Thank you very much, Mr. Chairman. My name's Brent Diverty. I'm vice-president, programs, and I'm joined by my colleague Michael Gaucher, who's our director of pharmaceuticals and health workforce. I'm very pleased to address the committee today.
On behalf of the Canadian Institute for Health Information, I would like to thank you for the opportunity to appear before the committee. Since 1994 we've played a unique role in Canada's health sector. Working with a broad range of stakeholders, we are responsible for collecting, sharing, and publicly reporting on health data and information. We recently reviewed our mandate, and that's the beginning of a new chapter for our organization.
We continue to believe that better data contributes to better decisions, ultimately improving the health of Canadians. We are committed to making our information more accessible and easy to use. Working collectively with our stakeholders is critical to achieving our goals, and this plan, our strategic plan, highlights the importance of responding to their needs quickly with innovative tools and approaches.
Ultimately, our goal is to drive health system transformation and improvement across the continuum of care.
Today we're here to give you an overview of the current landscape of drug coverage and spending in Canada. Our data, which is drawn directly from the provinces and territories, and our analytical expertise, mean CIHI is well positioned to provide unbiased information to inform conversations about improving the accessibility and affordability of drugs. Based on data from our national health expenditures database, we know that Canada spends $29 billion, or $814 per Canadian, on drugs. Drug coverage is currently provided by a number of public- and private-sector payers, with 37% financed by provincial and territorial governments, 35% by private insurers. In addition, 22% of drug spending is paid for out-of-pocket by individual Canadians, and the remainder is financed by social security funds at 4% and the federal government at 2%.
Internationally, Canada ranks second behind the United States in per capita drug spending. Among OECD countries, Canada ranks near the bottom in the share of public drug-spending financed by the public sector. In other words, in Canada private insurers and individuals pay a higher share of drug costs than they do in most other OECD countries.
In recent years, growth in drug spending has been slowed by the expiration of patents on many widely used blockbuster medications like statins, which are used to lower cholesterol. In addition, public drug programs have implemented policies, limiting the prices they are willing to pay for generic drugs. More recently, provincial and federal drug programs have come together, through the pan-Canadian Pharmaceutical Alliance, to reach coordinated pricing agreements for selected brand-name and generic products. These agreements have achieved further savings.
CIHI's recent report on prescription drug spending in Canada found that, although these changes have led to significant savings for public drug programs, the savings were offset by increased spending on specialized medications such as biologics to treat conditions like rheumatoid arthritis and Crohn's disease. These and other new drugs, like those used to treat hepatitis C, are putting significant pressure on both public and private drug programs.
As the trend towards higher-cost drugs continues, the need to understand cost drivers and to forecast future trends will become greater, as even a single drug may present significant challenges for the sustainability of drug budgets. CIHI maintains information on public drug programs across the country, and tracks changes in program policies over time. Public drug coverage is available in all provinces and territories, but the design of public drug programs varies widely as to who is covered and how costs are shared between individuals and the drug program.
Some provinces and territories provide coverage to all residents, with the level of coverage depending on a person's income and drug costs, while others provide coverage to particular groups like seniors, people receiving income assistance, and other selected populations. Although some programs cover all eligible costs, generally costs are shared between programs and beneficiaries, and the ways that costs are shared varies.
There are also differences in which drugs are covered, resulting in disparities in access to certain medications across jurisdictions. Each provincial, territorial, and federal drug program maintains its own formulary, which includes the list of drugs it covers and the criteria under which it covers each drug. The benefits and costs of any changes made in drug coverage to improve accessibility and affordability are highly dependent on how they are designed and managed.
Our data and expertise place CIHI in a strong position to support both the evaluation of various options and ongoing monitoring, measurement, and evaluation activities. Since 2004, CIHI has maintained the national prescription drug utilization information system for public drug claims. The system was designed in collaboration with representatives from federal, provincial, and territorial drug programs, along with the Patented Medicine Prices Review Board, to provide information that supports pharmaceutical policy development and the effective management of Canada's public drug programs. It holds pan-Canadian information related to public drug program formularies, drug claims, policies, and population statistics.
Data from public drug programs in all provinces except Quebec, as well as from the federal drug program managed by Health Canada's first nations and Inuit health branch, is available in this database. It will soon hold data from Yukon.
Formulary data that we maintain shows there's a high degree of similarity and drug coverage despite the differences among public drug programs. This suggests the pan-Canadian agreement on the coverage of at least a certain set of drugs is achievable. This high-level analysis does not, however, take into account the details of how drugs are covered by each program. CIHI regularly conducts these types of more detailed analyses and is able to assess the comparability of public drug program formularies across the country.
We share our drug claims data with participating jurisdictions and the PMPRB to support their work. We also provide data to support the work of CADTH, Health Canada, and other national and provincial organizations. To date, CIHI and its network of partners have used CIHI data to support public drug programs to measure the drivers of drug spending; support evaluation of policy options; better understand trends in drug use and spending; and examine safety concerns like potentially inappropriate drug use, prescription drug abuse, and polypharmacy.
What has been learned? In one example, by linking drug data with our other holdings that contain hospital in-patient and emergency department data, we found that seniors were five times more likely than other Canadians to be hospitalized for an adverse drug reaction. In another study we found that two-thirds of Canadian seniors were taking five or more drugs and almost 40% were using a potentially inappropriate medication. Notably, CIHI’s drug claims database contains information on more than 70% of Canadian seniors.
But our data remains incomplete. In order to have a complete picture of drug use and safety, and to more accurately forecast and examine policy options, comprehensive data is needed on all drugs used by all Canadians, including people with private insurance or without any drug coverage. The data must also be collected in a way that it can be joined together with other health datasets, such as those for emergency department visits and hospitalizations, to provide a more complete picture of Canadians' encounters with the health system.
Despite this imperative, CIHI currently has comprehensive drug data from just three provinces: British Columbia, Saskatchewan, and Manitoba. We are working with other jurisdictions to collect private insurance data from drug information systems, as well as data on hospital and cancer drugs, but the process is slow and we expect it to take many years. Greater collaboration among governments, health system stakeholders, and the private sector is needed in order to expedite the creation of a comprehensive dataset.
CIHI is able to support the work of the committee and the ongoing discussion around drug policy in Canada, for example, in the evaluation of different program options and their associated costs. Our data and analytical expertise, which enables us to analyze trends and to forecast future drug use and spending, may be useful as you weigh the impact of various policy options and changes.
Going forward, we would be pleased to provide the committee with any information it needs as it considers this important and complex topic.
I thank you again for the opportunity to present this information and I look forward to taking some of your questions at the end.