By Sheryl Ubelacker TORONTO — Canadians are forking out close to $30 billion a year to stock their medicine cabinets with prescription and over-the-counter medications, says an annual report on drug spending released Thursday. That works out to an average of almost $900 per person across the country, concluded the Canadian Institute for Health Information report on estimated 2008 drug costs outside hospitals. The report shows last year's drug expenditures accounted for 17.4 per cent of total health costs — nearly double the proportion that drug spending claimed in 1985 when the institute began compiling and publishing such data. "Typically, and this has been a pattern really for the last 10 years, drugs are certainly the fastest-growing component of health expenditure," said Michael Hunt, CIHI manager of pharmaceutical programs. Drug spending grew by an estimated eight per cent in 2008 over the previous year, outstripping the six per cent rate of growth in what is paid out for hospitals and doctors. "So it's really not in line with what we see for physician spending, hospital spending and actually the overall increase in health expenditure," Hunt said from Ottawa. "I always think of drug expenditure as having reached critical mass many years ago," he said. "In health we talk about billions quite easily, but we're seeing more than $2 billion a year's growth in overall drug expenditure year to year." Prescription medications are estimated to have accounted for 84 per cent of the total drug bill last year; spending on prescription drugs grew at a rate of nine per cent, while non-prescription drugs grew by 4.6 per cent. For the third consecutive year, private-sector spending on prescribed drugs grew at a faster rate than that of the public sector, CIHI found. Private-sector prescription medication expenditure reached an estimated $14 billion in 2008, for a year-over-year growth rate of about 11 per cent. Public-sector spending is estimated to have hit $11.2 billion, growing almost seven per cent over the previous year. "Since 2006, it's the public-private split that begins to tell a bit of a story, in that public growth has been less than private growth," Hunt said. "And when we talk about private, that's sort of out of pocket — those folks who don't have an insurance plan or those with a third-party insurance plan." He said public expenditures include provincial and territorial drug-insurance programs, such as those that cover the cost of medications for seniors and residents who receive social assistance. Hunt said the data doesn't allow researchers to "dig down much" to figure out why such a shift is occurring. But Steve Morgan, a health economist at the University of British Columbia, suggested two possible reasons. "The public-sector drug plans in Canada are gradually changing in their shape," Morgan said from Vancouver. "A number of provinces have adopted income-based drug-benefit programs as opposed to age-based entitlement programs, so we see that there will be more and more spending on the private sector as people reshape the way pharmacare in Canada is structured." As well, drug spending by baby boomers is growing at a faster clip than that of any other population group, and much of it falls on the private-sector side of the equation, he noted. But with so many Canadians losing their jobs — and their employment-related drug plans — because of the economic downturn, Hunt said it will be important to document the impact on both public-sector and out-of-pocket drug spending over the next few years. "I think this is a really important question," agreed Morgan. Because the drug-benefit system relies heavily on employment and retiree drug benefits, a significant number of people could end up relatively uninsured for drug costs "because our system is fractured into this private-public split," he said. "And so we may in this current economic climate want to refocus and rethink how we designed our drug-benefit programs and maybe reconsider whether it would have been a better idea to have a pharmacare system not unlike medicare."