CompassRx, 5th Edition

Annual Public Drug Plan Expenditure Report, 2017/18

CompassRx, 5th edition

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Executive Summary

Prescription drug expenditures for the NPDUIS public drug plans increased by a considerable 7.4% in 2017/18 to reach $11.4 billion, driven primarily by a marked increase in the use of higher-cost drugs.

The PMPRB CompassRx report monitors and analyzes the cost pressures driving changes in prescription drug expenditures in Canadian public drug plans. This fifth edition of CompassRx provides insight into the factors driving growth in drug and dispensing costs in 2017/18, as well as a retrospective review of recent trends in public drug plan costs and utilization.

The main data source for this report is the National Prescription Drug Utilization Information System (NPDUIS) Database at the Canadian Institute for Health Information (CIHI), which includes data for the following jurisdictions: British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, Yukon, and the Non-Insured Health Benefits Program.

The findings from this report will inform policy discussions and aid decision makers in anticipating and responding to evolving cost pressures.

Key findings

Building on the modest 1.9% growth rate in 2016/17 and the substantial double-digit increase the year before, prescription drug expenditures for the NPDUIS public drug plans increased by 7.4% in 2017/18.

  • Between 2014/15 and 2017/18, the total prescription drug expenditure for Canada’s public drug plans rose by $2 billion, for a compound annual growth rate of 6.6%.
  • Drug costs, which represented 80% of prescription drug expenditures in 2017/18, grew at a rate of 8.3%, while dispensing costs, which accounted for the remaining 20% of expenditures, grew by 3.8%.
  • The NPDUIS public drug plans paid an average of 87% of the total prescription costs for 277 million prescriptions dispensed to almost 7 million active beneficiaries in 2017/18.
  • The introduction of the OHIP+ program in the last quarter of 2017/18 accounted for a 2.5% increase in total prescription drug expenditures for Ontario, representing an increase of 1.4% for all NPDUIS public drug plans for the entire fiscal year.

Drug cost increases in the NPDUIS public plans in 2017/18 were primarily driven by the increased use of higher-cost drugs, renewed pressure from direct-acting antiviral (DAA) drugs for hepatitis C, and the implementation of Ontario’s OHIP+ program, with limited savings from generic and biosimilar substitution.

  • Increased use of higher-cost medicines, including renewed pressure from DAA drugs, accounted for a significant 7.1% upward push on drug costs in 2017/18.
  • The patented market segment had a double-digit rate of growth, with a 19.3% rise in costs for medicines exceeding $10,000 in annual treatment costs. These high-cost drugs were used by less than 2% of public drug plan beneficiaries and accounted for more than 30% of the total drug costs in 2017/18.
  • The overall increase in costs was also greatly influenced by the implementation of Ontario’s OHIP+ program in the last quarter of 2017/18. Without OHIP+, the 8.3% total drug cost growth in all NPDUIS public drug plans would have been 6.8%.
  • Increases in the volume of drugs and the size of the beneficiary population pushed drug costs upward by 2.4% in 2017/18, following a stable five-year trend.
  • Although savings from price reductions and generic and biosimilar substitution somewhat offset the growth in drug costs, their impact steadily declined from -9.2% in 2012/13 to -2.4% in 2017/18.

The growth in dispensing costs in the NPDUIS public plans was moderate and aligned closely with the recent three-year trend, reaching $2.3 billion.

  • The overall growth in dispensing costs was 3.8% (or $86.1 million) in 2017/18, paralleling the growth rate two years before, though results varied among individual plans.
  • The implementation of Ontario’s OHIP+ program had a significant impact on the growth in dispensing costs, pushing costs upward by 1.3% ($28.8 million) overall and by 2.4% in Ontario.
  • The demographic effect only made a modest contribution of 1.4% to the growth in dispensing costs in 2017/18.
  • The prescription size effect had the greatest impact on dispensing costs in 2017/18, pushing overall costs up by 2.5%.
  • Changes in the average dispensing fee per prescription pulled down dispensing costs by 0.5% in 2017/18, mainly due to the -6.9% change in Manitoba.

Full report

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