Cost Pressures in the Canadian Hospital Drug Market, 2006–2014

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The sale of drugs dispensed in hospitals represents a relatively small component of the Canadian pharmaceutical market (13%), but is nonetheless an emerging market segment. The rates of growth in drug expenditures for in-patient and out-patient settings in Canada are analyzed in this study and compared to foreign markets, with a focus on the impact of high-cost drugs.

The analysis provides policy makers with insight into the cost pressures in the Canadian hospital market and illustrates how it compares internationally to the seven Patented Medicine Prices Review Board comparator countries (PMPRB7: France, Germany, Italy, Sweden, Switzerland, the United Kingdom and the United States).

Key Findings

1. Canada has a relatively small hospital sector compared to other foreign markets.

While the hospital market share in terms of drug use is fairly small in Canada (4.4%), it represents a much larger share in terms of sales (13%), indicative of the high cost of the drugs predominantly used in hospitals. The national sales for drugs dispensed in hospitals mounted to $2.6 billion in 2014.

2. International variations reflect differences in approaches to drug delivery in out-patient and in-patient settings.

Particular drugs may be available in some countries primarily through the hospital sector, while in others through the retail sector. For instance, in Italy, antivirals that are used in hospitals account for 5% of the total pharmaceutical market; in Canada, these drugs are predominantly dispensed through the retail market.

3. The rates of growth in hospital sales have been on the rise in recent years and exceed those in retail markets in Canada.

While the rate of growth in the retail sector temporarily stabilized, mainly due to the implementation of generic pricing policies and generic substitution, the rate in the hospital sector continued to rise, with a 43% rate of growth over a nine-year period and a record 7.8% growth in 2014.

4. The growth in hospital sales has mainly been driven by oncology drugs, as well as vaccines and antivirals.

Over the last nine years, hospital drug sales increased by 43% (or $0.8 billion), from $1.8 billion in 2006 to $2.6 billion in 2014. Of this growth, 31% was directly attributable to the increased use of antineoplastic (oncology) drugs (18%), as well as the use of more expensive antineoplastic drugs (13%). The increased use of vaccines, as well as the use of more expensive antivirals, each contributed 5% to the growth in hospital drug sales.

5. Oncology drugs comprise the largest share of hospital revenues, and this share has been increasing.

Due to their high growth in sales, antineoplastics accounted for an increased share of the hospital market: 40% in 2014, up from 26% in 2006.

6. The hospital prices for top-selling drugs tend to be lower in foreign markets than in Canada.

The table lists the 10 topselling drugs for the hospital market in Canada, which account for 36% of hospital sales. For many of these drugs, the median foreign price is below the Canadian level (a ratio lower than 1).

*World Health Organization Anatomical Therapeutic Classification.
**Form and strength specific. ***The foreign price is the median across the PMPRB7 countries.
Note: The PMPRB7 comparator countries are France, Germany, Italy, Sweden, Switzerland, the United Kingdom and the United States.
Data Source: MIDAS™ Database, Manufacturer Ex-factory Sales, IMS AG. All Rights Reserved.

†Data Source: MIDAS™ Database, Manufacturer Ex-factory Sales, IMS AG. All Rights Reserved.

Disclamer: Although based in part on data provided under license by the IMS AG’s MIDAS™ Database, the statements, findings, conclusions, views and opinions expressed in this report are exclusively those of the PMPRB and are not attributable to IMS AG.

NPDUIS is a research initiative that operates independently of the regulatory activities of the PMPRB.