Managing pharmaceutical expenditure: an overview and options for Canada

Abstract

Public drug plans in Canada continue to grapple with public sector pharmaceutical drug spending growth that exceeds revenue growth. Public drug spending is expected to account for 9% of public sector healthcare expenditures in 2010 (approximately 12.1 billion dollars) (CIHI, 2010). ◥ This issue persists despite the introduction over the last two decades of various drug reimbursement policies to control cost, including beneficiary cost sharing, mandatory generic drug substitution as well as prior authorization and other forms of utilization review. Other approaches are needed. ◥ Furthermore, some of these policies may have unintended consequences on patient health, access to drugs for those without comprehensive drug coverage, pharmaceutical innovation, the timely market entry of generic drugs, the provision of professional pharmacy services and spending on drugs. ◥ Promising policy options are available for consideration by governments to manage drug spending in Canada and at the same time provide incentives for innovation in appropriate areas. ◥ If governments elect to appropriately manage price and reward innovation using a mix of policy options other than the payment of high prices for new drugs as an isolated approach, then drug prices could be reduced and the development of valuable new drugs for Canadians would be rewarded.