"Dramatic Increases" In Claim Costs In Canada

A report released earlier this month by Canada's Green Shield Corporation, an organization offering prepaid health care services plans, shows average claim costs for private prescription drug plans have risen dramatically since 1987. The report says the high entry cost of new drugs, increased market share for new, more expensive patented drugs, and the absence of generic competition for these new drugs are pushing claim costs up substantially. And this is despite the stable unit cost for drugs reported by Canada's Patented Medicine Prices Review Board.

Brenda Drinkwalter, president of the Canadian Drug Manufacturers Association, which represents the generic drugs industry, commenting on the report said it: "highlights the irrelevancy of PMPRB statistics on average drug prices. Overall drug costs continue to increase due to the high entry price of new patented medications, and prescribing trends that favor these new drugs over existing lower cost, clinically equivalent drugs. These factors, combined with restrictions on generic competition, will cost our health care system billions of dollars over the next decade."

Reports by the PMPRB reveal that the average price of patented drugs has risen at less than the rate of increase in the consumer price index. In contrast, the drug cost in the average Green Shield drug claim is composed of the mix of drugs actually used by employed persons and rose 93% from C$12.48 ($9.22) in 1987 to $24.09 in 1993, an annual rate of increase of 11.6%. The annual rate of increase for the consumer price index was 3.8%.