Canadian Health Policy Institute: Adjusting for population and inflation, the total direct cost of patented drugs has experienced near zero real growth for the last decade

Tuesday, December 12, 2017 General News
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TORONTO, Dec. 12, 2017 /CNW/ - A new study published by the Canadian Health Policy Institute (CHPI) concludes that there is no spending crisis regarding

patented drugs in Canada. Adjusting for real economic factors like population, CPI and GDP, the total direct cost burden from patented drugs is stable and moderate. Prices are also stable and moderate relative to CPI
or comparable countries.

The analysis used data from the Patented Medicine Prices Review Board (PMPRB), the Canadian Institute for Health Information (CIHI), and Statistics Canada.

The study found that:

  • The total direct cost from sales of patented drugs accounted for less than 41% of the total drugs related expenditure reported by CIHI in 2016.
  • Adjusting for national population growth and general price inflation over time reveals that patented drugs have experienced near zero real cost growth for the last decade.
  • Sales of patented drugs have accounted for less than 1 percent of GDP for the last 27 years.
  • Patented drugs accounted for only 6.7% of total public and private health spending in Canada in 2016.
  • Federal, Provincial and Territorial public drug plan spending on the direct costs of patented drugs was only 3.7% of total health spending by governments in the same year.
  • The prices of patented drugs in Canada grew slower than the rate of general inflation in 27 of the 29 years from 1988 to 2016.
  • Adjusted for the market exchange rates of currencies, median international prices have been higher than Canadian prices for the last 10 years, as much as 25 per cent higher in 2016.
  • Using the mean (or average) prices, and adjusting currencies at purchasing power parities, international prices for patented drugs were 51 per cent higher than Canadian prices in 2016, and the gap has widened from 4 per cent higher in 2007.

The paper, "Facts about the cost of patented drugs in Canada", was published at CHPI's online journal, Canadian Health Policy, and can be accessed at www.canadianhealthpolicy.com.

SOURCE Canadian Health Policy Institute



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