OBJECTIVES

After a sharp 9.9% increase in 2015/16, the growth in public drug plan expenditures dropped to 2.6% in 2016/17. This analysis provides insight into the factors that contributed to this decline and explains whether it is transient or it reflects a lasting return to the lower rates of growth in previous years.

METHODS

The analysis uses a cost-driver model to isolate the key factors contributing to changes in drug and dispensing costs based on claims-level public drug plan data from the Canadian Institute for Health Information’s NPDUIS Database.

RESULTS

The decline in public drug plan expenditures in 2016/17 was mainly the result of lower costs related to hepatitis C drugs compared to the previous year when part of the backlog of patients was treated. At the same time, the sustained pressure of higher cost drugs pushed cost levels up by 4.7%, while the counteracting effect of generic savings was limited and the low biosimilar uptake provided only modest savings. The growth in dispensing costs continued a downward trend, falling from 3.6% in 2015/16 to 1.6% in 2016/17, although methadone use added pressure in some public drug plans.

CONCLUSIONS

A greater understanding of the forces driving expenditures in Canadian public drug plans informs policy and stakeholder discussions and aids in anticipating, managing and responding to evolving cost pressures.