In Canada, when the hand wringing begins over our health system’s financial sustainability there is a narrow-minded focus on the costs of new therapies and technologies.

Prescription drugs account for less than 14 percent of total health spending in Canada.  By contrast, hospital and institutional care accounts for 40 percent of total health spending.

Chart Distribution of Health Spending in Canada

From 2010 to 2014, increases in spending on prescription drugs accounted for less than 6 percent of the total health spending growth in Canada.  During the same period, hospital and institutional care accounted for 42 percent of the total health spending growth. This is 7 times the health spending growth attributed to pharmaceuticals.

Chart Distribution of Health Spending Increase in Canada

The Canadian Institute of Health Information has stated that health system efficiency in Canada can be improved by “tackling existing organizational and delivery challenges”. But rather than face these complex delivery challenges, policy-makers in Canada tend to focus their cost control efforts on new drugs and other technologies to the detriment of patients who are denied access to the best available therapies.

Science is disrupting the practice of medicine like never before.  New personalized medicines linked to the genome of individual patients are curing cancer. Recently developed medicines that cure Hepatitis C could save our economy billions in ongoing care and lost productivity. Over the course of a single generation, thanks to new medicines, deaths and disability from cardiovascular disease have been cut it half.

When it comes to limiting health spending, there is no doubt that the private sector industries that develop and market new therapies are an easier target than hospitals and health workers. When policy-makers aim to manage costs by limiting access to new therapies, the health system and its patients miss out on the benefits and efficiencies that come from cutting-edge science and medical innovation. Canada needs to rethink its approach to health spending and embrace the benefits that come from science and medical innovation.


Data Source: Canadian Institute for Health Information, National Health Expenditure Trends 1975-2014