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Pharmaceutical cost control in Canada: does it work?

¹Institute of Health Economics, and University of Alberta, Edmonton.

Health Affairs (Project Hope)

|October 5, 2001

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Canadian governments use price controls to manage drug costs, showing some success. However, total drug spending still increases, indicating a need for new cost-management strategies beyond price regulation.

Area of Science:

Health economics
Pharmaceutical policy

Background:

Governments in Canada have implemented various drug price control mechanisms.
These include federal factory-gate price controls and provincial strategies like formulary management and generic use.

Purpose of the Study:

To evaluate the effectiveness of existing drug price control mechanisms in Canada.
To identify the need for additional drug spending management strategies.

Main Methods:

Analysis of government policies for drug price control at federal and provincial levels.
Review of implemented measures including formulary management, generic prescribing, reference-based pricing, price freezes, and markup limits.

Main Results:

Existing price control mechanisms have largely been effective in controlling drug prices.

Related Experiment Videos

Despite price controls, total drug spending in Canada continues to escalate.

Conclusions:

Current price control measures demonstrate partial success but are insufficient for comprehensive drug spending management.
Development of novel strategies beyond price regulation is essential for better management of national drug expenditures.