Public drug plan expenditures in Canada up by $2 bn in 3 years, says PMPRB

by Leo Almazora11 Sep 2019

Prescription drug expenditures by Canadian public drug plans increased by 7.4% to reach $11.4 billion in 2017-2018, the Patented Medicine Prices Review Board (PMPRB) said in a new report.

According to the board’s CompassRx, 5th edition: Annual Public Drug Plan Expenditure Report, that increase follows the modest 1.9% growth rate in 2016-2017 and the substantial double-digit increase observed the year before. Between the 2014-2015 and the 2017-2018 fiscal years, the total prescription-drug expenditure for Canada’s public drug plans rose by $2 billion, reflecting a compound annual growth rate of 6.6%.

The acceleration in expenditures for the public plans last year was primarily driven by a rise in the use of higher-cost drugs: drug costs rose by 8.3% over the previous fiscal year, and expenditures on drugs that exceed $10,000 in annual treatment costs surged by 19.3%. Such high-cost drugs were used by less than 2% of public drug plan beneficiaries, and accounted for over 30% of the total drug costs in 2017-2018.

Increased use of higher-cost medicines, along with renewed pressure from direct-acting antiviral (DAA) drugs for hepatitis C, accounted for a 7.1% rise in drug costs during 2017-2018.

Changes to plan designs also contributed to the growth in expenditures. Notably, the rollout of the OHIP+ program in the last quarter of 2017/2018 reportedly accounted for a 2.5% increase in total prescription-drug expenditures for Ontario, representing a 1.4% increase for all National Prescription Drug Utilization Information System (NPDUIS) public drug plans for the entire fiscal year.  Absent the OHIP+ program, the total drug cost growth in all NPDUIS programs would have been 6.8% rather than 8.3%.

Generic and biosimilar substitution efforts produced limited savings. The impact of savings from price reductions and generic and biosimilar substitution reportedly underwent a steady decline from -9.2% in 2012-2013 to -2.4% in 2017-2018.

The report also showed a modest increase of 3.8% in dispensing costs in 2017-2018, equating to $86.1 million. It closely mirrored the growth rate observed two years before; once again, the report noted that Ontario’s OHIP+ program was a significant contributor, pushing dispensing costs upward by 1.3% ($28.8 million) overall.

Demographic effects added just 1.4% to the growth in dispensing costs in 2017-2018, while the prescription-size effect exerted a more significant impact, pushing overall dispensing costs up by 2.5%. That was offset somewhat by changes in the average dispensing fee per prescription, which pulled down dispensing costs by 0.5% due mainly to a -6.9% revision in dispensing costs in Manitoba.