News Feature | March 10, 2014

Rate Of Drug Spending Slowing In Canada With Availability Of Generics

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By Marcus Johnson

Canadians are spending more money than ever on prescription drugs, but the rate of spending growth has slowed down with the availability of generic drugs. In 2013, Canadians spent $29.3 billion on prescription drugs, but the rate of growth in spending was only 2.3 percent. That rate of growth was the country’s slowest in the past 20 years. A study performed by the Canadian Institute for Health Information, or CIHI, claims that generic drugs are becoming more common and are greatly preferred by consumers to expensive brand drugs. The study found that in Canada, most of the spending on pharmaceutical products comes from the state. Only 24 percent of spending on pharmaceutical products is out of pocket, with nearly 42 percent coming from the government. Insurance companies paid for the remaining 34.5 percent. Generic drugs were also found to account for nearly 75 percent of all drug spending, although that number was less than 50 percent when only looking at public spending.

The study also looked at how different health industry sectors had grown in the past decade. The increase in spending on drugs was the largest for government health system between 2001 and 2013, but since 2005 spending on pharmaceutical products has slowed and surpassed by spending on hospitals and doctors.

Canadians are still using brand name drugs, even if the availability of generics is rising. The study found that there is an increase in Canadians who use more than $10,000 on prescription drugs each year. That is because the public health system is spending more on brand name drugs, which are more expensive.