Spending on drugs expected to outpace spending on hospitals and doctors
November 7, 2017 — New figures released by the Canadian Institute for Health Information (CIHI) show that the country’s health spending is forecast to grow by almost 4% in 2017, to $242 billion. This is a slight increase in the rate of health spending growth — since 2010, the average annual increase has been 3.2%.
National Health Expenditure Trends, 1975 to 2017 finds that health costs are expected to represent 11.5% of Canada’s gross domestic product (GDP) in 2017, similar to last year. Other key findings from the report include the following:
- Total health spending is forecast to reach $6,604 per Canadian in 2017, almost $200 more per person than in 2016 ($6,419).
- Total health expenditure per person is expected to vary across the country from $7,378 in Newfoundland and Labrador and $7,329 in Alberta to $6,367 in Ontario and $6,321 in British Columbia.
- Internationally, Canada’s health spending per person in 2015 (CA$5,782) was similar to spending in France (CA$5,677), Australia (CA$5,631) and the United Kingdom (CA$5,170).
- Per capita spending remained highest in the United States (CA$11,916).
- Hospitals (28.3%), drugs (16.4%) and physician services (15.4%) are expected to continue to use the largest share of health dollars in 2017. Since 1997, hospitals have accounted for the most significant share of health spending, followed by drugs and physician services.
- Drug spending is expected to grow the fastest, reaching an estimated 5.2% in 2017.
- Physician spending growth is forecast at 4.4%.
- Spending on hospitals is estimated to grow by 2.9%.
Prescribed drug spending
Prescribed Drug Spending in Canada, 2017: A Focus on Public Drug Programs finds that public drug spending increased by 4.5% in 2016. This is about half of the 9.3% increase in spending that occurred in 2015, which was driven largely by the uptake of new and expensive hepatitis C drugs. Excluding the hepatitis C drugs, there has been steady growth in spending since 2013.
In 2017, $14.5 billion (42.7%) of prescribed drug spending will be financed by the public sector.
- Tumour necrosis factor alpha inhibitors (anti-TNF drugs), used to treat conditions such as rheumatoid arthritis and Crohn’s disease, continue to account for the highest proportion of public drug spending.
- Anti-TNF drugs and the new hepatitis C drugs were the top 2 contributors to growth in 2016, accounting for 20.8% and 12.6% of growth in public spending, respectively.
- Canadians with drug costs of $10,000 or more represented 2% of beneficiaries but accounted for one-third of public drug spending in 2016.
Public drug spending was examined using data from 11 jurisdictions across Canada: 9 provinces, 1 territory and 1 federal program administered by the First Nations and Inuit Health Branch (FNIHB).
Spending on drugs dispensed in hospitals or funded through cancer agencies and other special programs is not included in public drug spending. Spending on drugs dispensed in hospitals was $2.1 billion in 2015, excluding Quebec.
Canada’s economy is improving and, as we have seen in the past, when there is more economic growth, more money is spent on health care. Drugs, hospitals and physicians continue to be the 3 biggest categories of overall health spending, but we’ve seen the pace of drug spending increase over the last couple of years. The growth rate for 2017 demonstrates that spending on health is starting to increase.
— Michael Hunt, Director, Health Spending and Strategic Initiatives, Canadian Institute for Health Information
The Canadian Institute for Health Information (CIHI) is an independent, not-for-profit organization that provides essential information on Canada’s health systems and the health of Canadians.
We provide comparable and actionable data and information that are used to accelerate improvements in health care, health system performance and population health across Canada. Our stakeholders use our broad range of health system databases, measurements and standards, together with our evidence-based reports and analyses, in their decision-making processes. We protect the privacy of Canadians by ensuring the confidentiality and integrity of the health care information we provide.