Prescription drug spending growing faster than for hospitals, doctors

New CIHI figures reveal the strongest drivers of public spending and the impact of high-cost pharmaceuticals

Prescription drug spending growing faster than for hospitals, doctors

New figures from the Canadian Institute for Health Information (CIHI) add to a growing picture of Canadians being burdened by health costs, particularly from prescription drugs.

The CIHI forecasts that the country will spend $39.8 billion on drugs this year. $33.7 billion of that is expected to be spent on prescribed drugs — $6,839 per person — representing an annual increase of 4.2%. In contrast, year-on-year growth of costs spent on hospitals and doctors are forecast at 4% and 3.1%, respectively.

“Drug spending is increasing more than the other major areas of health spending — with a large proportion of drug spending going toward high-cost drugs for a small number of individuals,” said Brent Diverty, vice president of Programs, Canadian Institute for Health Information.

Estimates of total health expenditures in Canada are pegged at $253.5 billion this year. CIHI anticipates that the largest shares of health dollars will be spent on hospitals (28.3%), drugs (15.7%), and physician services (15.1%); the remaining 41% will go to other healthcare goods and services such as long-term care facilities and allied health professionals.

The institute expects that around $14.4 billion (42.7%) of prescribed drug spending will be financed with public funds, while the remainder will be covered by private insurers and individuals paying out of pocket.

In the public sector, provincial and territorial programs are expected to pay $12.2 billion for drugs this year; $830 million is expected to come from federal direct drug subsidy programs, and $1.3 billion from social security funds. Forecasts on the private side include $12.3 billion from private health insurers and $13.1 billion from individuals.

The institute also looked at the share of public drug spending that went to different drug categories in 2017. For the sixth straight year, anti-TNF drugs, biologics to treat conditions such as rheumatoid arthritis and Crohn’s disease, were estimated to capture the highest share of public spending (8.2%): $1.1 billion, which broke down to $19,341 per paid beneficiary.

Antiviral drugs against hepatitis C accounted for the second-highest proportion (5%), taking $673.7 million and amounting to a per-beneficiary cost of $56,069. The top 10 drug classes by public drug program spending also included antineovascularization agents (4.6%, $9,225 per beneficiary), oral protein kinase inhibitors (2.3%, $30,506 per beneficiary), and selective immunosuppressants (2.2%, $7,007 per beneficiary).

“Opportunities to benefit from life-changing drugs have never been greater,” Diverty said. “But at the same time, spending on drugs through public drug programs has never been higher.”


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