April 11, 2013—Spending on drugs continues to rise but at a much slower annual growth rate—3.3%, the lowest in 16 years—reveals the Canadian Institute for Health Information (CIHI).
Total drug expenditure is estimated to have reached $33 billion, or $947 per person, in 2012.
According to Drug Expenditure in Canada, 1985 to 2012, drugs continued to account for the second-highest share (15.9%) of health spending, behind hospitals and ahead of physicians. 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% to 40% 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% and 3.2%, respectively.
- Prescribed drugs are expected to make up 84.0% 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%) was the lowest since 1996, while the expected rate in the private sector (4.1%) was the lowest since 1994.
- 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.
Prescribed Drug Expenditure per Capita, by Source of Finance, by Province/Territory and Canada, 2012