NCPA - National Center for Policy Analysis


July 7, 2008

Research shows that government health spending in Canada is growing at an unsustainable pace, say Mark Rovere and Brett Skinner, of the Fraser Institute.  Meanwhile, government spending on prescription drugs has grown faster than other components of health spending.  This has led some people to claim that prescription drugs -- patented drugs in particular -- are the primary cause of the unsustainable growth in government health spending.

A recent Fraser Institute report indicates that neither patented medicines nor prescription drugs can be blamed for the unsustainable growth in government health spending:

  • Overall, total spending on all types of drugs accounted for an estimated 16.7 percent of total government and private health spending in Canada in 2006, a drop from 17.4 percent in 2005.
  • Prescription drugs accounted for only an estimated 9.3 percent of total government spending on health care in 2006, down from 9.6 in 2005.
  • Patented prescription drugs accounted for only 6.3 percent of total annual government spending on health care in 2006, compared to 6.8 percent in 2005.
  • Non-patented prescription drugs accounted for a mere 3.0 percent of spending in 2006.
  • All of types of health spending consumed 90.7 percent of government health expenditure in Canada.

The Fraser Institute suggests that unsustainable growth in government spending on health is a function of the flawed design of government health and drug insurance programs, and not of the price of medical treatment or the introduction of new medical technologies such as patented drugs.

Source: Mark Rovere and Brett Skinner, "Medicare's New Red Herring," Fraser Forum, June 2008.


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