Drug spending is a HOT topic in benefits the concern is that the spending will continue to increase.  However, a recent report from the Canadian Institute for Health Information (CIHI) has revealed some unexpected results.

According to the Drug Expenditure in Canada: 1985 to 2011 report—which updates trends in drug spending in Canada, primarily from retail establishments and using a variety of metrics, such as total expenditure, expenditure by public and private payers, expenditure by type of drug and a comparison of expenditures by province and territory—Canadian drug spending continues to increase and reached $32 billion in 2011.

The overall annual growth of drug spending is at its lowest rate in 15 years, according to the report. CIHI estimates that the total share of health dollars spent on drugs in 2011 is 16%, the same percentage as was spent in 2001.

The slower pace of spending increase can be attributed to a variety of factors, including the expiry of patents for a number of highly prescribed brand-name drugs, as well as the implementation of generic drug pricing control legislation in a growing number of provinces.

The report also shows that 85% of total drug spending in Canada was on prescription drugs—for a total of $27.2 billion, which is an increase of 4.7% over 2010 figures. It is estimated that 45% of prescribed drugs are financed by the public sector, with the private sector financing the balance.

While CIHI states that it must conduct further research to determine whether generic drug pricing policies are responsible for the lower costs seen in British Columbia and other jurisdictions, the press release for the report states that it appears these policies may be having an impact.

Employers need to review their benefit plans with their consultants and determine if their plans are designed to take advantage of the new generic drug policies.

Contact our office for a full review of your benefit plan!

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