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Spending on drugs slowing down in Canada Add to ...

There is a glimmer of good news for those fearing runaway health costs: New spending on drugs has dropped to the lowest level since 1996.

The marked slowdown – drug spending was up 3.3 per cent in 2012, a long way from the double-digit increases that were the norm in the 1990s and early 2000s – is due to a slew of expiring patents on brand-name drugs and governments imposing significant price reductions on generic drugs.

But experts are warning that the savings probably will not last.

“We’re getting some temporary relief, but, without some structural change in the way we fund drugs, we will return to an era of high growth pretty soon,” Steve Morgan, associate director of the Centre for Health Services and Policy Research at the University of British Columbia, said in an interview.

The reality is that Canada has nothing to brag about, he said. It still has the second-highest drug costs in the world, surpassed only by the United States. And, in the decade from 2000 to 2010, Canadian drug spending grew more than every other developed country but Japan.

The new data, published on Thursday by the Canadian Institute for Health Information, show total drug spending reached $33-billion in 2012.

That figure includes $27.7-billion for prescription drugs and $5.3-billion for non-prescription drugs.

Per capita drug spending was $947, but that varied widely across the country, from a low of $736 in British Columbia to a high of $1,160 in Nova Scotia.

About 45 per cent of prescription-drug costs, $12.3-billion, are paid from the public purse, while the other 55 per cent, $15.4-billion, are paid privately.

Again, there are significant regional variations. New Brunswick, for example, covers 32.5 per cent of prescription-drug costs with public insurance, while Alberta and Saskatchewan pay 49.3 per cent of drug costs with public funds.

The slowdown in drug spending is attributable largely to blockbuster drugs like Lipitor coming off patent and being made available in generic form. Provinces regulate generic pricing, setting the cost as a percentage of the comparable brand-name drug. Over the past couple of years, that percentage has plummeted to as low as 18 per cent, from 50 per cent or more previously.

Canada, unlike most developed countries, does not have a national pharmacare program. Rather, it has a mishmash of public insurance plans (for seniors, people with disabilities, those on social assistance, etc.) and private plans covered by employers or paid out-of-pocket.

“Canada is the only country in the world that offers universal health insurance for medical and hospital care but not for prescription drugs,” Mr. Morgan said.

He called that situation “perverse” and said it is to blame for a lot of health-policy problems, from high drug costs to growing disparities in access.

Mr. Morgan said that contrary to fears that pharmacare is too costly to pursue, having a health system where funding for hospitals, physicians and prescription drugs is all in the same envelope would be more coherent and actually result in billions of dollars in savings.

In Canada, only 38 per cent of total drug costs are paid from the public purse; that is in stark contrast to Germany, which funds 77 per cent of drug costs. (This not to suggest that there is a single, government plan; in most European countries, including Germany, patients depend primarily on private insurance, but the plans are highly regulated.)

Twenty years ago, in 1992, total drug spending was $8.5-billion, including $6.1-billion for prescription drugs and $2.4-billion for non-prescription drugs.

At the time, drugs accounted for 12.2 per cent of all health spending; they now account for 15.9 per cent of the total.

In 1992, total health spending was $70-billion. Last year, it was $207-billion.

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