Drug cost growth within Canada’s private insurance plans will be in the low single-digit range over the next five years, say new forecasts.

The compounded annual growth rate (CAGR) of private insurance market drug costs, at an overall market level, will be in the range of 1.6% to 2.8% during 2013-17, according to the forecasts, which have been produced by IMS Brogan for Canada’s Research-Based Pharmaceutical Companies (Rx&D).

More than 20 million Canadians are covered by private drug plans, and concerns have been expressed in this market about the potential costs of specialty and biologic medicines, the impact of an aging population and a rapidly-changing business environment, says Rx&D.

However, as well as the forecasts of sustainable drug cost growth at an overall market level in the forecast period, other key findings of the IMS report are that:

- branded-drug patent loss and generic pricing reform will have the largest impact on drug costs for private insurance plans, offsetting the incremental cost of new medicines entering the market and the impact to the aging population;

- the impact of new medicines entering the market is partially offset by the displacement of previous therapies. As such, their cost impact on the total market is mitigated;

- specialty medicines treat very small patient populations. As a result, the proportional impact of these new products on the total market is also mitigated; and

- the costs of new cancer medications have a relatively small impact on the costs of private health insurance plans, mainly due to the fact that in Canada these medicines are often covered by hospitals, cancer care agencies and provincial drug programmes.

Rx&D describes the research as “one of the most rigorous and detailed forecasts ever conducted” for the Canadian private drug plan market.

“Individual Canadians, employers, healthcare providers and industry all want the same thing – affordable and predictable drug coverage that allows for access to the right treatment at the right time,” said the association’s president, Russell Williams. “We believe this new information sheds light on questions of affordability and the value that innovative medicines contribute to individual well-being and workplace health and productivity.”