Prescription drugs are not to blame for the unsustainable growth of government health spending in Canada, a new study concludes.

“The flawed design of government health and drug insurance programmes is what’s bankrupting the Canadian health care system, not the price of prescription drugs or new patented medicines,” says Mark Rovere, co-author of the report, which is published this week by the Fraser Institute free-market think-tank.

“Government spending on all areas of health care other than prescription drugs consumes more than 90% of total government spending on health care,” he adds.

Prescription drugs accounted for only 8.8% of Canadian government health spending last year, down from 9.3% in 2006, and patented prescription drugs represented just 5.5% of total government health spending in 2009, compared to 6.3% in 2006, says the study. After spending on drugs is subtracted, all remaining areas of health care accounted for 90.8%-91.2% of total government health spending over the period, it adds.

The Institute also cites government data showing that average prices for existing patented prescription drugs in Canada have grown at a slower annual pace than the general rate of inflation for 19 of the last 22 years, and have declined in nine of those years.

“This means that prices for existing patented drugs are increasing at a slower rate than they could increase under federal rules that permit annual price increases matching the general rate of inflation. It also means that after adjusting for inflation, prices for existing patented medicines have decreased in real terms in 19 of the last 22 years,” says Mr Rovere.

“The solution is clear - a compulsory private insurance system combined with low-income subsidies to foster universal coverage would offer a significantly wider range of benefits and more efficient coverage, leaving all Canadians much better off,” he adds.

Meantime, another new report says that Canadian physicians are prescribing more medications and ordering more diagnostic imaging tests than ever before, and that they need support to avoid inappropriate and over-use of these costly services.  

Over the past 10 years, the number of prescriptions filled at community pharmacies has almost doubled, from 272 million in 1999 to 483 million in 2009, says the study, which is produced by the Health Council of Canada, an independent national agency. This suggests that some Canadians are getting drugs they do not need, while others are not getting medications from which they could benefit, putting into question the appropriate use of prescription drugs in Canada, it says.

The report finds that the use of and adherence to clinical practice guidelines is too low and that improvements are needed in the use of health information technology, where Canada continues to lag behind many other countries. The increased adoption of better usage of electronic health systems will lead to more comprehensive data on how drugs are prescribed and used, linking them back to effects on health outcomes, while encouraging adherence to clinical practical guidelines, it says.

- Canada is set to remain one of the most attractive pharmaceutical markets worldwide, despite its tightening cost-containment environment, provincial variations in drug approvals and subsidies and the country’s appearance on the US Trade Representative’s 2010 Priority Watch List,  Business Monitor International (BMI) has reported recently.

Positives include Canada’s high per-capita spending on medicines, which topped US$629 in 2009, it says, and forecasts that the market will show a compound annual growth rate (CAGR) averaging 4.34% to 2014, when it will be worth C$29.9 billion in local currency terms.

Average annual growth to 2019 will slow to 3.09%, although later in the period sales of patented medicines should be boosted by the use of more personalised therapies and novel medicines. Generics, however, will post the strongest five- and ten-year CAGRs, rising 8.34% and 6.12% in local currency terms, says BMI.