Billions wasted on drug spending in Canada, research shows

Canada wasted $15 billion over the last five years on highly priced prescription drugs, in part because of questionable drug company sales tactics, according to exclusive research and a hidden camera investigation by the fifth estate.

The research conducted for the fifth estate by health benefits company Express Scripts Canada shows employer-funded private insurance plans in Canada wasted more than $3 billion per year between 2011 and 2015 by covering the cost of expensive drugs that have cheaper options, as well as paying for unnecessary dispensing fees.

That's nearly 20 per cent of the $81 billion spent on drugs over those five years by private insurance companies in Canada.

"It's quite a staggering number," says John Herbert, director of strategy, product development and clinical services for Express Scripts Canada, an Ontario-based company that helps the private insurance industry cut wasted spending.  

"It's key for Canadians to know this because they can save themselves as well as their employer money by choosing to take advantage of those lower-cost, clinically effective medications."

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For example, when it comes to spending on Type 2 diabetes drugs by private insurance plans in Canada, 30 per cent of the time doctors prescribed vastly more expensive drugs without first trying cheaper alternatives.

Spending on diabetes drugs is growing faster than any other category of drugs in Canada, according to health-care data company IMS Health.

Clinical guidelines from the Diabetes Association of Canada recommend first prescribing generic Metformin — a drug that costs just $65 per year. Only when it fails to work should doctors move on to more expensive alternatives that can cost as much as $3,000 per year.

According to the research by Express Scripts Canada, in 2015 more than $100 million was wasted by ignoring those clinical guidelines.

In some cases, there may be medical reasons for bypassing the guidelines, but experts say that wouldn't explain all of it.

"My guess is that drug promotion is very influential in terms of doctors not following the guidelines," says Toronto family doctor Sheryl Spithoff.

"It's incredible. It's a lot of money that could be used for other things in the health-care system."  

Misinformed prescribing practices

Experts say misinformed prescribing practices, influenced by drug company marketing, are at the heart of the wasted spending.

In Canada, doctors often rely on the drug companies to teach them about new drugs and their potential benefits, a situation that inevitably creates a conflict of interest, experts say.

A drug company will likely favour its own products, even if they are not the best or cheapest option.

"The companies would not be spending millions of dollars on [drug marketing and education] if it wasn't having an effect on sales," says Barbara Mintzes, a professor previously with the faculty of pharmacy at the University of British Columbia who now lectures at the University of Sydney in Australia.

"There is a body of research evidence showing that marketing promotion of drugs to physicians is effective in affecting prescribing practice."

Hidden camera investigation

One of the ways drug companies market their products to doctors is sponsoring booths at medical education conferences.

the fifth estate asked a doctor to wear a hidden camera to the largest annual conference for family physicians, the Family Medicine Forum, held in Vancouver last November.

The doctor visited several booths where companies were promoting their latest diabetes drugs.

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In all cases, the drug representatives used a tactic experts consider questionable. The representatives failed to mention any side-effects or medical risks associated with their drugs, without first being prompted by the doctor.

In one instance, the representative for AstraZeneca went further and criticized the guidelines in British Columbia that advise doctors to prescribe cheaper drugs before more expensive options, implying the guidelines should be disregarded in favour of the more expensive drugs his company sells.

"When you look at your diabetes in B.C.," he told the doctor, "I mean — we see — [the guidelines are] still backwards."

Off-label promotion?

That same representative, along with a second from the drug company Boehringer Ingelheim, suggested their diabetes drugs could also help people lose weight, even though their drugs aren't approved for weight loss by Health Canada.

It's a tactic that could be considered off-label promotion.

"It was a great option for patients that [are], you know, middle age, overweight," the representative from Boehringer Ingelheim said, adding that their drugs also have the "benefit of weight loss."  

In a statement to the fifth estate, AstraZeneca says it's "committed" to "high standards of ethical business practices" and the company has "completed an internal investigation and taken appropriate steps."

Boehringer Ingelheim says the company doesn't "condone or support promotion that contravenes Health Canada's terms of authorization" and that the company "continues to investigate the information provided by the fifth estate and will immediately implement any actions identified by our internal investigation."

'Need to think carefully'

Many experts believe drug companies shouldn't be involved in educating doctors about new drugs, arguing an independent body could take on that task instead.

"Sales means that you've got to promote your product, highlight the positive, downplay the negative," says Steve Morgan, a leading health economist from the University of British Columbia.

"We really need to think carefully about making sure that a drug benefits system in this country, a pharmaceutical strategy in Canada, is grounded entirely on good quality clinical evidence. Not over a box of doughnuts at a meeting with a sales rep or on the floor of a convention center."

The body that represents drug manufacturers in Canada, Innovative Medicines Canada, declined to do an interview with the fifth estate, but provided a statement.

"Innovative Medicines Canada and its member companies are proud to be an integral part of our country's health-care system," the group wrote. "And we believe that all Canadians deserve fair, equitable and affordable access to the medicines they need, when they need them."

A representative for Canada's private insurance industry did agree to be interviewed.

"There's no question we can do better," said Stephen Frank, a vice-president with the Canadian LIfe and Health Insurance Association.

Frank said insurance companies offer tools to employers to help them cut waste from their private workplace drug plans and more and more employers are starting to use them.

"That's taking a bit of time on the private side ... it's a question of how quickly it's going to move, not a question of if."