75% of private drug claims growth driven by utilization

by Leo Almazora20 Aug 2018

Increased costs of drugs accounted for only 25% of the increase in claims costs observed by private drug plans from 2012 to 2016, according to a new analysis from Innovative Medicines Canada.

Focusing on data from the IQVIA Canadian Private Drug Plan (PDP) Claims Database, which represents approximately 70% of total drug claims in Canada, IMC observed that total private drug claims accelerated by 4.7% CAGR from 2012 to 2016.

Of the 4.7%, the report found that 2.1% was driven by increasing numbers of claimants; 1.4% was from increased number of claims per claimant, and 1.2% from increased costs per claim. Put another way, 45% of the growth was explained the rising number of claimants, 30% by the rising number of claims submitted by each claimant, and 25% by the rising cost for each claim.

From 2012 to 2016, the number of claimants rose from 12.1 million to 13.1 million. The average number of claims made by each claimant advanced from 10.3 to 10.9, while the average cost per claim rose from $52.09 to $54.60.

Dividing the claimants into different age groups, IMC found that those aged 25 to 54 accounted for 2% of the increase in aggregate private drug claim costs, while those aged 55 to 64 accounted for 1.4%. But the cost paid for each claimant from the 55-64 group tended to be higher, and the group made up less than 20% of the private-plan claimant population; furthermore, aggregate costs for the 55-64 cohort advanced faster (4.8% CAGR) than those for the 25-54 group (3.8%).

The analysis also compared the aggregate cost impact of drugs that treat chronic diseases versus non-chronic conditions. Costs for drugs that treat chronic disease comprised 63%-64% of total private plan drug costs, and they saw 5% CAGR between 2012 and 2016; on the other hand, costs for drugs that address non-chronic conditions represented only 33%-34% of total costs and grew only by 3.9%.

Oncology drug costs were grouped in a separate category. Costs for this group surged by 8.8% from 2012 to 2016, but since they represented only 2.8% to 3.2% of drug costs, they contributed the least to total market growth.

IMC also looked at the top-contributing classes to private drug plan costs over the period. They found that despite growing volumes and costs of specialty drugs, two of the top four classes and more than half of the top 10 classes were broadly prescribed, genericized classes of drugs that were used chronically.

“Generally speaking, drugs whose cost are less than $10,000 per patient per year represented 75% of total private plan drug costs in 2016, and they grew by 2.3% CAGR and contributed 1.8% of total CAGR of 4.7%,” the report said.


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