After several years of low growth, public drug plan expenditures up sharply in 2015-16
$1 billion increase from 2014-15 fueled largely by new, higher-cost drugs
May 24, 2017 — Ottawa, ON — Patented Medicine Prices Review Board
A new Patented Medicine Prices Review Board (PMPRB) report reveals that prescription drug expenditures by Canadian public drug plans reached $11.3 billion in 2015-16, up $1 billion over the previous year. This increase was mainly driven by a 12% growth in drug costs. While new and curative treatments for hepatitis C were major contributors to this growth, other high-cost drugs continued to put upward pressure on drug plans.
This relatively high growth rate signals a shift from a sustained period of low growth, as expenditures related to new, higher-cost drugs significantly outstripped savings resulting from generic price reductions and generic competition to drugs that recently lost patent protection.
These findings were released today by the PMPRB in the third edition of Compass Rx, an annual report published under the National Prescription Drug Utilization Information System research initiative. CompassRx provides insight into the forces driving prescription drug expenditures in select Canadian public drug plans. This edition focuses on the 2015-16 fiscal year and provides a retrospective review of trends in prescription drug expenditures since 2011-12.
CompassRx, 3rd edition: 2015-16 is available on the PMPRB website in PDF and accessible HTML formats.
Prescription drug expenditures are composed of three main components: drug costs (74.7%), which increased by nearly $0.9 billion in 2015-16, dispensing costs (21.8%), and markups (3.1%).
The growth in drug costs in the public drug plans analyzed was mainly driven by the use of new direct-acting antiviral drugs for hepatitis C, and other high-cost drugs. Other, lesser cost drivers included changing demographics and increased use.
Patented drugs, the largest market segment at 58.5%, grew at a rate of 18.8% in 2015-16. Patented drugs exceeding $10,000 in annual treatment costs grew by 60.5%, accounting for 27.6% of drug costs, but were used by less than 1% of public drug plan beneficiaries.
New and curative treatments for hepatitis C cost Canadian public drug plans $600.6 million in 2015-16, contributing 8.0% to the total 12% drug cost growth.
The savings from generic substitution and price reductions in 2015-16 only partially offset cost pressures on the Canadian public drug plans analyzed by pulling overall drug cost levels downward by 4.1%.
The Canadian public drug plans analyzed reimbursed, on average, 79.7% of total prescription costs for 285 million prescriptions dispensed to over nine million active beneficiaries. The remainder was paid for out-of-pocket or by third-party insurance.
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