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Canada's drug spending growth slowed by generics

March 19, 2014

<photocredit>Johann Helgason/Hemera/Thinkstock</photocredit>

Canadians spent $29.3 billion on prescription drugs in 2013. This continues the trend for a rise in spending on drugs, marking a 2.3-percent increase on the previous year, according to data released by the Canadian Institute for Health Information (CIHI).

However, the annual growth rate of spending has slowed down to the second-smallest increase in over two decades. The reason for this is the increasing market share of generic drugs, which are typically much cheaper than branded and patented drugs. So although purchases of drugs are rising, the total spending value is slowing down, the CIHI explained. Last year, generic drugs accounted for more than half of the drugs used in Canada but the bulk of spending was still devoted to branded pharmaceutical products. In 2013, prescription drugs represented 85 percent of the entire expenditure on drugs, which came in at $34.5 billion, figures showed.

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The sharp increase in generic drug use can be put down to the fact that the patents of several of the most frequently prescribed drugs have expired and their generic alternatives are now freely available in Canada, the CIHI said.

In terms of the sources of spending on drugs in 2013, the largest proportion came from the public sector (41.6 percent), followed by private insurers (34.5 percent) and consumers (23.9 percent). The CIHI pointed out that Canadian public-sector spending on drugs is expected to have grown by a rate of less than 0.1 percent last year.