Prescription drug expenditures rebound following the COVID-19 pandemic

The Patented Medicine Prices Review Board (PMPRB) has published its latest report itemizing factors driving the growth in prescription drug costs for private drug plans in 2023. The report, Private Drug Plans in Canada: Expenditure Report, 2018-2023 also reviews trends in private drug plan costs and utilization since 2018.

Private insurance, they say, pays for an estimated 38 per cent of all drug spending and prescription drug expenditures. This spending by private plans rose by 12.9 per cent in 2023, returning to pre-pandemic growth trends. Although drug costs grew between four and five per cent during the COVID-19 pandemic, between 2018 and 2023, prescription drug expenditures in private drug plans grew at a compound annual growth rate of 7.1 per cent.

Higher-cost medicines 

In 2023 alone, drug costs jumped 14.1 per cent. The primary driver being the increased use of higher-cost medicines. Use of high-cost drugs was up 6.3 per cent from 2018 to 2023, peaking at 9.2 per cent in 2023. Dispensing costs during the same period increased 4.5 per cent. “Drug costs grew at almost twice the pace of dispensing costs,” states the report.

By 2023, medicines costing over $10,000 and $25,000 annually, used by only 1.5 per cent and 0.4 per cent of claimants, represented one-third and one-sixth of total drug costs, respectively. The top five per cent of claimants, meanwhile, accounted for nearly two-thirds of total drug costs in private plans. The use of higher cost drugs consistently pushed costs between five and nine per cent higher each year. Drugs costing over 100,000 annually saw their share of total drug costs more than double from 1.6 per cent in 2018 to 3.5 per cent in 2023.

“Private insurers typically covered 88 per cent of the total prescription costs, leaving beneficiaries responsible for the remaining 12 per cent,” they write.

Generic and biosimilar substitutions 

Cost mitigating measures, including generic and biosimilar substitutions, they add, along with price reductions, decreased plan costs between one and four per cent annually. Other cost-saving measures utilized include dispensing larger prescriptions – private plans dispensed an average 37-day supply, compared with an average 25-day supply dispensed for public plan members. “Extending days’ supply where appropriate could reduce fill frequency and generate savings from lower dispensing costs,” the report states.

As for new drugs, private plans reimbursed 84 per cent of new active substances approved between 2017 and 2022; approximately 80 per cent of these approvals occurred within one year of the drugs receiving post-market approval.

Overall, the report says prescription drugs being used outside of the hospital setting were covered by public drug plans 42 per cent of the time, by private insurers 38 per cent of the time and by individuals 20 per cent of the time. The total cost of prescription drugs in Canada reached $42.1-billion in 2023.