Teaser: High-cost medications and reduced generics savings continue to weigh on public plans
Following year-on-year growth of 10.8% in 2015-16, public drug plan expenditures in Canada rose modestly by 1.9% in 2016-17 to reach $10.7 billion, according to the latest edition of the Patented Medicine Price Review Board’s (PMPRB) CompassRx report.
The report revealed that drug costs, which account for 79% of prescription drug expenditures in 2016-17, increased by 2%; dispensing costs, whose share in prescription drug expenditures were virtually unchanged at 21%, rose by 1.6%. That translated into an absolute increase of $168 million.
Drug plans included in the National Prescription Drug Utilization Information System (NPDUIS) at the Canadian Institute for Health Information (CIHI) paid 86%, on average, of total costs for 266.3 million prescriptions.
“The 2.0% increase [in drug costs] in 2016-17 was in addition to a significant 12% increase in 2015-16, with the total drug costs reaching $8.4 billion,” the report noted. The acceleration in drug costs was attributed to increased use of higher-cost drugs, though the use of direct-acting antiviral (DAA) drugs for hepatitis C declined in 2016-17 compared to the preceding year.
Patented medicines were the largest market segment, capturing 60.1% of drug costs in 2016-17; excluding the decline of DAA drug costs, expenditures for the segment grew 5.7% during the period. Spending on drugs that cost more than $10,000 annually per treatment, meanwhile, increased disproportionately; though used by less than 2% of public plan beneficiaries, the category underwent 17.2% growth and accounted for nearly 28% of total drug costs.
“Single-source non-patented medicines also had a sizable rate of growth (7.4%), but only captured a small market share (3.9%),” the report said. “The costs for multi-source generic drugs, which accounted for nearly one quarter of drug costs, increased by 2.7% in 2016/17.”
Increases in the beneficiary population and the use of drugs lifted drug costs by 2.8%. During the 2016-17 period, the number of beneficiaries expanded 1.7% to 5.8 million, accounting for 20.2% of the population.
“The drug-mix effect for higher-cost drugs (other than DAA drugs for hepatitis C) had the greatest push on drug costs with an impact of 4.4% or $363 million,” the PMPRB noted, adding that the decreased use of DAA drugs drove costs down by -2.3% or -$186 million.
“The demographic effect boosted drug costs in the NPDUIS public plans by 1.8% ($151 million) in 2016/17. An increase in the number of Canadians eligible for senior coverage (65+) and the launch of new sub-plans (e.g., increased eligibility in PEI) are among the factors that contributed to this growth.”
Increases in drug costs were offset by price reductions and generic and biosimilar substitution, which added up to $229 million in savings. However, because of the reduced impact of the patent cliff and generic price reforms those savings have weakened steadily from -9.2% in 2012-13 to -2.8% in 2016-2017.
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