Putting Drugs into Perspective - The Value of Innovation

Guest Blogger: Russell Williams, President of Rx&D (Canada’s Research Based Pharmaceutical Companies)

In our continuing dialogue on improving our health care system, I would like to put the issue of drug costs in perspective.

First of all, we cannot assess value for money in isolation. New medicines and vaccines, when appropriately utilized, improve and save lives, while saving costs elsewhere in our health-care system by reducing wait times, hospitalization and surgery.

New medicines and vaccines continue to be an important contributing factor in reducing hospitalization rates in Canada. According to the Organisation for Economic Co-operation and Development (OECD), hospitalization due to ulcers dropped by 71%, diabetes by 37% and breast cancer by 30% between 1980 and 2005. Furthermore, between 1980 and 2004, mortality rates for lung disease decreased by 79% and heart attack by 70%. For HIV/AIDS, mortality rates plunged by 78% and hospitalization by 50% between the mid-nineties and 2004-05.

Several studies clearly show that access to innovative medicines and their optimal use allow patients to avoid more costly treatments such as surgery and hospitalization. For example, a study published in 2007 in PharmacoEconomics journal shows that if other Canadian provinces had increased their spending on innovative medicines in the early 1980s like Quebec did, they would have saved over a billion dollars in health care costs for hospitalization and other services.

Canadians can also be assured that they receive excellent value for their patented prescription medicines, which over the past ten years have been priced, on average, 7% below the international median and have actually decreased when inflation is taken into account. The same cannot be said for Canadian generic drugs, which several studies, including one by the federal Competition Bureau, have shown are among the highest in the world.

While it is true that overall prescription drug expenditures have risen, according to the Canadian Institute for Health Information, this is not due to price, but rather utilization caused in part by an increase in the prevalence of disease, earlier diagnosis, as well as demographic changes.

The cornerstone of our industry is innovation recognising that new technologies and cutting edge treatments hold the key to improving patient outcomes and maximizing value for money in health. Member companies invest over $1 billion dollars each year in research and development in Canada; but, the development of each new medicine or vaccine is both risky and expensive, requiring up to 15 years of research and an investment of about $1 billion.

Timely access to new medicines and vaccines must be a priority as we move towards improving our health system, thus fostering better health outcomes and supporting discovery of new treatments and therapies which will further improve effectiveness.

We need to put the power of innovation to work to improve the health and prosperity of Canadians, while getting the best value for our health-care dollars.

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Some of the material on this page is written by guest bloggers. We appreciate their opinions. However, please note that they are not necessarily those of the Health Council of Canada.