Prescription drugs fuel rising costs of health care

Drugs are one of the fastest-growing areas of health-care spending in Canada, according to the institute's fourth annual report on the subject. Rising drug costs in Canada outstripped inflation. In 2003, total health costs were an estimated $121.4 billion. Hospital spending was the largest category at 30 per cent, followed by drug spending at 16.2 per cent. Although medicare only covers drugs administered in hospital, the public sector paid for 47.2 per cent of the prescription drug tab last year, up from 42.5 per cent five years earlier. "The increase in drug spending is occurring despite relatively stable drug prices in Canada," said Paul Grootendorst, a University of Toronto professor of pharmacy and an adviser to CIHI. "This points to a higher volume of drug use and the entry of new drugs, which are generally introduced to the market at higher prices," he added in a release.

The study's authors found wide variations in drug spending across Canada. In 2001, drug spending ranged from 3.1 per cent in Nunavut to 17.9 per cent in Quebec. Differences in drug subsidy programs and age and sex distributions between provinces and territories accounted for some of the variations, Grootendorst said. Among 11 industrialized countries ranked by the Organization for Economic Co-operation and Development, Canada falls behind Japan, France and Hungary in drug spending as a share of total health spending. In the 2003 health accord, governments agreed to cover "catastrophic" drug costs.