Opinion: Pharmaceutical costs are soaring due to innovative but pricey new drugs


By Mina Tadrous, Tara Gomes, and Michael Law.

In this opinion piece, Dr. Tara Gomes, scientist at the Li Ka Shing Knowledge Institute and the Ontario Drug Policy Research Network, argues for the need to manage pharmaceutical costs in Canada as innovative, but pricey drugs come to market.

We are likely entering a golden era of drug innovation, with the rise of new drug development technologies and biologics. Over the past decade, we have seen several record-breaking years in terms of the number of new therapies being developed and approved. In 2019 alone, just before the pandemic, Health Canada approved 58 new prescription drugs, many of which were the first of their kind to treat several rare diseases. The COVID-19 pandemic has also focused further attention on the value of investing in drug treatments and vaccine development.

But this progress has, of course, come at a cost. In 2020, Canada spent $32.7 billion on medications. And this amount continues to grow: year-over-year spending on drugs for the past two decades has outpaced inflation threefold, averaging more than 6 per cent growth annually. In fact, drug spending is consistently the fastest growing segment in health care.

These were the striking findings of a recently released analysis, where we looked at medication purchases across Canada over the past 20 years. We also looked ahead to the future to see what was likely to come down the pipeline. What we saw was notable: in the future, this rate of growth will almost certainly continue, if not accelerate.

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