No patented-drug spending crisis in Canada, concludes CHPI

by Leo Almazora13 Dec 2017
The Canadian Health Policy Institute (CHPI) has released a study stating there is no spending crisis on patented drugs in Canada.

According to the study — which looked at data from the Patented Medicine Prices Review Board (PMPRB), the Canadian Institute for Health Information (CIHI), and Statistics Canada — total direct cost from patented drug sales accounted for less than 41% of all drug-related expenditures reported by CIHI in 2016.

Adjusting for national population growth and general price inflation over time based on CPI (consumer price index), the study also found near-zero growth in the real costs of patented drugs over the last decade. Patented-drug prices were found to have grown slower than the rate of general inflation in 27 years out of 29 years from 1988 to 2016.

Patented drug spending was also found to account for only 6.7% of total 2016 public and private health spending in Canada. Considering only public drug-plan spending at federal, provincial, and territorial levels, direct costs of patented drugs were said to make up only 3.7% of total government health spending in the same year.

The study also looked at how Canadian patented-drug prices compared with those from international peers. Adjusting for the market exchange rates of currencies, the institute found median international prices have been higher than Canadian prices for the last 10 years, with the gap in 2016 reaching 25%. Looking at average prices and adjusting currencies at purchasing-power parities, international prices were 51% higher in 2016; they were only 4% higher than Canadian prices in 2007.

The study’s findings fly in the face of those by Health Canada. In early December, the department released Canada Gazette Part 1, which said that substantial price increases over the past two decades have put the country among the most expensive in the word for patented medicine. Recognizing the difficulty such costs present for governments, employers, and individuals, Health Canada made several proposals that seek to overhaul the way prices of patented drugs are regulated.

The trade group for life and health insurers also responded positively to Health Canada’s announcement. “The industry will support the government as it works toward reducing drug costs in Canada and we will be active participants in these important consultations,” said CLHIA President and CEO Stephen Frank.


Related stories:
Insurers align with government on proposed drug price reform
Pharma industry group urges caution on drug-price cuts
 

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