Prescribed Drug Spending in Canada, 2013: A Focus on Public Drug Programs

Transcription

1 Prescribed Drug Spending in Canada, 2013: A Focus on Public Drug Programs Spending and Health Workforce

2 Our Vision Better data. Better decisions. Healthier Canadians. Our Mandate To lead the development and maintenance of comprehensive and integrated health information that enables sound policy and effective health system management that improve health and health care. Our Values Respect, Integrity, Collaboration, Excellence, Innovation

3 Table of Contents Acknowledgements... 4 About CIHI... 5 Highlights... 6 Introduction Prescribed Drug Spending in Canada How Much Do Canadians Spend on Prescribed Drugs? What Are the Trends in Prescribed Drug Spending in Canada? What Proportion of Prescribed Drug Spending Is Funded by the Public Sector? Public Drug Program Spending in Selected Jurisdictions Which Drugs Account for the Highest Proportion of Public Drug Program Spending? Which Drugs Contributed to the Observed Trends in Public Drug Program Spending? How Is Public Drug Program Spending Distributed? Appendix A: Glossary of Terms Appendix B: Overview of Drug Program Design and Formulary Appendix C: Drug Classification Systems Appendix D: Factors That May Influence Drug Use and Expenditure in Canada Appendix E: Methodological Notes Appendix F: Federal, Provincial and Territorial Drug Programs Appendix G: Percentage of Public Drug Program Spending, by Broad Therapeutic Category, Selected Jurisdictions, Appendix H: Generic Drugs as a Percentage of Total Drug Program Spending and Total Number of Accepted Claims, Selected Jurisdictions, 2003, 2008 and Appendix I: Percentage of Paid Beneficiaries and Public Drug Program Spending, by Program Spending per Paid Beneficiary, Selected Jurisdictions, 2008 and Appendix J: Proportion of Public Drug Program Spending per Paid Beneficiary per Chemical, Selected Jurisdictions, 2003, 2008 and Appendix K: Top 10 Drug Classes With the Highest Proportion of Public Drug Program Spending, by Jurisdiction, Appendix L: IMS Brogan Disclaimer References... 53

4 Acknowledgements The Canadian Institute for Health Information (CIHI) wishes to acknowledge and thank the following groups for their contributions to Prescribed Drug Spending in Canada, 2013: A Focus on Public Drug Programs: Newfoundland and Labrador Prescription Drug Program, Department of Health and Community Services Prince Edward Island Provincial Pharmacare Program, Department of Health and Wellness Nova Scotia Pharmaceutical Services, Department of Health and Wellness New Brunswick Pharmaceutical Services Branch, Department of Health Ontario Pharmaceutical Services Coordination Unit, Ministry of Health and Long-Term Care Manitoba Provincial Drug Programs, Department of Health Saskatchewan Drug Plan and Extended Benefits Branch, Ministry of Health Alberta Health Economics and Funding Branch, Ministry of Health British Columbia Health Outcomes and Economic Analysis Division, Ministry of Health First Nations and Inuit Health Branch, Non-Insured Health Benefits Directorate, Health Canada Please note that the analyses and conclusions in this document do not necessarily reflect those of the organizations mentioned above. 4

5 About CIHI The Canadian Institute for Health Information (CIHI) collects and analyzes information on health and health care in Canada and makes it publicly available. Canada s federal, provincial and territorial governments created CIHI as a not-for-profit, independent organization dedicated to forging a common approach to Canadian health information. CIHI s goal: to provide timely, accurate and comparable information. CIHI s data and reports inform health policies, support the effective delivery of health services and raise awareness among Canadians of the factors that contribute to good health. Production of this analysis is made possible by financial contributions from Health Canada and provincial and territorial governments. The views expressed herein do not necessarily represent the views of Health Canada or any provincial or territorial government. 5

6 Highlights This report focuses on prescribed drug expenditure, which accounts for 85.0% of drug spending in Canada. The first section provides an overview of prescribed drug spending using CIHI s National Health Expenditure Database (NHEX) data. The second section looks more in-depth at public drug program spending using data from CIHI s National Prescription Drug Utilization Information System (NPDUIS) Database. Slowed growth in prescribed drug spending, observed since 2000, is forecast to have continued in 2014 in both the public and private sectors. Prescribed drug spending is expected to have reached $28.8 billion, accounting for 85.0% of total drug spending ($33.9 billion) and 13.4% of total health expenditure. Prescribed drug spending is forecast to have grown at 0.9%, its lowest rate since spending was first measured in Public-sector spending on prescribed drugs in 2014, which represents 42.0% of total prescribed drug spending, is forecast to have been $12.1 billion. 10 drug classes accounted for about a third (32.9%) of public drug program spending in of the top 10 drug classes were used to treat conditions related to either the cardiovascular or nervous system. Tumour necrosis factor alpha inhibitors (anti-tnf drugs), a biologic drug class used to treat rheumatoid arthritis and Crohn s disease, accounted for the highest proportion of spending. Individuals for whom public drug programs paid $2,500 or more toward drug costs accounted for 12.1% of beneficiaries and 62.9% of public drug spending. Generic drugs accounted for 34.1% of public drug program spending and 71.5% of claims. When looking at only cases in which generic products are available, generics accounted for 79.1% of spending and 85.2% of claims. Savings from generics between 2008 and 2013 were largely offset by increased spending on other drug classes. The expiration of patents and subsequent introduction of lower-cost generic drugs and the implementation of generic pricing policies contributed to a decline in spending in 5 of the top 10 drug classes in terms of public drug program spending. Between 2008 and 2013, public drug program spending on these 5 classes decreased by $270.7 million in the 7 jurisdictions where data was available in both years. These decreases in spending were offset by increases in other drug classes during this time period. In particular, public drug program spending on anti-tnf drugs alone increased by $233.8 million between 2008 and of the top 10 drug classes that contributed most to the growth of public drug spending anti-tnf drugs, antineovascularization agents, long-acting insulins and analogues for injection, and interleukin inhibitors are classes of drugs known as biologic agents. 6

7 Introduction Spending on prescribed drugs continues to rise and is forecast to have reached almost $28.8 billion in Spending is forecast to have increased by 0.9% from the previous year, continuing the recent trend of slower growth and representing the lowest annual growth rate since spending was first measured in The lower growth observed in recent years has been due in large part to patent expirations for commonly used chemicals and the implementation of generic pricing policies. 2 5 Multiple payers are involved in the financing of prescribed drugs, including public drug programs, private insurers and households. In 2014, public-sector expenditure on prescribed drugs is expected to have reached $12.1 billion, which is the same as it was in 2013, accounting for 42.0% of prescribed drug spending in Canada. Private-sector expenditure on prescribed drugs is expected to have reached $16.7 billion in 2014, an increase of 1.3% from This includes $10.3 billion (35.8%) financed by insurers and $6.4 billion (22.2%) financed by Canadian households. To support drug program management and decision-making, there is an ongoing need for detailed information about drug use and expenditure. This report focuses on prescribed drug expenditure, which accounts for the majority (85.0%) of drug spending in Canada. The first section of this report provides an overview of prescribed drug spending in Canada using 2014 forecast data from CIHI s National Health Expenditure Database (NHEX), which contains a historical series of macro-level drug expenditure statistics by province and territory. It examines trends in overall prescribed drug spending in Canada and by source of funds. The second section of this report provides a more in-depth look at public drug program spending. It looks at the types of drugs and characteristics of people accounting for the majority of spending and examines some of the components of spending that contributed to observed trends in overall public drug program spending. The analysis in this section uses drug claims data submitted to CIHI s National Prescription Drug Utilization Information System (NPDUIS) Database in 2013 (see appendices E and F for more information about the data used in this report). The NPDUIS Database contains claims from public drug programs in 9 provinces Newfoundland and Labrador, Prince Edward Island, Nova Scotia, New Brunswick, Ontario, Manitoba, Saskatchewan, Alberta and British Columbia as well as 1 federal program administered by the First Nations and Inuit Health Branch (FNIHB). 7

8 1 Prescribed Drug Spending in Canada This section examines prescribed drug spending in Canada and will address the following questions: How much do Canadians spend on prescribed drugs? What are the trends in prescribed drug spending in Canada? What proportion of prescribed drug spending is funded by the public sector? A glossary (Appendix A) provides definitions of key terms used in this report. 1.1 How Much Do Canadians Spend on Prescribed Drugs? Canadians spent an estimated $33.9 billion on drugs in 2014, the majority of which (85.0%) was spent on prescribed drugs, at an estimated $28.8 billion. Multiple payers are involved in the financing of prescribed drugs. In the public sector, these payers include provincial/territorial and federal drug subsidy programs and social security funds (such as workers compensation boards). In the private sector, payers include private insurers and households or individuals paying out of pocket. In 2014, $12.1 billion (42.0%) of prescribed drug spending is expected to have been financed by the public sector (Figure 1). In the private sector, prescribed drug spending financed by private insurers is expected to have been $10.3 billion (35.8%), with the remaining $6.4 billion (22.2%) financed by Canadian households. 8

9 Figure 1: Prescribed Drug Expenditure, by of Finance, Canada, 2014 f Notes * Social Security Funds (SSFs) include health care spending by workers compensation boards and the premium component of the Quebec Drug Insurance Fund. f: Forecast. $ billions; percentage share of total prescribed drug expenditure. National Health Expenditure Database, 2014, Canadian Institute for Health Information. In 2014, among the major categories of health spending, spending on prescribed drugs is expected to account for 13.4% of spending, the third-largest category after hospitals (29.6%) and physicians (15.5%, Figure 2). The share of prescribed drugs in total health spending varied among provinces, ranging from 10.5% in B.C. and 10.7% in Alberta to 15.5% in New Brunswick and 16.7% in Quebec. 1 9

10 Figure 2: Total Health Expenditure, by Use of Funds, Canada, 2014 f Notes f: Forecast. $ billions; percentage share of total health expenditure. National Health Expenditure Database, 2014, Canadian Institute for Health Information. 1.2 What Are the Trends in Prescribed Drug Spending in Canada? Since 2000, the growth in drug spending has been slowing fairly consistently from year to year. 1 Similar trends have been observed in both the public and private sectors (Figure 3). i Prescribed drug spending in Canada grew rapidly in the early 2000s when many blockbuster drug classes expanded in terms of use and cost. More recently, growth rates have been lower as a result of patent expirations for many of the same drugs that led to higher growth in the previous years, as well as the introduction of generic pricing policies. 2 5 In 2014, the rate of annual growth in prescribed drug spending is forecast to have been 0.9%, the lowest rate since spending was first measured in i. Due to a major redesign of the Survey of Household Spending by Statistics Canada in 2010, out-of-pocket prescribed drug estimates from 2009 and earlier years should not be compared with those between 2010 and These were effectively 2 different surveys before and after the methodology redesign. The differences in survey design are responsible for the spike in private-sector prescribed drug spending observed in For more information, please refer to CIHI s report National Health Expenditure Trends, 1975 to

11 Figure 3: Prescribed Drug Spending, Canada, 2000 to 2014 f Notes f: Forecast. Rx Drug: Prescribed drug. National Health Expenditure Database, 2014, Canadian Institute for Health Information. Other categories of public-sector health spending also experienced slowed growth between 2000 and 2014; however, the decline in growth rates was more pronounced for drugs. Between 2000 and 2005, public drug spending grew at a more rapid rate than other major components of health care spending. However, since 2006, public drug spending has grown more slowly than physician spending in each year and more slowly than hospital spending in each year but 2 (Figure 4). Slower growth in public drug spending is forecast to have continued in 2014, with a growth rate of 0.4%, compared with 1.9% for hospital spending and 4.4% for physician spending. 11

12 Figure 4: Annual Growth Rate of Publicly Funded Health Spending, by Selected Categories, 2000 to 2014 f Note f: Forecast. National Health Expenditure Database, 2014, Canadian Institute for Health Information. 1.3 What Proportion of Prescribed Drug Spending Is Funded by the Public Sector? In 2014, the public sector is forecast to have financed 42.0% of prescribed drug spending in Canada (Figure 5). The public share of prescribed drug spending varied among provinces, ranging from 31.5% in New Brunswick and 34.4% in B.C. to 45.7% in Quebec and 51.0% in Saskatchewan. 12

13 Figure 5: Publicly Funded Drug Spending as a Percentage of Prescribed Drug Spending, by of Finance, by Provinces and Canada, 2014 f Notes * Social Security Funds include health care spending by workers compensation boards and the premium component of the Quebec Drug Insurance Fund. f: Forecast. National Health Expenditure Database, 2014, Canadian Institute for Health Information. The majority of public-sector spending in each province is funded by the provincial government. It should be pointed out that the federal share of spending is larger in Manitoba and Saskatchewan because of the proportionally higher First Nations population in those provinces. FNIHB administers a federal drug plan that provides drug coverage to eligible First Nations populations in all provinces and territories in Canada. Conversely, the federal share is lower in Ontario because the provincial drug program funds costs that are funded by FNIHB in other provinces. The share of prescribed drug spending financed by the provincial governments ranges from 28.0% in New Brunswick to 40.9% in Alberta. 13

14 2 Public Drug Program Spending in Selected Jurisdictions To better understand trends in public drug program spending, this section examines public drug program spending using data submitted to the NPDUIS Database by 10 federal/provincial public drug programs. This section will address the following questions: Which drugs account for the highest proportion of public drug program spending? Which drugs contributed to the observed trends in public drug program spending? How is public drug program spending distributed? 2.1 Which Drugs Account for the Highest Proportion of Public Drug Program Spending? Spending by Broad Therapeutic Category In 2013, total public drug program spending among the 10 jurisdictions was almost $7.8 billion. Among 14 broad therapeutic categories, the top 2 categories nervous system and cardiovascular system drugs accounted for 35.8% of total public drug program spending (Table 1). Spending by broad therapeutic category provides a high-level overview of the types of conditions that account for drug spending. Broad therapeutic categories are regarded as groups of different chemicals that act on the same organ or system (see Appendix C). 14

15 Table 1: Percentage of Total Public Drug Program Spending and Rate of Use, by Broad Therapeutic Category, Selected Jurisdictions,* 2013 Broad Therapeutic Category TPS ($ Millions) Proportion of TPS (%) Rate of Use (%) Nervous System 1, Cardiovascular System 1, Antineoplastic and Immunomodulating Agents 1, Alimentary Tract and Metabolism Respiratory System Sensory Organs Anti-Infectives for Systemic Use Blood and Blood-Forming Organs Musculoskeletal System Genitourinary System and Sex Hormones Systemic Hormonal Preparations Dermatologicals Various Anti-Parasitic Products, Insecticides and Repellents Unassigned Total 7, Notes * The 10 jurisdictions submitting claims data to the NPDUIS Database as of January 2015 are Newfoundland and Labrador, Prince Edward Island, Nova Scotia, New Brunswick, Ontario, Manitoba, Saskatchewan, Alberta, British Columbia and the First Nations and Inuit Health Branch. This category includes drug products without an Anatomical Therapeutic Chemical (ATC) code assigned by Health Canada and products assigned as pseudo drug identification numbers. TPS: Total program spending. National Prescription Drug Utilization Information System Database, Canadian Institute for Health Information. In general, the distribution of spending across broad therapeutic categories was similar among jurisdictions, with antineoplastic and immunomodulating agents and nervous system drugs each accounting for the highest proportion of spending in 5 of the 10 jurisdictions, and appearing in the top 3 broad therapeutic categories in all jurisdictions except Newfoundland and Labrador, Ontario and FNIHB (see Appendix G). There are many factors that can influence the distribution of spending, including the health of the population covered, formulary coverage, prescribing patterns and how costs are shared between the public drug program and beneficiaries. For a more comprehensive list of factors, see Appendix D. It should be noted that public drug program spending does not include spending on drugs dispensed in hospitals or on those funded through cancer agencies and other special programs. Spending on these drugs can impact the distribution of spending across broad therapeutic categories, especially as it relates to antineoplastic and immunomodulating agents. In 2009, an estimated $2.4 billion was spent on drugs dispensed in hospitals, $800 million of which was spent on cancer drugs. 4 15

16 The distribution of public drug program spending across broad therapeutic categories is also impacted by the drug program design in each jurisdiction, which in turn impacts the age distribution of the active beneficiary population (see Appendix B). For example, FNIHB, Manitoba and B.C. the 3 jurisdictions where non-seniors account for the highest proportion of drug program spending spend the highest proportion on nervous system drugs (the category accounting for the highest proportion of drug program spending for non-seniors) and the lowest proportion on cardiovascular drugs (the category accounting for the highest proportion of drug program spending for seniors; see Appendix G). In contrast, Nova Scotia and Alberta the 2 provinces where seniors account for the highest proportion of drug program spending ii spend the highest proportion on cardiovascular drugs and the lowest proportion on nervous system drugs. However, not all jurisdictions follow this pattern. For example, Ontario, where the proportion spent on seniors is third-highest among the 10 jurisdictions, spends more on nervous system drugs than on cardiovascular drugs, again highlighting that other factors aside from drug program design can influence these numbers. Spending by Drug Class Spending by drug class provides more detail in terms of the specific conditions being treated. Drug classes are regarded as groups of different chemicals that act in the same way to treat similar medical conditions. As expected, based on the distribution of spending by broad therapeutic category, 6 of the top 10 drug classes in terms of public drug program spending act on either the cardiovascular or nervous system (Table 2). These top 10 drug classes accounted for 32.9% of drug program spending in 2013, compared with 34.1% in All of the top 10 drug classes also appeared in the top 10 drug classes in ii. The lower proportion of non-seniors appearing in the data is due in large part to the fact that drug claims from programs for income assistance recipients in Alberta and Nova Scotia are not submitted to the NPDUIS Database. 16

17 Table 2: Top 10 Drug Classes by Public Drug Program Spending, Selected Jurisdictions,* 2013 Drug Class Tumour Necrosis Factor Alpha Inhibitors (Anti-TNF Drugs) Common Uses TPS ($ Millions) Proportion of TPS (%) Rheumatoid Arthritis, Crohn s Disease Antineovascularization Agents Age-Related Macular Degeneration HMG-CoA Reductase Inhibitors (Statins) Proton Pump Inhibitors (PPIs) Adrenergics in Combination With Corticosteroids or Other Drugs, Excluding Anticholinergics Angiotensin-Converting Enzyme (ACE) Inhibitors, Plain Selective Serotonin Reuptake Inhibitors Natural Opium Alkaloids High Cholesterol Gastroesophageal Reflux Disease, Peptic Ulcer Disease Asthma, Emphysema, Chronic Bronchitis Heart Failure, High Blood Pressure Depression Management of Moderate to Severe Pain Other Antidepressants Depression Diazepines, Oxazepines, Thiazepines and Oxepines Schizophrenia, Bipolar Disorder Combined Top 10 2, Notes * The 10 jurisdictions submitting claims data to the NPDUIS Database as of January 2015 are Newfoundland and Labrador, Prince Edward Island, Nova Scotia, New Brunswick, Ontario, Manitoba, Saskatchewan, Alberta, British Columbia and the First Nations and Inuit Health Branch. Spending on ranibizumab (which accounted for 99.9% of spending on antineovascularization agents) in Nova Scotia, Manitoba and British Columbia is funded through special programs and is not included in the NPDUIS Database. TPS: Total program spending. National Prescription Drug Utilization Information System Database, Canadian Institute for Health Information. Anti-TNF drugs, which are used to treat conditions such as rheumatoid arthritis and Crohn s disease, accounted for the highest proportion of public drug program spending, at 7.4%. Antineovascularization agents used to treat age-related macular degeneration, which is a condition that results in the loss of vision, accounted for the second-highest proportion of spending, at 4.3%. A comparison of drug spending by jurisdictions in 2013 reveals that 3 drug classes (anti-tnf agents, statins and PPIs) appear among the top 10 drug classes in each jurisdiction (Appendix K). However, there are some jurisdictional differences in the distribution of spending across drug classes. Most notably, the proportion of spending on anti-tnf agents varied from 3.8% for FNIHB to 16.8% in Manitoba. 17

18 In Alberta and Ontario, antineovascularization agents accounted for a significant portion of spending (7.9% and 5.9%, respectively). Almost all of this spending (99.9%) was for the drug ranibizumab (sold under the brand name Lucentis). In some provinces (B.C., Manitoba and Nova Scotia), public spending on ranibizumab is through special programs that are not included in the NPDUIS Database s drug claims data. iii There was also variation in the proportion of spending on statins across provinces, from 2.1% in Manitoba to 6.1% in P.E.I. This was due, in large part, to differences in the age distribution across provinces and the fact that statins are most commonly used among seniors. The 3 jurisdictions with the lowest proportion of spending on statins (B.C., Manitoba and FNIHB) do not have programs designed explicitly for seniors. The drug classes accounting for the highest proportion of public-sector spending were similar to those accounting for the majority of private-sector spending, iv which includes private drug program and out-of-pocket spending. Statins, anti-tnf agents and PPIs were among the top 4 drug classes in terms of spending in both the public and private sectors, while 8 drug classes appeared among the top 10 classes in terms of spending in both sectors (Table 3). A notable difference is that antineovascularization agents, which account for the second-largest proportion of public drug program spending, ranked 36th in terms of private-sector spending. This is due to the fact that ranibizumab (which accounted for 99.9% of spending in this class for public drug programs) is commonly used to treat age-related macular degeneration, which is much more prevalent in seniors. The majority of seniors drug coverage in Canada is financed by public drug programs. iii. For example, the special program in Manitoba spent $7.7 million on ranibizumab in This amount included the drug cost as well as the operational and administrative costs of the program. iv. Private drug spending data used in this analysis includes only ingredient costs, without dispensing and markup fees. For more information on data sources, see Appendix E. 18

19 Table 3: Top 10 Drug Classes by Total Spending Funded by the Private Sector,* Selected Provinces, 2013 Drug Class Tumour Necrosis Factor Alpha Inhibitors (Anti-TNF Drugs) HMG-CoA Reductase Inhibitors (Statins) Proton Pump Inhibitors (PPIs) Selective Serotonin Reuptake Inhibitors Common Uses Total Spending ($ Millions) Proportion of Total Spending (%) Rheumatoid Arthritis, Crohn s Disease High Cholesterol Gastroesophageal Reflux Disease, Peptic Ulcer Disease Depression Other Antidepressants Depression Angiotensin-Converting Enzyme (ACE) Inhibitors, Plain Heart Failure, High Blood Pressure Other Antiepileptics Epilepsy Adrenergics in Combination With Corticosteroids or Other Drugs, Excluding Anticholinergics Asthma, Emphysema, Chronic Bronchitis Dihydropyridine Derivatives High Blood Pressure Centrally Acting Sympathomimetics Attention Deficit Hyperactivity Disorder (ADHD) Combined Top 10 3, Notes * Includes drug spending on ingredients, excluding dispensing and markup fees, paid for by private insurers and out of pocket. The 9 provinces are Newfoundland and Labrador, Prince Edward Island, Nova Scotia, New Brunswick, Ontario, Manitoba, Saskatchewan, Alberta and British Columbia. Geographic Prescription Monitor, 2013, IMS Brogan. Given the fact that seniors account for close to two-thirds (58.8%) of public drug program spending, it is not surprising that 7 of the top 10 drug classes also appeared on the top 10 list for seniors in 2013 (Table 4). Antineovascularization agents accounted for the highest proportion of public drug program spending for seniors (7.2%), followed by statins (5.4%), which are the most commonly used drug class among seniors. 6 19

20 Table 4: Top 10 Drug Classes by Public Drug Program Spending on Seniors, Selected Jurisdictions,* 2013 Drug Class Common Uses TPS ($ Millions) Proportion of TPS (%) Antineovascularization Agents Age-Related Macular Degeneration HMG-CoA Reductase Inhibitors (Statins) Proton Pump Inhibitors (PPIs) Adrenergics in Combination With Corticosteroids or Other Drugs, Excluding Anticholinergics Angiotensin-Converting Enzyme (ACE) Inhibitors, Plain Tumour Necrosis Factor Alpha Inhibitors (Anti-TNF Drugs) High Cholesterol Gastroesophageal Reflux Disease, Peptic Ulcer Disease Asthma, Emphysema, Chronic Bronchitis Heart Failure, High Blood Pressure Rheumatoid Arthritis, Crohn s Disease Anticholinesterases Alzheimer s Disease Dihydropyridine Derivatives High Blood Pressure Anticholinergics Emphysema, Chronic Bronchitis Selective Serotonin Reuptake Inhibitors Depression Combined Top 10 1, Notes * The 10 jurisdictions submitting claims data to the NPDUIS Database as of January 2015 are Newfoundland and Labrador, Prince Edward Island, Nova Scotia, New Brunswick, Ontario, Manitoba, Saskatchewan, Alberta, British Columbia and the First Nations and Inuit Health Branch. Spending on ranibizumab (which accounted for 99.9% of spending on antineovascularization agents) in Nova Scotia, Manitoba and British Columbia is funded through special programs and is not included in the NPDUIS Database. TPS: Total program spending. National Prescription Drug Utilization Information System Database, Canadian Institute for Health Information. Only 2 drug classes anti-tnf drugs and selective serotonin reuptake inhibitors (SSRIs) appeared in both the top 10 drug classes in terms of public drug program spending for both seniors and non-seniors (Table 5). Anti-TNF drugs accounted for the highest proportion of public drug program spending for non-seniors (13.2%), followed by 2 classes of antipsychotics (accounting for 3.8% and 3.6% of spending, respectively). Antineovascularization agents, which accounted for the highest proportion of spending among seniors, ranked 75th in program spending on non-seniors in This reflects the difference in the prevalence of age-related macular degeneration between the 2 age groups. 20

21 Table 5: Top 10 Drug Classes by Public Drug Program Spending on Non-Seniors, Selected Jurisdictions,* 2013 Drug Class Tumour Necrosis Factor Alpha Inhibitors (Anti-TNF Drugs) Diazepines, Oxazepines, Thiazepines and Oxepines Common Uses Rheumatoid Arthritis, Crohn s Disease TPS ($ Millions) Proportion of TPS (%) Schizophrenia, Bipolar Disorder Other Antipsychotics Schizophrenia, Bipolar Disorder Natural Opium Alkaloids Management of Moderate to Severe Pain Interferons Multiple Sclerosis, Chronic Hepatitis C Other Antidepressants Depression Selective Serotonin Reuptake Inhibitors Antivirals for Treatment of HIV Infections, Combinations Depression Human Immunodeficiency Virus (HIV) Drugs Used in Opioid Dependence Drug Addiction, Pain Control Protease Inhibitors Human Immunodeficiency Virus (HIV) Combined Top 10 1, Notes * The 10 jurisdictions submitting claims data to the NPDUIS Database as of January 2015 are Newfoundland and Labrador, Prince Edward Island, Nova Scotia, New Brunswick, Ontario, Manitoba, Saskatchewan, Alberta, British Columbia and the First Nations and Inuit Health Branch. TPS: Total program spending. National Prescription Drug Utilization Information System Database, Canadian Institute for Health Information. Among non-seniors, 4 of the top 10 drug classes were classes of psychotropic drugs, used to treat a variety of mental health conditions. These 4 classes accounted for 13.3% of public drug program spending on non-seniors in Spending by Brand Name and Generic Drugs In 2013, generic products accounted for 34.1% of public drug program spending (Figure 6). Although the share of generic spending varies by province, generic products increased as a proportion of drug program spending over the past decade in each of the jurisdictions for which data was available (Appendix H). Generics also increased as a share of utilization during this time period, accounting for 71.5% of accepted claims in

22 Figure 6: Percentage Share of Public Drug Program Spending and Number of Accepted Claims (Brand Name and Generic), Selected Jurisdictions,* 2013 Note * The 10 jurisdictions submitting claims data to the NPDUIS Database as of January 2015 are Newfoundland and Labrador, Prince Edward Island, Nova Scotia, New Brunswick, Ontario, Manitoba, Saskatchewan, Alberta, British Columbia and the First Nations and Inuit Health Branch. TPS: Total program spending. National Prescription Drug Utilization Information System Database, Canadian Institute for Health Information. It should be noted that the share of spending on generic products does not necessarily reflect the extent of use of generic products in place of brand products, as generic alternatives are not available in all cases (most often when the brand name product is still under patent). For cases where generic products were available, generics accounted for 79.1% of spending and 85.2% of claims in Which Drugs Contributed to the Observed Trends in Public Drug Program Spending? While the overall change in public drug spending between 2008 and 2013 was a relatively small increase of 1.7% (Table 6), v examining growth rates by drug class shows that there were both significant increases and decreases in spending during this time period. The slowed growth observed in overall public drug program spending was due in large part to patent expirations for commonly used chemicals after 2007, which occurred in 8 of the top 10 drug classes in terms of drug spending in Statins, for instance, had one of the highest proportions of total program spending (3.8%) in 2013; however, public drug program spending on statins declined by an average annual rate of 17.3% between 2008 and A decline in spending was also observed for 4 other top 10 drug classes: PPIs (commonly used to treat gastroesophageal reflux v. Data from 5 provinces is included: Nova Scotia, New Brunswick, Manitoba, Saskatchewan and Alberta. 22

23 disease), ACE inhibitors (commonly used to lower blood pressure), selective serotonin reuptake inhibitors (commonly used to treat depression) and diazepines, oxazepines, thiazepines and oxepines (commonly used to treat schizophrenia and bipolar disorder). Table 6: Average Annual Growth in Public Drug Program Spending for Top 10 Drug Classes by Total Program Spending, Selected Jurisdictions,* 2003 to 2013 Drug Class Tumour Necrosis Factor Alpha Inhibitors (Anti-TNF Drugs) Common Use Rheumatoid Arthritis, Crohn s Disease Antineovascularization Agents Age-Related Macular Degeneration HMG-CoA Reductase Inhibitors (Statins) Proton Pump Inhibitors (PPIs) Adrenergics in Combination With Corticosteroids or Other Drugs, Excluding Anticholinergics Angiotensin-Converting Enzyme (ACE) Inhibitors, Plain Selective Serotonin Reuptake Inhibitors Natural Opium Alkaloids AAG in TPS, 2003 to 2008 (%) AAG in TPS, 2008 to 2013 (%) Percentage Change Over 2012 (%) High Cholesterol Gastroesophageal Reflux Disease, Peptic Ulcer Disease Asthma, Emphysema, Chronic Bronchitis Heart Failure, High Blood Pressure Depression Management of Moderate to Severe Pain Other Antidepressants Depression Diazepines, Oxazepines, Thiazepines and Oxepines Schizophrenia, Bipolar Disorder All Drug Classes Notes * The 5 jurisdictions submitting claims data to the NPDUIS Database as of January 2015 are Nova Scotia, New Brunswick, Manitoba, Saskatchewan and Alberta. Newfoundland and Labrador data is not available prior to 2009, Ontario and First Nations and Inuit Health Branch data is not available prior to 2011, and Prince Edward Island and British Columbia data is not available prior to 2005; these jurisdictions are thus excluded from the results. Spending on ranibizumab (which accounted for 99.9% of spending on antineovascularization agents) in Nova Scotia, Manitoba and British Columbia is funded through special programs and is not included in the NPDUIS Database. AAG: Average annual growth. TPS: Total program spending. National Prescription Drug Utilization Information System Database, Canadian Institute for Health Information. In each of the 5 classes that experienced a decline in spending between 2008 and 2013 (i.e., statins, PPIs, ACE inhibitors, selective serotonin reuptake inhibitors and diazepines, oxazepines, thiazepines and oxepines), patents on commonly used chemicals expired, allowing for the entry of lower-priced generic versions. Drug program spending per beneficiary reduced across all these classes. For example, spending per beneficiary for statins decreased from $452 in 2008 to $155 in 2013 (Figure 7). The impact of the entry of lower-cost generics in these 23

24 classes was further amplified with the implementation of generic pricing policies by public drug programs over the past 5 years. Generic drug prices are now regulated in most provinces, ranging from 18% to 35% of the price of brand name products. Additionally, since April 2013, a Council of the Federation initiative has reduced the prices for 10 commonly used generic drugs vi including 3 statins, 1 selective serotonin reuptake inhibitor, 1 ACE inhibitor and 3 PPIs to 18% of the brand name price; each of these chemicals belonged to 1 of the top 10 drug classes in terms of drug program spending in Between 2008 and 2013, public drug program spending on these 5 drug classes decreased by $270.7 million in the 7 jurisdictions where data was available in both years, representing 10.4% of public drug program spending in those jurisdictions in Figure 7: Total Drug Program Spending per Paid Beneficiary on Selected Drug Classes, Selected Jurisdictions,* 2008 and 2013 Notes * The 7 jurisdictions submitting claims data to the NPDUIS Database as of January 2015 are Prince Edward Island, Nova Scotia, New Brunswick, Manitoba, Saskatchewan, Alberta and British Columbia. Newfoundland and Labrador data is not available prior to 2009, and Ontario and First Nations and Inuit Health Branch data is not available prior to 2011; these jurisdictions are thus excluded from the results. PPIs: Proton pump inhibitors. SSRIs: Selective serotonin reuptake inhibitors. ACE inhibitors: Angiotensin-converting enzyme inhibitors. National Prescription Drug Utilization Information System Database, Canadian Institute for Health Information. vi. The 10 generic drugs are atorvastatin, ramipril, venlafaxine, amlodipine, omeprazole, rabeprazole, rosuvastatin, pantoprazole, citalopram and simvastatin. 24

25 These decreases in spending were offset by increases in other drug classes during this time period. In particular, public drug program spending on anti-tnf drugs alone increased by $233.8 million between 2008 and Anti-TNFs contributed the greatest amount to the overall growth in public drug program spending and were the top contributor to growth in each jurisdiction for which data was available. vii 4 of the 10 drug classes that contributed most to the growth of public drug spending anti-tnf drugs, antineovascularization agents, long-acting insulins and analogues for injection, and interleukin inhibitors are classes of drugs known as biologic agents (Table 7). Antineovascularization agents exhibited the highest average annual growth rate in terms of public drug program spending between 2008 and 2013, at 148.5%, followed by interleukin inhibitors, which grew at an average annual rate of 106.8%. Biologic agents are often significantly more expensive than alternative medications (where they exist), and public drug programs in the 10 jurisdictions spent an average of $18,523, $9,366 and $14,297 per paid beneficiary on anti-tnfs, antineovascularization agents and interleukin inhibitors, respectively, in vii. Data from 7 provinces is included: P.E.I., Nova Scotia, New Brunswick, Manitoba, Saskatchewan, Alberta and B.C. 25

26 Table 7: Top 10 Drug Classes by Contribution to Public Drug Program Spending Growth, Average Annual Growth, Selected Jurisdictions,* 2008 to 2013 Drug Class Tumour Necrosis Factor Alpha Inhibitors (Anti-TNF Drugs) Antineovascularization Agents Insulins and Analogues for Injection, Long-Acting Adrenergics in Combination With Corticosteroids or Other Drugs, Excluding Anticholinergics Common Use Rheumatoid Arthritis, Crohn s Disease Age-Related Macular Degeneration Contribution to TPS Growth (%) Average Annual Growth (%) Percentage Change Over 2012 (%) Diabetes Mellitus Asthma, Emphysema, Chronic Bronchitis Other Antipsychotics Schizophrenia, Bipolar Disorder Protease Inhibitors Drugs Used in Opioid Dependence Human Immunodeficiency Virus (HIV) Drug Addiction, Pain Control Selective Immunosuppressants Organ Transplant Interleukin Inhibitors Rheumatoid Arthritis, Psoriasis, Organ Transplant Anticholinergics Emphysema, Chronic Bronchitis All Drug Classes Notes * The 7 jurisdictions submitting claims data to the NPDUIS Database as of January 2015 are Prince Edward Island, Nova Scotia, New Brunswick, Manitoba, Saskatchewan, Alberta and British Columbia. Newfoundland and Labrador data is not available prior to 2009, and Ontario and First Nations and Inuit Health Branch data is not available prior to 2011; these jurisdictions are thus excluded from the results. Contributing more than 100% to growth means that the dollar value of the growth in spending on the drug class was greater than the dollar value of the overall growth in spending. Spending on ranibizumab (which accounted for 99.9% of spending on antineovascularization agents) in Nova Scotia, Manitoba and British Columbia is funded through special programs and is not included in the NPDUIS Database. TPS: Total program spending. National Prescription Drug Utilization Information System Database, Canadian Institute for Health Information. 26

27 2.3 How Is Public Drug Program Spending Distributed? The majority of public drug spending in 2013 was for a relatively small number of individuals. Public drug programs paid $2,500 or more toward drug costs for 12.1% of beneficiaries, accounting for 62.9% of public drug spending. Conversely, the programs paid less than $500 on drug costs for more than half (56.1%) of beneficiaries, accounting for only 6.3% of program spending (Table 8). Table 8: Percentage of Paid Beneficiaries and Public Drug Program Spending, by Program Spending per Paid Beneficiary, Selected Jurisdictions,* 2013 Program Spending Proportion of Paid Beneficiaries (%) Proportion of TPS (%) <$ $500 $1, $1,500 $2, $2,500 $4, $5,000 $9, $10, Notes * The 10 jurisdictions submitting claims data to the NPDUIS Database as of January 2015 are Newfoundland and Labrador, Prince Edward Island, Nova Scotia, New Brunswick, Ontario, Manitoba, Saskatchewan, Alberta, British Columbia and the First Nations and Inuit Health Branch. TPS: Total program spending. National Prescription Drug Utilization Information System Database, Canadian Institute for Health Information. The distribution of cost in each jurisdiction is similar to the overall distribution (see Appendix I). The proportion of individuals for whom the drug program covered less than $500 in drug costs ranged from 72.0% for FNIHB to 39.8% for Nova Scotia. viii In contrast, the proportion of individuals for whom the drug program paid $2,500 or more toward drug costs is significantly smaller, ranging from 16.2% for Manitoba to 6.2% for P.E.I. Among the 7 jurisdictions ix for which data is available for 2008 and 2013, the proportion of drug program spending on beneficiaries for whom the drug program paid $10,000 or more in drug spending increased from 15.9% in 2008 to 29.7% in 2013, while the proportion of beneficiaries they accounted for increased by less than 1 percentage point (from 1.1% in 2008 to 1.8% in 2013) (Appendix I). This increase is due in large part to the increased spending on more expensive drugs. In 2013, 21.8% of public drug spending was on chemicals that cost $10,000 or more per beneficiary, representing 5.6% of the total number of chemicals that were paid for by the public drug programs (Figure 8). In 2008, 2.6% of the chemicals paid for by public drug programs exceeded $10,000 per beneficiary, accounting for only 9.1% of program spending. viii. As a result of the creation of the First Nations Health Authority (FNHA), claims in British Columbia or for FNHA clients were excluded from October 1, 2013, onward (see the Methodological Notes section for more detail). Although this would result in an underestimation of drug program spending for clients whose claims were excluded, results were similar in ix. The 7 jurisdictions submitting claims data to the NPDUIS Database as of January 2015 are Prince Edward Island, Nova Scotia, New Brunswick, Manitoba, Saskatchewan, Alberta and British Columbia. 27

28 Figure 8: Proportion of Public Drug Program Spending and Proportion of Chemicals Paid, Chemical That Cost $10,000 or More per Paid Beneficiary, Selected Jurisdictions,* 2008 to 2013 Notes * The 7 jurisdictions submitting claims data to the NPDUIS Database as of January 2015 are Prince Edward Island, Nova Scotia, New Brunswick, Manitoba, Saskatchewan, Alberta and British Columbia. Newfoundland and Labrador data is not available prior to 2009, and Ontario and First Nations and Inuit Health Branch data is not available prior to 2011; these jurisdictions are thus excluded from the results. TPS: Total program spending. National Prescription Drug Utilization Information System Database, Canadian Institute for Health Information. 28

29 Appendix A: Glossary of Terms Please note that some of the terms in this glossary may have alternate definitions. The stated definitions are meant only to reflect how these terms were used in the context of this report and are not necessarily the sole definitions of these terms. Accepted claim: A claim where the drug program accepts at least a portion of the cost, either toward a deductible or for reimbursement. Active beneficiary: An individual with at least 1 claim accepted by a public drug program, either for reimbursement or applied toward a deductible. In Manitoba and Saskatchewan, active beneficiaries are also individuals with accepted claims who are eligible for coverage under a provincial drug program but who have not submitted an application and, therefore, do not have a defined deductible. Amount paid per paid beneficiary: The average amount paid by the plan/program per individual, for whom the public plan/program paid at least part of 1 claim. Anatomical Therapeutic Chemical (ATC) level: A classification system that divides drugs into different groups according to the organ or system on which they act and their chemical, pharmacological and therapeutic properties. This report uses the 2014 version of the ATC classification system. Average annual growth rate: The constant annual rate necessary for a value at the beginning of a period to grow to a value at the end of a period over the number of compounding years in the period. (See Appendix E for more detail.) Broad therapeutic category: Subgroups of chemicals classified by the World Health Organization at the first level of the ATC classification system. At this level, groups are, in theory, regarded as groups of different chemicals that act on the same organ or system. Chemical: Chemicals classified by the World Health Organization at the fifth level of the ATC classification system, 2014 version. Each unique code represents a distinct chemical or biologic entity within the respective drug class. Chemical paid: A chemical that has had, at least, part of at least 1 claim paid by a plan/program as a benefit. Claim: 1 or more transactions, with the final result indicating that a prescription had been filled and dispensed in exchange for payment. Copayment: The portion of the claim cost that individuals must pay each time they make a claim. This may be a fixed amount or a percentage of the total claim cost. When calculated as a percentage of the total cost, it is also known as co-insurance. Cost sharing: The amount of the total prescription cost accepted by the plan/program that is not paid by the plan/program (i.e., the amount of the total prescription cost accepted that is paid out of pocket by the beneficiary or through another plan/program/insurer). 29

30 Cost-sharing mechanisms: The ways through which prescription costs can be shared between drug programs and their beneficiaries (e.g., copayments, deductibles and premiums). Deductible: The amount of total drug spending an individual must pay in a given year (or other defined time period) before any part of his or her drug costs will be paid by the drug program. A deductible may be a fixed amount or a percentage of income (income-based deductible). Drug: See Chemical. Drug class: Subgroups of chemicals classified by the World Health Organization at the fourth level of the ATC classification system, 2014 version. At this level, subgroups are, in theory, regarded as groups of different chemicals that work in the same way to treat similar medical conditions (e.g., the chemical subgroup bisphosphonates includes chemicals such as etidronate, alendronate and risedronate). Drug program: A program that provides coverage for drugs for a set population. Programs have defined rules for eligibility, payment and the drugs they cover. Drug program formulary: A formal listing of the benefits eligible for reimbursement under a specific drug benefit plan/program and the conditions under which coverage is provided. For the purpose of the NPDUIS Database, a benefit means a drug, product, medical supply, equipment item or service covered under a drug benefit plan or program. Drug program spending: The amount paid by the drug program toward an individual s prescription costs. Any portion of the prescription cost paid by the individual or a third-party private insurer is not captured in this amount, including the drug cost, professional fees paid to the pharmacy or markup charged by the pharmacy. (See Appendix E for more detail.) Indication: Refers to the use of a drug for treating a particular disease. For example, gastroesophageal reflux disease is an indication for proton pump inhibitors. Jurisdiction: The federal/provincial/territorial jurisdiction responsible for the drug program formulary and for financing the paid amount of accepted claims. Paid beneficiary: An individual who has had, at least, part of at least 1 claim paid by a plan/program as a benefit. Paid claim: A claim for which the drug program paid at least a portion of the cost. Palliative: Individuals who have been diagnosed by a physician or nurse practitioner as being in the end stage of a terminal illness or disease, who are aware of their diagnosis and have made a voluntary informed decision related to resuscitation, and for whom the focus of care is palliation and not treatment aimed at a cure. Premium: The amount an individual must pay to enrol in the drug program. Public drug coverage: Drug coverage offered to individuals by the federal/provincial/ territorial jurisdictions. Total drug program spending: See Drug program spending. 30