News
Record low growth in public drug plans masks troubling new trends
March 31, 2015
Ottawa, ON — Patented Medicine Prices Review Board
Patented Medicine Prices Review Board releases flagship CompassRx report on public drug plan expenditures
The Patented Medicine Prices Review Board (PMPRB), through the National Prescription Drug Utilization Information System (NPDUIS) research initiative, is proud to present CompassRx, a flagship annual report and the first of its kind to identify the major drivers behind changes in prescription drug expenditures in public drug plans in Canada— an important element in allowing policy-makers and researchers to understand current trends and anticipate future cost pressures and expenditure levels.
This inaugural edition of CompassRx uses data from the NPDUIS public drug plan database to offer insight into the growth in prescription drug expenditures in select Canadian public drug plans over the 2012/13 fiscal year, providing policy-makers and researchers with a baseline for trends to be explored in future public drug plan expenditure reports. The report also takes a retrospective look at trends in public drug plan expenditures since 2008/09 and monitors major developments in Canada related to drug approval, review, pricing, and reimbursement.
The analysis in CompassRx employs a cost-driver model to identify and measure the impact of each of the four major drivers of change—demographic, volume, price, and drug-mix effects— for the two components of prescription drug expenditures: drug costs and dispensing costs. Important sub-effects, such as generic substitution, population growth, and prescription size are also examined.
Quick Facts
- Prescription drug expenditures in the select Canadian public drug plans totaled $7.7 billion in 2012/13, and were made up of drug costs (74.4%), pharmacy dispensing costs (21.4%) and retail markups (4.2%). The public drug plans shouldered the majority of the expense (82%), with the remainder paid by beneficiaries either out-of-pocket or through a third-party private insurer.
- The year-over-year change in the drug-cost component of prescription drug expenditures has been steadily declining, with overall expenditures in 2012/13 decreasing by 0.8% compared to 2011/12. This was driven by several key opposing factors, creating upward “push” and downward “pull” effects on drug costs, which nearly off-set each other.
- Increases in the size of the beneficiary population; increased prescription drug use; and the use of more expensive drugs “pushed” drug costs upward, which, without the savings generated by opposing “pull” effects, such as the substitution of generic drugs and related price reductions, would have increased drug-cost levels by 8.5% in 2012/13.
- Provincial policies that lowered generic drug prices and the substitution of generic drugs for their brand-name counterparts “pulled” overall prescription drug costs down, and, without cost pressures such as increased beneficiary population size; increased prescription drug use; and the use of more expensive drugs, would have decreased drug-cost levels by 9.2% in 2012/13.
- Expenditures related to pharmacists’ dispensing costs have been increasing in most plans in recent years, with overall cost levels growing in 2012/13 by 5.8% from the previous year.
- Changes in expenditures related to pharmacists’ dispensing costs were generally driven by increases in the size and age of the beneficiary population; growth in the average dispensing cost reimbursed per prescription; an increase in the use of drugs; and a trend in some provinces toward dispensing medication for a shorter length of time, resulting in more frequent dispensing and increased related cost expenditures.
- The “push-pull” effect and other trends observed in this edition of CompassRx will be closely monitored in future annual editions of the report.
Quotes
“The key takeaway from the CompassRx report is that the provinces have been very effective lately at containing drug costs through increased generic substitution and generic price reductions, but that longer term solutions will be needed to address the fundamental cost drivers we are seeing in public drug plans.”
Douglas Clark
Executive Director, PMPRB
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Patented Medicine Prices Review Board
The Patented Medicine Prices Review Board protects and informs Canadians by ensuring the prices of patented medicines sold in Canada are not excessive, and by reporting on pharmaceutical trends.
About the NPDUIS initiative
The National Prescription Drug Utilization Information System is a research initiative jointly conducted by the PMPRB and the Canadian Institute for Health Information (CIHI). NPDUIS seeks to provide policy-makers and drug plan managers with information and insights on trends in prices, utilization, and costs.
The main data source for this report is the NPDUIS Database, developed by the CIHI.
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Contacts
Sofie McCoy-Astell
Manager, Communications
Patented Medicine Prices Review Board
613-960-9728
Sofie.McCoy-Astell@pmprb-cepmb.gc.ca
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