceuticals and generic pricing policies.

In the past few years, many public drug programs have reduced the amount that they are willing to pay for generic drugs, with prices now regulated to be, at most, 25 per cent to 40 per cent of the price of brand name products.

Spending on prescribed drugs is forecast to have reached almost $27 billion in 2011 and $28 billion in 2012, representing annual growth rates of 3.8 per cent and 3.2 per cent, respectively, found the report.

Prescribed drugs are expected to make up 84 per cent of total drug spending in 2012.

The growth rate of prescribed drug spending has slowed in both the public and private sectors. In 2012, the expected growth rate in the public sector (1.9 per cent) was the lowest since 1996, while the expected rate in the private sector (4.1 per cent) was the lowest since 199, found the report.

The private sector — which includes private insurers as well as households and individuals — is expected to have spent $15.4 billion on prescription drugs in 2012, while the public sector is expected to have spent $12.3 billion


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