Canadians spend over $21 billion on drugs

Apr 5 2005

Drugs continue to be the fastest-growing category of health care spending in Canada and a new report released by the Canadian Institute for Health Information (CIHI), the Drug Expenditure in Canada 1985-2004 report, shows that total spending on drugs is expected to have reached $21.8 billion in 2004, five times the amount spent on drugs in 1985.

Total drug expenditure per person in Canada is forecast to have reached $681 in 2004 and drugs continue to be the fastest-growing category of health care spending, the second-largest after hospitals. In-hospital drug spending adds over $1.3 billion to the drug tab.

Physician spending comes third, and is forecasted to be $16.8 billion in 2004. The report shows that prescribed drugs continue to be the main source of drug spending and that the amount spent is expected to have reached $18.0 billion in 2004 and account for 82.5% of total drug spending in Canada. Expenditure on non- prescribed drugs is forecast to have reached $3.8 billion in 2004.

Steve Morgan, assistant professor at the University of British Columbia and a CIHI advisor says that increased drug use, substitution of newer for older drugs and changes in the way health care is delivered, are all factors that influence the annual increase in the national drug bill, and it is necessary to know more about the consequences of the national investment in this form of health care delivery. There is considerable variation in drug spending per person across provinces, ranging from $732 in Ontario to $542 in British Columbia.

A number of factors influence these figures, provincial drug subsidy programs, variations in the age and sex distribution across the populations of provinces and territories, the health needs of targeted populations and the way health care is delivered and it is the same with spending on prescribed drugs. Quebec was forecasted to spend the most, with prescribed drug costs of $626 per person, and British Columbia ($421) was expected to spend the least.

Michael Hunt, Manager of Pharmaceutical Programs at CIHI says that public drug coverage for Canadians varies, and in order to understand what is driving the variation in drug expenditure, CIHI is building a system to collect prescribed drug claim information. This information will assist in understanding the factors that influence drug use and, ultimately, drug expenditure.

Provincial drug expenditure in hospitals in 2002, was over $1.3 billion, accounting for 4.1% of total hospital expenditure.

The OECD (Organization for Economic Co- operation and Development), ranked Canada fifth in 2002 in drug spending among 11 countries.

Public funding reached 37.6% of total drug expenditure. This proportion was the second lowest among OECD countries, above the United States (19.5%) and just below Korea at 49.4%. Germany had the highest share of public drug expenditure in total drug spending, at 74.8%.