UBC Faculty Research and Publications

The determinants of prescription drug expenditure … and what to do about them Morgan, Steve


Pharmaceuticals are a major part of health care in Canada. They represent one of the largest and fastest growing components of health spending. Next year, Canadians will spend roughly $30 billion on pharmaceuticals in the community setting. This represents nearly two-thirds of what we will spend on hospital care (including drugs provided in hospitals) and 50% more than what we will spend on physicians’ services. It also represents three times what we spent on drugs ten years ago. Drug spending may be viewed as an investment that is made by public and private payers with the intent to improve the health of patients and/or to reduce demands for other health care services. Given that current annual growth in Canadian pharmaceutical expenditure could otherwise pay for the services of 10,000 primary care practitioners (at $200,000/yr), one would expect that there was clear evidence and data to indicate that the increase in drug spending generates significant gains to our population health and the health care system. In this paper I review the historical context of drug spending in Canada and provide a summary of the literature describing the underlying causes of drug spending trends.

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Attribution-NonCommercial-NoDerivs 2.5 Canada