Prescription drug costs for public drug plans rose to $12.5 billion in 2019/20, a 3.7 per cent rise in spending since 2017/18, driven primarily by increases in the use of higher-cost drugs, according to a report by the Patented Medicine Prices Review Board.

The report, which reviewed data from the National Prescription Drug Utilization Information System database, found between 2014/15 and 2019/20, total prescription drug expenditures for Canada’s public drug plans rose by $3.1 billion, for a compound annual growth rate of 5.5 per cent. Overall, growth in prescription drug expenditures skyrocketed by 5.8 per cent, while declining use of direct-acting antivirals for hepatitis C had a pull effect of negative 1.6 per cent.

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Drug costs, which represent 80 per cent of prescription drug expenditures, also rose, growing by 4.3 per cent from 2018/19 to 2019/20. Dispensing costs, which account for the remaining 20 per cent of expenditures, grew by 1.4 per cent. Nearly 60 per cent of the total drug costs in 2019/20 were attributable to just five per cent of public drug plan beneficiaries, while high-cost drugs — which were used by just two per cent of beneficiaries — accounted for more than a third of the costs.

However, the report also found new restrictions on eligibility requirements in the Ontario Health Insurance Plan had a significant impact on costs, leading to a 4.8 per cent decrease in total prescription drug expenditures for Ontario in 2019/20 and a 2.9 per cent drop in spending for all public drug plans. Indeed, the overall increase in costs was tempered by changes in eligibility for Ontario’s public program for those aged 24 and younger. Without the OHIP changes, the 4.3 per cent total drug cost growth in all national public drug plans would have been 7.8 per cent.

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Changes in the size of beneficiary populations pushed costs up by three per cent in 2019/20, due in large part to the expansion of British Columbia’s income-based plan. Following a substantial 6.2 per cent decrease in costs from generic pricing initiatives in 2018/19, price reductions and generic and biosimilar substitution had a slight negative 1.2 per cent effect in 2019/20.

Public drug plans paid an average of 87 per cent of the total prescription costs for 300 million prescriptions dispensed to almost seven million active beneficiaries in 2019/20. The overall growth in dispensing costs was 1.4 per cent ($35.4 million) in 2019/20, a more modest increase than the 5.1 per cent growth observed in 2018/19, though results varied among individual plans.

The modifications to the OHIP also led to a 2.3 per cent decrease in dispensing costs ($56.3 million) nationally and by 4.1 per cent in Ontario. That said, the number of active beneficiaries pushed overall costs up by 2.7 per cent in 2019/20 as a result of demographic changes in B.C. Notably, changes in prescription size and the volume of units dispensed to patients pushed costs upward by 2.3 per cent, while there was no change in the overall average dispensing fee per prescription.

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