47.2% of the estimated $16.0 billion spent on prescribed drugs in Canada was financed by the public sector in 2003

Jun 24 2004

A new report released today by the Canadian Institute for Health Information (CIHI) shows that 47.2% of the estimated $16.0 billion spent on prescribed drugs in Canada was financed by the public sector in 2003. Five years ago, in 1998, the public sector share of prescribed drugs was 42.5%.

CIHI’s fourth annual report of this kind, Drug Expenditure in Canada, 1985–2003, shows total spending on drugs is expected to have reached $19.6 billion in 2003, an increase of 8.1% over the previous year. In 2001, drug spending reached $16.7 billion, and increased to reach an expected $18.1 billion in 2002, an increase of 8.8%. It was forecast that in 2003 prescribed drugs would represent 81.6% of all drug spending in Canada.

“The increase in drug spending is occurring despite relatively stable drug prices in Canada,” says Dr. Paul Grootendorst, University of Toronto professor and advisor to CIHI. “This points to a higher volume of drug use and the entry of new drugs, which are generally introduced to the market at higher prices.”

Public Sector Spending on Drugs
In 2001, 46.3% of prescribed drugs were paid for by the public sector, rising to an expected 47.2% in 2003. Provincially, in 2003, the share varied from a low of 29.8% in Prince Edward Island to a high of 53.0% in Manitoba. Despite the differences, each province and territory increased its share of public funding between 1985 and 2001, with the exception of Nova Scotia, New Brunswick and Saskatchewan.

Drug Expenditure per Capita
Total drug expenditure per person in Canada was an estimated $537 in 2001; it is expected to have reached $578 in 2002 and $620 in 2003. Overall, per capita drug expenditure trends are similar to those of total drug spending. In 2001, per capita spending on drugs in the provinces and territories ranged from $194 in Nunavut to $584 in Prince Edward Island, and to an expected low of $192 per capita in Nunavut to a high of $688 in Prince Edward Island in 2003.

Drugs as a Share of Total Health Spending
Drugs have been one of the fastest-growing components of total health spending in Canada. In 2003, drug spending is expected to represent 16.2% of the estimated $121.4 billion total health expenditures in the country. Hospital spending remains the largest category of spending, with 30.0% of the total in 2003, while physician services follow in third at 12.9%.

International Comparisons
Internationally, among 11 industrialized countries ranked by the OECD (Organisation for Economic Co-operation and Development), Canada falls behind only Japan, France and Hungary in drug spending as a percentage of total health spending. The United States was ranked eighth, with drug expenditures accounting for 12.4% of its total health care expenditures. There are some significant variations in drug spending across Canada. In 2001, the share of total health expenditures spent on drugs ranged from 3.1% in Nunavut to 17.9% in Quebec. “These variations are influenced by several factors,” says Dr. Grootendorst. “Drug subsidy programs, age and sex distribution, delivery of care and the health needs of populations differ across every province and territory.”

Drug Expenditure in Canada, 1985-2003
Drug Expenditure in Canada, 1985–2003 provides a descriptive overview of Canadian drug expenditure trends from 1985 to 2001 and includes forecasts for 2002 and 2003. The report draws upon data compiled from CIHI’s National Health Expenditure Database, Canada’s most comprehensive source of information on health care financing and spending.