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Overall Benefits of Pharmaceuticals Outweigh Costs

The money spent on pharmaceutical treatment in Ontario more than pays off in savings for the health system and improved productivity for the economy.

Analysis shows Ontario gets twice as much back in benefits as it spends for commonly prescribed pharmaceutical treatments 

Ottawa, July 11, 2013—The money spent on pharmaceutical treatment in Ontario more than pays off in savings for the health system and improved productivity for the economy, according to a Conference Board of Canada analysis. This report, Reducing the Health Care and Societal Costs of Disease: The Role of Pharmaceuticals, quantifies how pharmaceutical treatment affects both direct health care costs and society more broadly.

This is an image of pills.“Public health care in Canada is under pressure to rein in rising costs, and drugs have been identified as a target in reducing costs. But our empirical research suggests that when it comes to certain conditions, pharmaceutical treatments offer benefits in reducing health-related complications and lowering the incidence of disease,” said Louis Thériault, Director, Health Economics, for the Conference Board’s Canadian Alliance for Sustainable Health Care. 


  • In 2012, the health and societal benefits in Ontario amounted to twice the amount spent on pharmaceuticals in the six drug classes assessed in this study. 
  • Getting patients to better comply with their prescribed drug therapy and encouraging the development of new drugs can offset, or even lower, overall health care spending.
  • Innovation in the pharmaceutical industry can boost the output of an economy by reducing lost productivity due to disease and sickness. 

This analysis examines pharmaceutical treatments involving six drug classes (and the conditions they are used to treat): 

  • Angiotensin-converting enzyme (ACE) inhibitors – (high blood pressure and hypertension) 
  • Statins – (high cholesterol)
  • Biguanides – (diabetes)
  • Biological response modifiers – (rheumatoid arthritis); 
  • Inhaled steroids – (asthma) 
  • Prescription smoking cessation aids

In Ontario, public, private and out-of-pocket expenses for these six drug classes totalled $1.22 billion last year. The Conference Board analysis calculated the impact of these treatments on overall health care costs (including drugs, physicians and hospitals) and on other costs to society (including short and long-term disability, early mortality and lost productivity specifically due to disease). The total economic benefit attributed to treatment from these six classes of drugs was nearly $2.44 billion in 2012.

Between 2007 and 2012, the analysis found both the absolute and relative health and societal benefits increased vis-à-vis costs in Ontario. Among the six classes of drugs, pharmaceuticals used to treat diabetes, high blood pressure, high cholesterol, and asthma produced benefits that outweighed their costs. 

During this 2007-2012 period, benefits did not fully offset the costs in the classes of drugs covering rheumatoid arthritis treatment and prescription smoking cessation. 

For rheumatoid arthritis patients, biological response modifiers represent a new and effective class of drug, but treatment costs remain very high. For prescription smoking cessation aids, the benefits take longer to materialize than many other classes of drugs, according to the analysis.

The economic assessment of pharmaceutical treatments covers the recent historical period (2007-2012); it also provides future projections from 2013 to 2030 under three different scenarios. In all three future scenarios, the benefits outweighed the costs – overall and in all six classes of drugs (including those for rheumatoid arthritis and smoking cessation aids). The analysis includes both branded and generic pharmaceuticals in the calculation of costs and benefits.

The report was prepared by the Canadian Alliance for Sustainable Health Care (CASHC) with technical contributions from an advisory group. CASHC research is funded by more than 30 organizations. This research received additional funding from Rx&D, Canada’s Research- Based Pharmaceutical Companies. 

Read a backgrounder for more on the methodology, assumptions and limitations of the analysis.

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