Drug spending reaches almost $25 billion in 2005

Significant variation in public drug spending across the provinces.

May 10, 2006-Total spending on drugs in Canada is estimated to have reached $24.8 billion in 2005, an increase of 11% over the previous year. The annual report released today by the Canadian Institute for Health Information (CIHI) looks at drug spending in Canada over the last 20 years. The estimated total drug expenditure per person in Canada for 2005 was $770, an increase of 10.2% over the previous year.

Drug Expenditure in Canada, 1985 to 2005 shows that prescribed drugs continue to account for the vast majority of drug spending in Canada. In 2005, the estimated spending on prescribed drugs was $20.6 billion, which is just over 83% of total drug spending. This represents an increase of 11.5% over the previous year. Comparatively, expenditure on non-prescribed drugs is projected to have reached $4.2 billion in 2005, representing an increase of 8.9%.

Drugs continue to be the fastest-growing category of health care spending, with drug spending estimated to have reached 17.5% of total health expenditure in 2005, almost double the 9.5% reported in 1985. Since 1997, drugs have accounted for the second-largest share after hospitals, among major categories of health spending.

Considerable variation in public/private prescribed drug spending across provinces

The share of publicly financed prescribed drug expenditure varies significantly across the provinces. Between 1985 and 2005, the public share of prescribed drug expenditure increased in all provinces and territories, with the exception of Nova Scotia, New Brunswick, Saskatchewan and British Columbia. Among the provinces, in 2005 the share of total prescribed drug expenditure funded by the public sector ranged from 32.3% in New Brunswick to 50.9% in Manitoba.

There is also considerable provincial variation in how much is spent per person on prescribed drugs by the public and private sectors. In 2005, estimated public-sector spending on prescribed drugs per capita ranged from $194 in Prince Edward Island to $341 in Quebec. The Canadian average was $295 per person.

Among the provinces, prescribed drug expenditure per capita financed by the private sector is estimated to have ranged from $280 per person in Manitoba to $475 per person in New Brunswick. As well, Ontario ($381), Nova Scotia ($386), P.E.I. ($352) and Newfoundland and Labrador ($387) are estimated to have had privately financed prescribed drug expenditure that was higher per person than the Canadian average ($346).

“Across the country, there are wide variations in drug coverage and in drug expenditure,” says Michael Hunt, Manager of Pharmaceutical Programs at CIHI. “These variations are influenced by a number of factors, including differences in provincial drug subsidy programs, variations in the age and sex distribution across the populations of provinces and territories, the health needs of targeted populations and the way health care is delivered.”

In-hospital drug spending per inpatient per day varies significantly across the provinces

In 2003, the most recent year for which data are available, drug expenditure in hospitals reached over $1.5 billion, accounting for 3.9% of total hospital expenditure. Among the provinces, drug expenditure in hospitals as a share of total health expenditure ranged from 3.2% in Newfoundland and Labrador to 4.7% in Alberta.

There is also considerable variation across the country in the amount spent on drugs per inpatient per day. The cost ranges from $45 in Nova Scotia to $76 in B.C. Among the provinces (excluding P.E.I.), average drug expenditure in hospitals per inpatient per day was $60, an increase of more than 8% over the previous year.

International comparisons show Canadian public drug spending below median

When comparing countries in the Organisation for Economic Co-operation and Development (OECD) with a similar health reporting system to Canada’s, in 2003 Korea spent the highest proportion of total health expenditure on drugs (28.8%), and Norway reported the lowest (9.4%). Canada was in the middle, at 16.9%.

When comparing the same 13 OECD countries, Canada was far below the median when it came to how much of the total drug bill was publicly financed. At 38.1%, only the United States (21.2%) and Mexico (11.3%) reported a lower public share than Canada did. Germany had the highest public drug expenditure as a percentage of total drug expenditure, at 74.8%.

Drug Expenditure In Canada, 1985 to 2005

Drug Expenditure in Canada, 1985–2005 provides a descriptive overview of Canadian drug expenditure trends from 1985 to 2003 and includes forecasts for 2004 and 2005. The report draws upon data compiled from CIHI’s National Health Expenditure Database and the Canadian MIS Database, Canada’s most comprehensive sources of information on health care financing and spending.

About CIHI

The Canadian Institute for Health Information (CIHI) is one of Canada’s premier sources of high quality, reliable and timely health information. An independent, Canadian, not-for-profit organization, CIHI is a focal point for collaboration among major health players�from provincial governments, regional health authorities and hospitals to the federal government, researchers and associations representing health care professionals. www.cihi.ca