Group: Don't blame pharma for rising Canadian health costs

Prescription drugs are not to blame for the unsustainable growth of government health spending in Canada, according to a new study released by the Fraser Institute, a public policy think-tank.

"The flawed design of government health and drug insurance programs is what's bankrupting the Canadian health care system, not the price of prescription drugs or new patented medicines," says Mark Rovere, Fraser Institute associate director of health policy research and co-author of The Misguided War Against Medicines 2010. According to the study, prescription drugs accounted for only 8.8 percent of total government health spending in 2009, down from 9.3 percent in 2006. And patented prescription drugs accounted for only 5.5 percent of total government health spending in 2009, down from 6.3 percent in 2006.

After spending on drugs is subtracted, all remaining areas of healthcare accounted for 90.8 percent to 91.2 percent of total government health spending between 2006 and 2009, the report notes.

The study also finds:

  • After adjusting for inflation, prices for patented medicines have decreased in real terms in 19 of the last 22 years and have declined in nine of those years;

  • Introductory prices for patented medicines in Canada are lower than those in many of the countries the Federal Government uses for international comparison and are "far below American prices for identical drugs;"

  • New medicines are now offering viable treatments and hope for patients for whom no viable treatment option existed in the past; and

  • Hospitalization rates between 1995 and 2007 declined as spending on drugs increased as a percentage of health budgets. This illustrates that investment in new medicines reduces costs elsewhere in the health care system.

"This study offers important information for policy makers because it shows that the value of new medicines and vaccines far outweighs their cost to the health care system." said Russell Williams, president of Canada's Research-Based Pharmaceutical Companies (Rx&D). "Rather than short term cost containment, we could be looking at ways to work together to improve patient health and well-being and ensure the sustainability of our health care system."

But, as Pharma Times notes, quoting Business Monitor International, Canada is set to remain one of the most attractive pharmaceutical markets worldwide. Among the positives: Canada's high per-capita spending on medicines, which topped US$629 in 2009 and forecasts that the market will show a compound annual growth rate averaging 4.34 percent to 2014. Although average annual growth to 2019 will slow to 3.09 percent, sales of patented medicines should later be boosted by the use of more personalized therapies and novel medicines. Furthermore, generics will post strong five- and ten-year CAGRs, rising 8.34 perent and 6.12 percent in local currency terms, says BMI.

- see the Fraser Institute release
- check out the release from Canada's Research-Based Pharmaceutical Companies
- read the study
- get more from Pharma Times