The federal government is changing regulatory guidelines used by the Patented Medicine Prices Review Board to force lower prices for new drugs. At the same time, Ottawa is considering ways to implement national pharmacare, which the federal Liberals are expected to announce as part of their upcoming budget. The official justification for both is the same: the cost of pharmaceuticals.
The Canadian Health Policy Institute used data from the PMPRB, the Canadian Institute for Health Information , and Statistics Canada to identify the direct cost of patented drugs and to assess affordability relative to GDP and other health-care costs. CIHI’s “drugs” expenditures are often falsely equated with manufacturers’ sales of patented drugs, and then cited as a reason to justify government intervention to control prices. But actual costs attributable directly to patented drugs are only a fraction of CIHI’s total published “drugs” costs.
Public drug plan spending on the direct costs of patented drugs at factory list prices was $7.0 billion in 2017, representing only 4.2 per cent of the $165.7 billion in total health spending by federal, provincial and territorial governments that year. Gross sales of patented drugs were the same percentage of government health costs in 2017 as in 2000 , an 18-year period of zero average annual growth relative to total government health expenditure.