"Drugs not to blame" for Canada health spend rise

A Toronto, Canada-based think-tank has issued a study which argues that the country's Medicare health care program's "lack of financial substainability" cannot be blamed on the cost of prescription drugs. The real problem, according to Brett Skinner, the Fraser Institute's director of health, pharmaceutical and insurance policy, is "a poorly-designed public health insurance system."

In the report, titled: the Misguided War Against Medicines, Mr Skinner argues that patented drugs represent too small a proportion of government health spending to account for the expenditure problems of the Canadian Medicare program. In 2005, he observes that patented prescription drugs made up only 6.8% of the country's health care spending. The Fraser Institute study also found that post-market prices for patented drugs had remained stable since 1987, with prices rising below the rate of inflation in 16 of the past 18 years, with actual price falls in six of them.

Thanks to cost controls, the introductory prices of new drugs in the Canadian market are already lower than for most of the countries that the federal government uses for international comparisons, especially with the neighboring USA. However, the perception of this is masked by the fact that many new drugs treat highly-specialized conditions and small patient populations. As a result, unit costs for some drugs are very high, however the number of patients being relatively small means that the actual budgetary impact to the government is "not large," according to Mr Skinner.