CHP blogazine

Are public drug budgets limited by false notions about the economic affordability of new medicines?

Posted on June 30, 2015

Are public drug budgets limited by false notions about the economic affordability of new medicines?

Publicly funded drug plans across Canada routinely cite cost as a reason to deny patients access to new drugs. 

Yet, despite high prices for some rare disease medications, total spending on new drugs is a bargain after accounting for changes in population, inflation and GDP and when compared to the growth and size of other healthcare costs.  

The evidence for this comes from a recent study published by the Canadian Health Policy Institute (CHPI) which used data from the Patented Medicines Prices Review Board (PMPRB) and the Canadian Institute for Health Information (CIHI). 

Adjusting for population, the study showed that nationally, spending on patented drugs was $386.82 per capita (green bars in the chart) in 2013. Adjusting for inflation over time (blue bars in the chart), national per capita spending on patented drugs in 2013 was equal to $246.96 in constant 1990 currency values, declining -5.2% from $260.41 in 2008.

In real economic terms, spending on new medicines has been getting more affordable over the last decade. Nonetheless, governments are increasingly restricting coverage for the most innovative drugs. Are public drug budgets limited by false notions about the economic affordability of new medicines? 

To get more facts about this topic download the article, Spending on Patented Drugs in Canada. 2014 Annual Report, available at Canadian Health Policy.

Find out how much we really spend on patented drugs nationally; adjusted for population, inflation and GDP; and as a percentage of total (publlic + private) health spending, as well as of government health spending. 

You might be surprised how economically affordable new drugs really are.