Have You Considered the Rising Cost of Prescription Drugs In Canada?
Drug spending has increasingly accounted for a large proportion of expenditure in the Canadian health care system. In fact, drug expenditure is growing faster than any other component of health care. Drug expenditure has even surpassed physician remuneration expenditure to become the second largest cost in the entire Canadian health care system after hospitals.
The key drivers of the increased expenditures are:
– The increase in overall use of prescription drugs
– The increase in the number of high-cost drugs entering the market
– The increased use of these newer and more expensive prescription drugs
As a result, there has been a significant increase in the number of Canadians with annual drug costs in excess of $10,000. In fact, the greatest rate of increase has been for those with annual drug costs over $20,000
(article: “Private Drug Plans in Canada: High-Cost Drugs and Beneficiaries,” Government of Canada www.pmprb-cepmb.gc.ca).
Canada currently uses a hybrid system for buying prescription medication, which involves multiple private and public drug plans. However, the diversity of drug plans mean that Canadians are covered for drugs according to the province they work or live, but not necessarily according to their medical needs.
Canadians with inadequate coverage, including unemployed or self-employed workers are usually unable to enjoy the benefits of optimal treatments. Over 10 percent of Canadians have reported not being able to fill prescriptions in the past year due to the lack of finances.
Did you know……every 3 minutes a Canadian is diagnosed with Diabetes, 1 in 2 Canadians will be diagnosed with cancer and every 10 minutes someone has a stroke in Canada?
The costs of these unexpected illnesses can have a significant financial impact due to the prescription drugs that are needed.
High Cost of Drugs
Canadians pay way too much for their drugs. In fact, Canada is the second-most expensive country globally when it comes to prescription drugs with the United States being the first. The drug prices in Canada are some of the highest among the Organization for Economic Co-operation and Development (OECD) countries.
This influences the access that Canadians have to essential prescription drugs as well as the sustainability of the health care system in Canada.
Why Are Drugs So Expensive in Canada?
The following is a brief breakdown of the cost of prescription drugs in Canada:
Brand Vs. Generic
The difference between brand name and generic drugs is a key concept when it comes to drug pricing in Canada.
A brand name drug is a patented drug initially developed and marketed under one of several Canadian patents and is only available for sale by the patent holder. The manufacturer sets the price and the Federal government limits it. A patent in Canada lasts 20 years, but that period also includes clinical trials and approval.
A generic drug is developed to be the chemical equivalent of the brand name drug. Manufacturers of generic drugs can produce and sell drugs after all the relevant patents have expired. The prices of generics are currently limited by provinces as a percentage of the brand name drugs, which range from 18 to 40 percent across provinces.
Brand name drugs account for about 40 percent of prescriptions filled in Canada while generic drugs account for 60 percent. However, the difference in prices means that brand name drugs account for around 75 percent of the total pharmaceutical expenditure in Canada.
A significant portion of the brand-name drug cost comes from development. The development costs are usually a secret, but estimates are about $1 billion from concept to market although estimates sometimes vary from several hundred million to over $10 billion. Generic drugs require between $3 and $10 million?? for development and take between 2 and 3 years to reach approval.
Contributing to these development costs are the new biologic drugs that are being developed to treat a wide range of diseases including arthritis, many cancers, and multiple sclerosis. The materials required to develop these drugs cost more and the manufacturing process, which uses live organisms, is much more complex. As well, the cost of research and development for biologics is higher. Thus, all of these components add to the overall cost.
Drugs dispensed outside hospitals in Canada are sold at pharmacies. The pharmacies buy drugs from the manufacturers and sometimes through wholesalers. When a physician outside a hospital prescribes drugs to a patient, the patient will be required to fill the prescription at a pharmacy. A dispensing fee is paid to the pharmacy for filling the prescription. This fee is in addition to the manufacturer’s price of the drug and can vary by pharmacy.
The Solution: Insurance
The Canadian Institute for Health Information estimates that an average Canadian spends over $1,500 annually on prescription drugs and as previously stated, this is increasing. Having access to prescription drugs is essential. If you don’t have insurance, you could be staring at expensive medical bills.
Unexpected medical issues can arise at a moment’s notice and considering that the provincial government drug programs don’t pay for prescription drugs dispensed outside of a doctor’s office or a hospital, it is critical to have insurance to fall back on.
The following is a brief breakdown of the types of prescription drug coverage from a Canadian health insurance perspective.
Canadian health insurance is of 2 main types:
– Employee Benefits health insurance
– Individual health insurance
Prescription drug coverage will vary depending on the type of health insurance you have Drug coverage from employee benefits typically doesn’t have annual or lifetime maximums while personal health insurance plans may.
Regardless of the type of health insurance you have, the specifics of the coverage will vary from insurance plan to insurance plan. For instance, some plans may cover 60% to 70% of the cost of prescription drugs while others may cover 80% to 100%. Plans may also have deductibles meaning you must pay a specified amount out of pocket before your coverage kicks in. As well, the plans will differ in the prescription drugs that are covered.
To be eligible for coverage a prescription drug must:
– Be medically necessary
– Be prescribed by a psychiatrist, physician, or dentist
– Have an associated Drug Identification Number (DIN)
It is worth noting that not all drugs that meet the above requirements will be covered. Insurers and employers can decide which drugs will be covered on specific plans.
Drugs that may be excluded tend to be what are referred to as “lifestyle” drugs including weight loss, fertility, smoking cessation, allergy serums, and contraceptive drugs. In addition, some plans may include or exclude over-the-counter drugs that are considered “life-sustaining” or natural health products.
Examples of prescription drugs that are always covered by health insurance plans include:
– Insulin for diabetics
– Drugs for controlling high cholesterol levels
– High blood pressure medications
Prescription Drugs That May Be Covered
The following drugs may be covered by health insurance depending on the plan:
– “Lifestyle” drugs such as fertility, contraceptives, and smoking cessation aids and allergy serums
– Over-the-counter drugs that are considered “life-sustaining”
– Natural Health products
– New drugs that have been recently approved for public use
– Brand name drugs even if an equivalent generic drug exists
– Medical marijuana is still not covered by most personal health insurance plans, but some employee benefit plans offer some coverage for marijuana prescribed for pain management.
If you want a specific prescription drug covered and are considering getting health insurance, then get in touch with an experienced agent such as Blue Country Insurance to ensure that your preferred drug is covered by the plan that you are considering.
Prescription Drugs That Are Never Covered
The following is a list of drugs that are never covered by private health insurance:
– Drugs that don’t have a DIN number
– Drugs administered in hospitals
What is a Drug Identification Number (DIN)?
A DIN is an 8-digit identification number that Health Canada assigns to all drugs sold in Canada, including prescription drugs. It provides information such as the name of the drug, the manufacturer, active ingredients, etc. It should always be displayed somewhere within the drug container’s label. It should also be listed on the receipt from the pharmacist.
The Bottom Line
The cost of prescription medication in Canada is on the rise. If this is not something you have been giving much thought to, now is the time to start doing it. Now that you know why prescription medication is so expensive in Canada, now is the time to make the wise decision to get health insurance coverage.
Blue Country Insurance is a licensed insurance agent offering a variety of health insurance options to meet your unique health care needs. If you choose our company, you can be confident in the fact that you will have the right prescription drugs coverage for you and your family’s specific needs at a cost that is affordable…….and that you will stay healthy should the need ever arise.
Blue Country Insurance is not just a health insurance agent. We also offer other types of individual insurance including:
– Dental Insurance
– Life Insurance
– Critical Illness Insurance
– Travel Insurance
For more information on prescription drug coverage and the other types of insurance coverage available to you, contact us today. You can also visit our website for your free quote or to apply online.
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