Government spending on all types of prescription drugs (patented and non-patented) is increasing faster than any other component of health spending. And new or patented medicines tend to be more expensive compared to older drugs and other health treatments. This study examines all of the ways in which patented drugs might contribute to health-care costs.

Research suggests that government health spending in Canada is growing at an unsustainable pace. At the same time, government spending on prescription drugs (both patented and non-patented) has grown faster than other components of health spending. In addition, new patented prescription medicines are often more expensive than existing drugs. These observations have led some to assume that prescription drugs-and patented medicines, in particular-are the primary cause of the unsustainable growth in government health spending observed in Canada.

In order to evaluate the validity of this claim, this study examines all of the ways in which spending on drugs may contribute to the overall growth in total government health spending. The evidence suggests that neither patented medicines in particular, nor prescription drugs in general can be blamed for the unsustainable growth rates of government health spending.