Patented Medicines Expenditure in Canada 1990-2018

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CHPI RESEARCH REPORT

Canadian Health Policy, December 2020. ISSN 2562-9492 www.canadianhealthpolicy.com

Abstract

The purpose of this annual study is to correct common misconceptions about the cost of patented medicines in Canada. The analysis uses publicly available data to: identify national expenditure attributable to the prices of patented medicines in Canada.; assess the affordability and sustainability of these expenditures relative to population, general price inflation, GDP and other healthcare costs; and discuss national expenditure on patented medicine in the context of the health-economic benefits of pharmaceutical innovation. The analysis uses the most recently published historical and comparable data from the Patented Medicine Prices Review Board (PMPRB), the Canadian Institute for Health Information (CIHI), and Statistics Canada. PMPRB data availability determined the time frame of the analysis. Annual national sales data for patented medicines were available from 1990 to 2018. Annual national sales data for patented medicines defined by PMPRB as “high-cost” drugs were available from 2006 to 2018. Patented medicines price indices data were available from 1988 to 2018. Foreign-to-Canadian price ratios for patented medicines were available from 2007 to 2018.

Highlights

According to PMPRB, gross national sales of patented drugs were $16.7 billion in 2018, which accounts for 40% of the “drugs” total reported by CIHI for the same year. 

At $16.7 billion, gross national sales of patented drugs accounted for 6.6% of the $254.5 billion reported by CIHI for national health spending in Canada in 2018. Over the 29 years from 1990 to 2018, spending on patented medicines never exceeded 8.0% of national health expenditure. Patented drugs accounted for a smaller percentage of national health spending in 2018 than in 2001 (7.1%), an 18-year period of near zero average annual relative cost growth.

Gross national sales of patented drugs have accounted for less than 1% of GDP for the last 29 years. Patented medicines expenditure was the same percentage of GDP in 2018 (0.8%) as in 2003 (0.8%), a 16-year period of zero average annual growth relative to GDP.   

Adjusting for national population growth and inflation over time, reveals that national expenditure on patented medicines has experienced zero real average annual growth for the last decade. Stated in constant 1990 dollars, the real gross expenditure per capita on patented drugs was $265 in 2018, the same as 2009.

According to PMPRB there were 162 patented medicines defined as high-cost drugs in 2018 accounting for $7.0 billion in gross sales. Gross sales of all high-cost patented drugs represented only 0.3% of GDP and 2.7% of national health expenditures in the same year.

Data Sources 

Canadian Institute for Health Information (CIHI 2019):

National Health Expenditure Trends, 1975 to 2019 — Methodology Notes.

National Health Expenditure Database, 1975 to 2019.

Table A.3.1.1 Total health expenditure by use of funds, in millions of current dollars, Canada, 1975 to 2019.

Table G.14.1 Expenditure on drugs by type and source of finance in millions of current dollars, Canada, 1985 to 2019.

Table A.1.1  Provincial/territorial hospital spending by type of expense in millions of current dollars, Canada (excluding Quebec and Nunavut), 2005–2006 to 2018–2019.

Appendix A.1 Gross domestic product at market prices by province/territory and Canada, in millions of current dollars, by year, 1975 to 2019.

Appendix D.1 Population by province/territory and Canada, in thousands, by year, 1975 to 2019.

Patented Medicine Prices Review Board (PMPRB). PMPRB 2018 Annual Report:

Figure 19. Annual Rate of Change, Patented Medicines Price Index (PMPI) and Consumer Price Index (CPI), 2003-2018.

Table 10. Average Foreign-to-Canadian Price Ratios, Multilateral Comparisons, 2018. (historical data from ARs 2008-2017). 

Table 19. Sales of Patented Medicines, 1990 to 2018.

Figure 11. Share of Sales for High-Cost Patented Medicines by Annual Treatment Cost, 2006 to 2018.

Statistics Canada. Table 18-10-0005-01 Consumer Price Index, annual average, not seasonally adjusted.

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