Aggressive measures needed to control drug spending—study

January 9, 2007

OTTAWA—Canada’s current system of controlling drug prices helps contain spending but more aggressive measures are needed, says a new study released today by the Canadian Centre for Policy Alternatives.

The study, by Dr. Joel Lexchin, finds evidence to support the contention that increasing the amount of public spending on medications will help to control overall drug expenditures. However, just increasing public spending, while necessary, may not be sufficient. Drug expenditures in Canada are currently rising about 8-10% faster than the rate of inflation, despite current controls.

“In addition to a national Pharmacare plan, whereby the government covers the bulk of the cost of prescription drugs, other measures should be considered in order to contain drug spending,” says Lexchin.

The study finds that measures taken to date by provincial and federal governments to control the prices of individual drugs or overall drug expenditures have not have any long-lasting negative effects on the financial stability of the pharmaceutical industry.

“Profits in the pharmaceutical industry are running at roughly double those in all manufacturing industries,” Lexchin says. “The economics of pharmaceutical manufacturing seems to mean stable, or increasing profits, for the companies.”

Dr. Lexchin is a Professor in the School of Health Policy and Management at York University and an Associate Professor in the Department of Family and Community Medicine at the University of Toronto and a CCPA Research Associate.


Canadian Drug Prices and Expenditures: Some statistical observations and policy implications is available on the CCPA web site:

For more information contact Kerri-Anne Finn, CCPA Communications Officer, at 613-563-1341 x306.