- Steven G Morgan, assistant professor ()1,
- Kenneth L Bassett, associate professor2,
- James M Wright, professor3,
- Robert G Evans, professor1,
- Morris L Barer, professor1,
- Patricia A Caetano, Post-doctoral fellow1,
- Charlyn D Black, director1
- 1 Centre for Health Services and Policy Research, University of British Columbia, 429-2194 Health Sciences Mall, Vancouver, BC, Canada V6T 1Z3,
- 2Department of Family Practice, Centre for Health Services and Policy Research, University of British Columbia
- 3Department of Pharmacology and Therapeutics, Centre for Health Services and Policy Research, University of British Columbia
- Correspondence to: S G Morgan
- Accepted 22 July 2005
Driven by increased use of prescription drugs and by shifts from old to new products, spending on drugs in Canada doubled between 1996 and 2003.1 Which drugs drove this expenditure growth? The Canadian Patented Medicine Prices Review Board appraises the therapeutic novelty of every patented medicine in Canada to distinguish “breakthrough” drugs from other medicines. Since 1990, the board has published these appraisals in annual reports.2 We applied the board's classifications for breakthrough drugs to total expenditures on and use of prescription drugs in the province of British Columbia (population 4.2 million).
Methods and results
Between 1990 and 2003, the board appraised 1147 newly patented drugs (identified by active ingredient(s), formulation, and strength), including derivatives of existing medicines, such as esomeprazole. Of these new drugs, 68 (5.9%) met the regulatory criterion of being a breakthrough drug (“the first drug to treat effectively a particular illness or which provides a substantial improvement over existing drug products”).2 These included, for example, filgrastim, donepezil hydrochloride, and infliximab. We expanded the criterion for being a breakthrough drug, however, to include all subsequent formulations and dosages of a classified breakthrough drug, as well as all competing drugs to enter the chemical subgroup3 established by a classified breakthrough drug. All variants on a breakthrough drug were therefore also classified as breakthroughs. This increased the number of breakthrough products in our study to 142.
The remaining 1005 new drugs did not provide a “substantial improvement over existing drug products.” We classified them as “me-too” drugs. The Patented Medicine Prices Review Board's breakthrough assessments are not available for drugs first marketed before 1990; we therefore classified these only as “vintage brand” or “vintage generic” drugs. Generic versions of drugs marketed before 1990 were classified as vintage regardless of year of introduction.
From 1996 to 2003, per capita expenditure on prescription drugs in British Columbia more than doubled (from $141 (£78; €115) to $316) and per capita days of treatment supplied increased by just over half (from 194 to 301 days) (figure). Cost per day supplied rose from $0.73 to $1.05.
Breakthrough drugs accounted for 6% of expenditure and 1% of use in 1996, and 10% of expenditure and 2% of use in 2003. Vintage brand and vintage generic drugs combined accounted for 75% of total use in 1996 and 54% in 2003, but only 53% and 27% of total annual expenditure for those two years respectively. In contrast, me-too drugs accounted for 44% of use and 63% of expenditure by 2003. Their average cost per day of treatment was twice that of vintage brand drugs and four times that of vintage generic drugs.
In British Columbia most (80%) of the increase in drug expenditure between 1996 and 2003 was explained by the use of new, patented drug products that did not offer substantial improvements on less expensive alternatives available before 1990. The rising cost of using these me-too drugs at prices far exceeding those of time tested competitors deserves careful scrutiny. Approaches to drug pricing such as those used in New Zealand4 may enable savings that could be diverted towards other healthcare needs. For example, $350m (26% of total expenditure on prescription drugs) would have been saved in British Columbia if half of the me-too drugs consumed in 2003 were priced to compete with older alternatives. This saving could pay the fees of more than a thousand new doctors.
Given that the list of top 20 drugs in global sales5 includes newly patented versions of drugs in long established categories (that is, marketed before 1990)—such as angiotensin converting enzyme inhibitors, statins, selective serotonin reuptake inhibitors, and proton pump inhibitors—me-too drugs probably dominate spending trends in most developed countries.
What is already known on this topic
Expenditure on prescription drugs is rising rapidly in Canada
Shifts from old to new products are a common cause of expenditure growth
What this study adds
Eighty per cent of the recent expenditure growth in British Columbia, Canada, is attributable to new drugs launched in established chemical subclasses
This article was posted on bmj.com on 2 September 2005: http://bmj.com/cgi/doi/10.1136/bmj.38582.703866.AE
Contributors SGM was responsible for project conception, collecting data, conducting the analysis, and drafting the original article. All his coauthors helped to develop the study design, interpret the results, draft the manuscript, and revise the article for intellectual content. All authors have read and approved the final version. SGM is the guarantor.
Funding This project was supported by an operating grant from the Canadian Institutes of Health Research. SGM is supported by career awards from the Canadian Institutes of Health Research and the Michael Smith Foundation for Health Research.
Competing interests None declared.
Ethical approval The Behavioural Research Ethics Board at the University of British Columbia approved the analysis of databases in this study.