Growth in Canadian drug spending slows to lowest rate since 1996

Although drugs remain an important cost driver in Canada’s health system, growth in spending has slowed to its lowest rate in 14 years, according to a new report released last week by the Canadian Institute for Health Information (CIHI).

Total drug expenditure is estimated to have reached C$31.1 billion ($32.77 billion) in 2010, an increase of $1.4 billion, or 4.8% since 2009. In comparison, the average annual growth rate in drug spending was nearly twice as high between 2000 and 2005, at 8.9%.

“Spending on drugs used to be the fastest growing category of health spending in Canada, but has slowed down considerably over the past five years,” says Michael Hunt, the CIHI’s director of pharmaceuticals and health workforce information services. “Consumers have been hearing lately that a number of blockbuster brand name drugs - including some used to treat high cholesterol and hypertension - have just come off patent, allowing for lower-priced, generic alternatives to enter the marketplace. The implementation of generic pricing policies by some provincial drug programs may also be contributing to the slowdown in growth,” he noted.