Prescribed Drug Spending in Canada, 2012: A Focus on Public Drug Programs

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1 Prescribed Drug Spending in Canada, 2012: 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... iii About CIHI... v Executive Summary... vii Highlights... ix Introduction... 1 Prescribed Drug Spending in Canada... 3 How Much Do Canadians Spend on Prescribed Drugs?... 3 What Are the Trends in Prescribed Drug Spending in Canada?... 5 What Proportion of Prescribed Drug Spending Is Funded by the Public Sector?... 7 Public Drug Program Spending in Selected Jurisdictions... 8 Which Drugs Account for the Highest Proportion of Public Drug Program Spending?... 9 Spending by Broad Therapeutic Category... 9 Spending by Drug Class How Is Public Drug Program Spending Distributed? Which Drugs Contributed to the Observed Trends in Public Drug Program Spending? 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: Provincial and Territorial Drug Programs Appendix G: Percentage of Total Public Drug Program Spending, by Broad Therapeutic Category, Selected Jurisdictions,* Appendix H: Percentage of Paid Beneficiaries and Total Drug Program Spending, by Program Spending per Paid Beneficiary, Selected Jurisdictions,* 2007 and Appendix I: Top 10 Drug Classes With the Highest Proportion of Total Program Spending, by Jurisdiction, References... 47

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5 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, 2012: A Focus on Public Drug Programs: 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 Pharmaceutical Funding and Guidance 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. iii

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7 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. v

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9 Executive Summary This report focuses on prescribed drug expenditure, the third-largest major category of total health spending in Canada. The first section of this report provides an overview of prescribed drug spending in Canada using data from a Canadian Institute for Health Information (CIHI) database, the National Health Expenditure Database (NHEX), which contains a historical series of macro-level drug expenditure statistics by province and territory. The second section of this report provides a more in-depth look at public drug program spending using drug claims data submitted to CIHI s National Prescription Drug Utilization Information System (NPDUIS) Database, which contains claims from public drug programs in eight provinces Prince Edward Island, Nova Scotia, New Brunswick, Ontario, Manitoba, Saskatchewan, Alberta and British Columbia as well as one federal program administered by the First Nations and Inuit Health Branch (FNIHB). How much do Canadians spend on prescribed drugs? In 2013, Canadians spent an estimated $34.5 billion on drugs, the majority of which (85.0%) was spent on prescribed drugs, at an estimated $29.3 billion. Prescribed drugs accounted for an estimated 13.9% of total health expenditure. What are the trends in prescribed drug spending in Canada? In 2013, the annual rate of change in prescribed drug spending (2.3%) was at its secondlowest point in more than two decades. Public-sector drug spending in Canada is forecast to have grown only negligibly, at a rate of less than 0.1% the lowest rate since 1996, when spending decreased. Between 2001 and 2013, drugs were one of the fastest-growing major categories of health system spending. However, since 2005, drug spending has grown more slowly than hospital and physician spending. What proportion of prescribed drug spending is funded by the public sector? In 2013, an estimated 41.6% of prescribed drug spending was financed by the public sector, with the remainder financed by private insurers (34.5%) and out of pocket by households and individuals (23.9%). The proportion of prescribed drugs financed by the public sector varied across provinces, ranging from 29.3% in New Brunswick to 47.6% in Saskatchewan. Which drugs account for the highest proportion of public drug program spending? In 2012, the top 10 drug classes, in terms of public drug program spending, accounted for 34.2% of spending in the nine jurisdictions. Six of the top 10 drug classes were used to treat conditions related to the cardiovascular and nervous systems. Tumor necrosis factor alpha inhibitors (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 in 2012; these were followed by statins, used to lower cholesterol levels, and proton pump inhibitors, used to treat gastroesophageal reflux disease. vii

10 How is public drug program spending distributed? In 2012, more than half of public drug spending (60.8%) was for a relatively small proportion of individuals (12.7%) for whom public drug programs paid $2,500 or more toward their annual drug costs. A total of 6.2% of drug program spending was for more than half of individuals (52.1%) for whom drug programs paid less than $500 toward their annual drug costs. The distribution of drug program spending was similar among the nine jurisdictions. Which drugs contributed to the observed trends in public drug program spending? Between 2002 and 2012, drug program spending grew at an average annual rate of 6.3%; however, growth from 2007 to 2012 (3.5%) was much slower than growth from 2002 to 2007 (9.2%). Anti-TNF drugs and antineovascularization agents, used to treat age-related macular degeneration, were the top two drug classes that contributed most to the growth of public drug spending between 2007 and 2012, accounting for 54.8% and 12.6% of growth, respectively. Four of the top 10 drug classes that accounted for the highest proportions of total program spending in 2012 experienced a decline in spending between 2007 and In each of these four classes, patents on commonly used drugs expired, allowing for the entry of lower-priced generic versions. In 2012, generic products accounted for 38.8% of public drug program spending and 72.4% of accepted claims. In cases where only generic products were available, generics accounted for 65.5% of spending and 80.6% of claims in viii

11 Highlights This report focuses on prescribed drug expenditure, the third-largest major category of health spending in Canada. The first section provides an overview of prescribed drug spending using CIHI s NHEX data. The second section looks more in-depth at public drug program spending using data from CIHI s NPDUIS Database. Prescribed drug spending is forecast to have grown by 2.3% in 2013, its second-lowest rate in more than two decades. Prescribed drug spending is expected to have reached $29.3 billion, accounting for 85.0% of total drug spending ($34.5 billion). Growth in prescribed drug spending has slowed since the early 2000s, reaching its lowest rate of 1.3% in Since 2005, prescribed drug spending has grown more slowly than hospital and physician spending. Public-sector spending on prescribed drugs in 2013, which represents 41.6% of total prescribed drug spending, is forecast to have been $12.2 billion, the same as for The introduction of lower-cost generic drugs in several high-use drug classes (for example, cholesterol-lowering agents and proton pump inhibitors) and the implementation of generic pricing policies contributed to the slowed growth in public-sector spending on prescribed drugs. Generic drugs grew as a share of public-sector spending and as a share of the number of accepted claims. Generic drugs accounted for 38.8% of public drug program spending and 72.4% of claims. Among cases where only generic products were available, generics accounted for 65.5% of spending and 80.6% of claims. Ten drug classes accounted for more than a third (34.2%) of public drug program spending in Six of the top 10 drug classes were used to treat conditions related to the cardiovascular and nervous systems. Anti-TNF drugs, biologic drugs used to treat rheumatoid arthritis and Crohn s disease, accounted for the highest proportion of spending in These drugs are used by a relatively small number of beneficiaries and have a significantly higher average cost. High-cost beneficiaries (for whom public drug programs paid $2,500 or more toward drug costs) accounted for 12.7% of all beneficiaries and 60.8% of public drug spending. ix

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13 Introduction Spending on prescribed drugs continues to rise, but recently, growth has occurred at a much slower rate. It is forecast to have reached almost $29.3 billion in 2013, representing an annual growth of 2.3% from the previous year, the second-lowest annual growth rate in the past 20 years (in 2011, drug spending increased at just 1.3%). 1 Multiple payers are involved in the financing of prescribed drugs, including public drug programs, private insurers and households. In 2013, public-sector expenditure on prescribed drugs is expected to have reached $12.2 billion, which is the same as it was in 2012, accounting for 41.6% of prescribed drug spending in Canada. To support public 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, one of the largest major categories of total health spending in Canada. The first section of this report provides an overview of prescribed drug spending in Canada using data from a Canadian Institute for Health (CIHI) database, the 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, as well as spending by age group and by source of funds. It also compares these trends with those observed in other major sectors of publicly funded health care spending in Canada. The second section of this report provides a more in-depth look at public drug program spending using drug claims data submitted to CIHI s National Prescription Drug Utilization Information System (NPDUIS) Database. It looks at the types of drugs and characteristics of people accounting for the majority of drug spending and examines some of the components of drug spending that contributed to the observed trends over the past 10 years. The NPDUIS Database contains claims from public drug programs in eight provinces Prince Edward Island, Nova Scotia, New Brunswick, Ontario, Manitoba, Saskatchewan, Alberta and British Columbia as well as one federal program administered by the First Nations and Inuit Health Branch (FNIHB). 1

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15 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. How Much Do Canadians Spend on Prescribed Drugs? Canadians spent an estimated $34.5 billion on drugs in 2013, the majority of which (85.0%) was spent on prescribed drugs, at an estimated $29.3 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 2013, $12.2 billion, or 41.6% 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 $10.1 billion, with the remaining $7.0 billion financed by Canadian households. Figure 1: Prescribed Drug Expenditure, by Source of Finance, Canada, 2013 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 drug expenditure. Source National Health Expenditure Database, 2013, Canadian Institute for Health Information. 3

16 Spending in 2013 on hospitals, prescribed drugs and physicians, combined, is forecast to have accounted for 58.3% of total health spending in Canada. Among the nine major categories of health spending, prescribed drugs are expected to account for 13.9% of spending, the thirdlargest category after hospitals (29.6%) and physicians (14.8%). The share of prescribed drugs in total health spending varied among provinces, ranging from the lowest in British Columbia (11.1%) and Manitoba (11.2%) to the highest in Quebec (16.8%) and New Brunswick (15.2%). 1 Figure 2: Total Health Expenditure, by Use of Funds, Canada, 2013 f Notes f: Forecast. $ billions; percentage share of total drug expenditure. Source National Health Expenditure Database, 2013, Canadian Institute for Health Information. 4

17 What Are the Trends in Prescribed Drug Spending in Canada? For more than a decade, drugs have been one of the fastest-growing components of health system spending in Canada. Spending on prescribed drugs in Canada grew rapidly in the early 2000s when many blockbuster drug classes expanded in terms of use and cost (Figure 3). Since then, growth in prescribed drug spending has slowed, and in 2011 spending grew at the lowest rate (1.3%) in more than two decades. Although slightly higher than in 2011, growth for 2012 and 2013 is also forecast to be at similarly low rates. It should be noted that the higher growth in 2010 was due to a change in the way out-of-pocket drug spending was measured. i Growth in drug spending by private insurers (3.3%) was much more similar to the growth in public-sector prescribed drug spending for that year (2.1%). Figure 3: Prescribed Drug Spending, Canada, 2001 to 2013 f Note f: Forecast. Source National Health Expenditure Database, 2013, Canadian Institute for Health Information. i. Due to a major redesign of the Survey of Household Spending by Statistics Canada in 2010, private prescription drug estimates from 2009 and earlier years should not be compared with those between 2010 and These were effectively two different surveys before and after the methodology redesign. The differences in survey design are responsible for the spike in private prescribed drug spending observed in For more information, please refer to CIHI s report National Health Expenditure Trends, 1975 to

18 There has been a similar decline in growth for publicly financed drug spending, which is the focus of the remainder of this report. In 2013, public-sector spending on prescribed drugs is forecast to have grown only negligibly, at a rate of less than 0.1% the lowest rate since 1996, when drug spending last declined. Other categories of health spending have also seen a decline in the rate of increase of public-sector spending over the past 10 years; however, the decline in growth rates was more pronounced for drugs. Between 2001 and 2006, public drug spending grew at a more rapid rate relative to that of other components of health care spending an average annual rate of 9.6% (Figure 4). In contrast, between 2006 and 2011, public drug spending, which increased at an average annual rate of 4.5%, grew more slowly than hospital spending (6.3%) and physician spending (7.9%). Slower growth in drug spending continued in 2012 and Figure 4: Average Annual Growth Rate of Public Health Spending, by Selected Categories, 2001 to 2013 f Note f: Forecast. Source National Health Expenditure Database, 2013, Canadian Institute for Health Information. 6

19 What Proportion of Prescribed Drug Spending Is Funded by the Public Sector? In 2013, the public sector is forecast to have financed 41.6% of prescribed drug spending in Canada (Figure 5). The public share of prescribed drug spending varied among provinces, ranging from the lowest in New Brunswick (29.3%) and P.E.I. (33.5%) to the highest in Saskatchewan (47.6%) and Quebec (46.9%). Figure 5: Publicly Funded Drug Spending as a Percentage of Prescribed Drug Spending, by Source of Finance, by Province and Canada, 2013 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. Source National Health Expenditure Database, 2013, 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 much higher 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 federally in other provinces. The share of prescribed drug spending financed by the provincial governments ranges from 25.6% in New Brunswick to 39.8% in Alberta. 7

20 Seniors account for a high proportion of public drug program spending due to the design of these programs (see Appendix B). In 2011, ii seniors accounted for 59.9% of the $10.3 billion in provincial/territorial government expenditure on prescribed drugs (Table 1). Seniors are estimated to account for close to 40% of all retail spending on prescribed drugs. 2 Table 1: Percentage of Provincial/Territorial Government-Funded Drug Spending, by Age Group, Canada, 2011* Provincial/Territorial Government Spending ($ Billions) $10.3 Age Group 19 Non-Seniors 40.1% 2.3% % % Seniors 59.9% 26.2% % % Note * 2011 is the most recent year for which this data is available. Source National Health Expenditure Database, 2013, Canadian Institute for Health Information. 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 nine federal/provincial public drug programs. This section will address the following questions: Which drugs account for the highest proportion of public drug program spending? How is public drug program spending distributed? What drugs contributed to the observed trends in public drug spending? ii. This is the most recent data year for which data broken down by age group was available in NHEX. 8

21 Which Drugs Account for the Highest Proportion of Public Drug Program Spending? Spending by Broad Therapeutic Category In 2012, total public drug program spending among the nine jurisdictions was almost $7.4 billion. Among 14 broad therapeutic categories, the top two categories nervous system and cardiovascular system drugs accounted for 39.3% of total public drug program spending (Table 2). Spending by broad therapeutic category provides a high-level overview of the types of conditions that account for drug spending. Broad therapeutic categories are regarded as groups of different chemicals that act on the same organ or system (see Appendix C). Table 2: Percentage of Total Public Drug Program Spending, by Broad Therapeutic Category, Selected Jurisdictions,* 2012 Broad Therapeutic Category TPS ($ Millions) Proportion of TPS (%) Nervous System 1, Cardiovascular System 1, Antineoplastic and Immunomodulating Agents 1, Alimentary Tract and Metabolism Respiratory System Anti-Infectives for Systemic Use Sensory Organs Musculoskeletal System Blood and Blood-Forming Organs Genitourinary System and Sex Hormones Systemic Hormonal Preparations Dermatologicals Various Anti-Parasitic Products, Insecticides and Repellents Unassigned Total 7, Notes * The nine jurisdictions submitting claims data to the NPDUIS Database as of December 2013 are 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. Source National Prescription Drug Utilization Information System Database, Canadian Institute for Health Information. 9

22 In general, the distribution of spending across broad therapeutic categories was similar across jurisdictions, with cardiovascular and nervous system drugs each accounting for the highest proportion of spending in four of the nine jurisdictions, and appearing among the top four broad therapeutic categories in each jurisdiction (see Appendix G). In Manitoba, antineoplastic and immunomodulating agents (used in cancer treatment) accounted for the highest proportion of spending, at 26.0%. The higher proportion spent on this category in Manitoba is likely due in part to the fact that the province covers oral cancer drugs through the public drug program. iii However, other jurisdictions that fund oral cancer drugs through the public drug program have much lower shares of spending for these drugs, suggesting that other factors are also influencing the distribution of spending across therapeutic categories. 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. 3 The distribution of 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 three 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 seniors). In contrast, Nova Scotia and Alberta the two provinces where seniors account for the highest proportion of drug program spending spend the highest proportion on cardiovascular drugs and the lowest proportion on nervous system drugs. It is important to note, however, that not all jurisdictions follow this pattern. For example, Ontario, where the proportion spent on seniors is third-highest among the nine jurisdictions, spends more on nervous system drugs than on cardiovascular drugs, again highlighting that other factors aside from drug program design are influencing these numbers. Other factors can include formulary coverage, demographics and prescribing patterns. 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. iii. As of April 2012, the Home Cancer Drug Program provides oral cancer and some supportive drugs to cancer patients in Manitoba. Previously, some of these drugs were covered through Manitoba s Pharmacare Program. For more details on public drug program design, please see the NPDUIS Plan Information document. 10

23 In 2012, among the nine jurisdictions, 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 6.5%. HMG-CoA reductase inhibitors (commonly referred to as statins ), used to lower cholesterol levels, accounted for the second-highest proportion of spending, at 5.6% (Table 3). Table 3: Top 10 Drug Classes by Total Program Spending, Selected Jurisdictions,* 2012 Drug Class Common Uses TPS ($ Millions) Tumor Necrosis Factor Alpha Inhibitors Rheumatoid Arthritis, Crohn s Disease (Anti-TNF Drugs) HMG-CoA Reductase Inhibitors (Statins) High Cholesterol Proton Pump Inhibitors (PPIs) Gastroesophageal Reflux Disease, Peptic Ulcer Disease Proportion of TPS (%) Antineovascularization Agents Age-Related Macular Degeneration Adrenergics and Other Drugs for Asthma, Emphysema, Obstructive Airway Diseases Chronic Bronchitis Natural Opium Alkaloids Management of Moderate to Severe Pain Angiotensin-Converting Enzyme (ACE) Heart Failure, High Blood Pressure Inhibitors, Plain Selective Serotonin Reuptake Inhibitors Depression Diazepines, Oxazepines, Thiazepines Schizophrenia, Bipolar Disorder and Oxepines Other Antidepressants Depression Combined Top 10 2, Notes * The nine jurisdictions submitting claims data to the NPDUIS Database as of December 2013 are 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. Source National Prescription Drug Utilization Information System Database, Canadian Institute for Health Information. As expected, based on the distribution of spending by broad therapeutic category, two of the top 10 drug classes in terms of drug program spending act on the cardiovascular system, and four act on the nervous system (Table 3). These top 10 drug classes accounted for 34.2% of drug program spending in A comparison of drug spending by jurisdictions in 2012 reveals that the top 3 drug classes among the nine jurisdictions combined (anti-tnf agents, statins and proton pump inhibitors, or PPIs) accounted for the highest proportion of spending in six of the nine jurisdictions and appear among the top 10 drug classes in each jurisdiction (Appendix I). 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 3.5% for FNIHB to 14.1% in Manitoba. 11

24 There was also variation in the proportion of spending on statins across provinces, from 3.5% in Manitoba to 8.0% in Nova Scotia and 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 jurisdictions with the lowest proportion of spending on statins were the three jurisdictions without designated seniors programs. In Alberta and Ontario, antineovascularization agents account for a significant portion of spending (6.1% and 4.3%, respectively). Almost all of this spending (99.9%) is for the drug ranibizumab (sold under the brand name Lucentis), commonly used to treat age-related macular degeneration, which is a condition that results in the loss of vision. In other provinces, the majority of public spending on ranibizumab is through special programs and is not included in NPDUIS drug claims data. Again, it should be noted that many factors in addition to drug program design can influence spending (see Appendix D). Given the fact that seniors account for close to two-thirds of public drug program spending, iv it is not surprising that seven of the top 10 drug classes also appeared on the top 10 list for seniors in 2012 (Table 4). In this same year, three cardiovascular-related drug classes were on the seniors top 10 list, and these drug classes made up 14.8% of public drug spending for seniors. Table 4: Top 10 Drug Classes by Total Program Spending on Seniors, Selected Jurisdictions,* 2012 Drug Class Common Uses TPS ($ Millions) HMG-CoA Reductase Inhibitors (Statins) High Cholesterol Antineovascularization Agents Age-Related Macular Degeneration Proton Pump Inhibitors (PPIs) Angiotensin-Converting Enzyme (ACE) Inhibitors, Plain Adrenergics and Other Drugs for Obstructive Airway Diseases Gastroesophageal Reflux Disease, Peptic Ulcer Disease Proportion of TPS (%) Heart Failure, High Blood Pressure Asthma, Emphysema, Chronic Bronchitis Dihydropyridine Derivatives High Blood Pressure Anticholinesterases Alzheimer s Disease Tumor Necrosis Factor Alpha Inhibitors Rheumatoid Arthritis, Crohn s Disease (Anti-TNF Drugs) Anticholinergics Emphysema, Chronic Bronchitis Selective Serotonin Reuptake Inhibitors Depression, Anxiety, Panic Disorder Combined Top 10 1, Notes * The nine jurisdictions submitting claims data to the NPDUIS Database as of December 2013 are 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. Source National Prescription Drug Utilization Information System Database, Canadian Institute for Health Information. iv. In 2012, seniors accounted for 61.5% of program spending in all provinces based on NHEX data and 59.1% of spending in the nine jurisdictions included in this study, based on NPDUIS Database data. 12

25 Only three drug classes statins, anti-tnf drugs and selective serotonin reuptake inhibitors (SSRIs) appeared in both the top 10 drug classes in terms of drug program spending for both seniors and non-seniors (Table 5). Among non-seniors, five of the top 10 drug classes were psychotropic drugs, used to treat a variety of mental health conditions. These classes accounted for 15.9% of drug program spending on non-seniors in Table 5: Top 10 Drug Classes by Total Program Spending on Non-Seniors, Selected Jurisdictions,* 2012 Drug Class Common Uses Tumor Necrosis Factor Alpha Inhibitors (Anti-TNF Drugs) Natural Opium Alkaloids Rheumatoid Arthritis, Crohn s Disease Management of Moderate to Severe Pain TPS ($ Millions) Proportion of TPS (%) Diazepines, Oxazepines, Thiazepines Schizophrenia, Bipolar Disorder and Oxepines Other Antipsychotics Schizophrenia, Bipolar Disorder Other Antidepressants Depression Selective Serotonin Reuptake Inhibitors Depression Interferons Multiple Sclerosis, Chronic Hepatitis C Antivirals for Treatment of HIV HIV Infections, Combinations Drugs Used in Opioid Dependence Drug Addiction, Pain Control HMG-CoA Reductase Inhibitors High Cholesterol Combined Top 10 1, Notes * The nine jurisdictions submitting claims data to the NPDUIS Database as of December 2013 are 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. Source National Prescription Drug Utilization Information System Database, Canadian Institute for Health Information. How Is Public Drug Program Spending Distributed? The majority of public drug spending was for a relatively small number of high-cost individuals. In 2012, public drug programs paid $2,500 or more toward drug costs for 12.7% of beneficiaries. These beneficiaries accounted for 60.8% of public drug spending. Conversely, the programs paid less than $500 on drug costs for more than half (52.1%) of beneficiaries, accounting for only 6.2% of program spending (Table 6). 13

26 Table 6: Percentage of Paid Beneficiaries and Total Drug Program Spending, by Program Spending per Paid Beneficiary, 2012, Selected Jurisdictions* Program Spending Proportion of Paid Beneficiaries (%) Proportion of TPS (%) <$ $500 $1, $1,500 $2, $2,500 $4, $5,000 $9, $10, Notes * The nine jurisdictions submitting claims data to the NPDUIS Database as of December 2013 are 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. Source National Prescription Drug Utilization Information System Database, Canadian Institute for Health Information. The distribution of cost in each jurisdiction is similar to the overall pattern (see Appendix H). The proportion of individuals for whom the drug program covered less than $500 in drug costs ranged from 71.1% for FNIHB to 36.3% in Nova Scotia. In contrast, the proportion of individuals for whom the drug program paid $5,000 or more toward drug costs is significantly smaller, ranging from 7.1% in Manitoba to 2.3% for FNIHB. Which Drugs Contributed to the Observed Trends in Public Drug Program Spending? Public drug program spending increased at an average rate of 6.3% per year among provinces for which NPDUIS Database data is available for both 2002 and v While drug program spending continued to increase, the rate of growth decreased substantially during the past five years, with an annual average rate of growth of 3.5% from 2007 to 2012 compared with 9.2% from 2002 to Between 2007 and 2012, anti-tnf drugs contributed to more than half (54.8%) of the growth in drug program spending and were the top contributor to growth in each jurisdiction for which data was available. vi Two of the top three drug classes that contributed most to the growth of public drug spending, anti-tnf drugs and antineovascularization agents, were newer 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 2007 and 2012, at 129.0%, followed by anti-tnfs, growing at an average annual rate of 28.1%. Again, it should be noted that Alberta accounts for the majority of ranibizumab spending in this calculation. Therefore, the growth rate would likely have been even higher if spending from other jurisdictions was included. In most of the other provinces where ranibizumab spending is not captured, anti-tnf agents were the fastest-growing drug class in terms of spending. v. Data from five provinces is included: Nova Scotia, New Brunswick, Manitoba, Saskatchewan and Alberta. vi. Data from seven provinces in included: P.E.I., Nova Scotia, New Brunswick, Manitoba, Saskatchewan, Alberta and B.C. 14

27 Both antineovascularization and anti-tnf drugs are relatively expensive. Biologic agents are often more expensive than alternative medications (where they exist), and drug programs in the nine jurisdictions spent an average of $9,104 and $17,782 per paid beneficiary on antineovascularization agents and anti-tnfs, respectively, in Table 7: Top 10 Drug Classes by Contribution to Total Program Spending Growth, Average Annual Growth, Selected Jurisdictions,* 2007 to 2012 Average Annual Growth (%) Drug Class Common Use Contribution to TPS Growth (%) Tumor Necrosis Factor Alpha Rheumatoid Arthritis, Crohn s Disease Inhibitors (Anti-TNF Drugs) Antineovascularization Agents Age-Related Macular Degeneration Adrenergics and Other Drugs for Obstructive Airway Diseases Asthma, Emphysema, Chronic Bronchitis Other Antipsychotics Schizophrenia, Bipolar, Dementia, Affective Disorder Drugs Used in Opioid Dependence Drug Addiction, Pain Control Anticholinergics Emphysema, Chronic Bronchitis Natural Opium Alkaloids Management of Moderate to Severe Pain Anticholinesterases Alzheimer s Disease Other Antiepileptics Epilepsy, Pain Selective Serotonin Reuptake Inhibitors (SSRIs) Depression, Anxiety, Panic Disorder Notes * The seven jurisdictions submitting claims data to the NPDUIS Database as of December 2013 are Prince Edward Island, Nova Scotia, New Brunswick, Manitoba, Saskatchewan, Alberta and British Columbia. 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. Source National Prescription Drug Utilization Information System Database, Canadian Institute for Health Information. The increased spending on these relatively high-cost drug classes led to a shift in the distribution of drug program spending across individuals. Among the seven jurisdictions vii for which data is available for 2007 and 2012, the proportion of drug program spending on beneficiaries for whom the drug program paid $10,000 or more in drug spending increased from 14.5% in 2007 to 25.5% in 2012, while the proportion of beneficiaries they account for increased by less than 1 percentage point (Appendix H). Among these high-cost individuals, almost half (45.5%) had a claim for either anti-tnf or antineovascularization drugs in 2012, compared with about one-quarter (23.1%) in vii. Data from seven jurisdictions is included: P.E.I., Nova Scotia, New Brunswick, Manitoba, Saskatchewan, Alberta and B.C. 15

28 As previously mentioned, the rate of growth in drug spending has decreased substantially during the past five years. It is not surprising that similar trends were observed in eight of the top 10 drug classes in terms of drug spending in 2012 (Table 8). This was due in large part to patent expiries for commonly used chemicals after 2007, which occurred in all but one of these eight drug classes (opioids). Statins, for instance, had one of the highest proportions of total program spending (5.6%) in 2012; however, public drug program spending on this class declined by an average annual rate of 7.0% between 2007 and A decline in spending was also observed for three other top 10 drug classes: PPIs (commonly used to treat gastroesophageal reflux disease), ACE inhibitors (commonly used to lower blood pressure), and diazepines, oxazepines, thiazepines and oxepines (commonly used to treat schizophrenia and bipolar disorder). Table 8: Average Annual Growth in Total Program Spending for Top 10 Drug Classes by TPS, Selected Jurisdictions,* 2002 to 2012 Drug Class Tumor Necrosis Factor Alpha Inhibitors (Anti-TNF Drugs) HMG-CoA Reductase Inhibitors (Statins) Proton Pump Inhibitors Common Use Average Annual Growth in TPS 2002 to 2007 (%) Average Annual Growth in TPS 2007 to 2012 (%) Rheumatoid Arthritis, Crohn s Disease High Cholesterol Gastroesophageal Reflux Disease, Peptic Ulcer Disease Antineovascularization Agents Age-Related Macular Degeneration Adrenergics and Other Drugs for Asthma, Emphysema, Obstructive Airway Diseases Chronic Bronchitis Natural Opium Alkaloids Management of Moderate to Severe Pain Angiotensin-Converting Enzyme Heart Failure, High Blood Pressure (ACE) Inhibitors, Plain Selective Serotonin Depression Reuptake Inhibitors Diazepines, Oxazepines, Schizophrenia, Bipolar Disorder Thiazepines and Oxepines Other Antidepressants Depression Combined Top Notes * The five jurisdictions submitting claims data to the NPDUIS Database as of December 2013 are Nova Scotia, New Brunswick, Manitoba, Saskatchewan and Alberta. 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. TPS: Total program spending. Source National Prescription Drug Utilization Information System Database, Canadian Institute for Health Information. 16

29 In each of these four classes, patents on commonly used drugs expired, allowing for the entry of lower-priced generic versions. Looking at the share of generic drug spending for these four classes, all of them experienced a shift from brand to generic products during the study period (Figure 6). Between 2002 and 2012, the generic share of public program spending for statins increased from 15.5% to 74.5%; ACE inhibitors increased from 16.3% to 64.1%; and diazepines, oxazepines, thiazepines and oxephines from 0.4% to 82.4%. Between 2007 and 2012, PPIs increased from 27.1% to 79.9%. Figure 6: Distribution of Total Drug Program Spending on Selected Drug Classes, by Type of Drug, Selected Jurisdictions,* 2002 to 2012 Notes * The five jurisdictions submitting claims data to the NPDUIS Database as of March 2013 are Nova Scotia, New Brunswick, Manitoba, Saskatchewan and Alberta. 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. PPIs: Proton pump inhibitors. ACE: Angiotensin-converting enzyme. Source National Prescription Drug Utilization Information System Database, Canadian Institute for Health Information. 17

30 The impact of the entry of lower-cost generic products in these classes was further amplified with the implementation of generic pricing policies by public drug programs over the past five years. Generic drug prices are now regulated in most provinces, ranging from 18% to 35% of the price of brand name products. Most recently, a Council of the Federation initiative reduced the prices for six commonly used generic drugs viii including a statin, an ACE inhibitor and two PPIs to 18% of the brand name price. Each of these chemicals belonged to one of the top 10 drug classes in terms of drug program spending in In 2012, generic products accounted for 38.8% of public drug program spending (Figure 7). 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 in each year (Table 9). The share of generic spending can be skewed by the typically higher prices of brand name products. Generics as a share of the total number of accepted claims (rather than as a share of spending) accounted for 72.4% in Figure 7: Percentage Share of Total Drug Program Spending and Number of Accepted Claims (Brand Name and Generic), Selected Jurisdictions,* 2012 Note * The nine jurisdictions submitting claims data to the NPDUIS Database as of December 2013 are Prince Edward Island, Nova Scotia, New Brunswick, Ontario, Manitoba, Saskatchewan, Alberta, British Columbia and the First Nations and Inuit Health Branch. Source National Prescription Drug Utilization Information System Database, Canadian Institute for Health Information. viii. The six generic drugs include atorvastatin, ramipril, venlafaxine, amlodipine, omeprazole and rabeprazole. 18

31 Table 9: Generic Drugs as a Percentage of Total Drug Program Spending and Total Number of Accepted Claims, Selected Provinces,* 2002 to 2012 Jurisdiction Percentage of TPS (%) Percentage of Claims (%) Percentage of TPS (%) Percentage of Claims (%) Percentage of TPS (%) Percentage of Claims (%) P.E.I. N/A N/A N.S N.B Ont. N/A N/A N/A N/A Man Sask Alta B.C. N/A N/A FNIHB N/A N/A N/A N/A Notes * The nine jurisdictions submitting claims data to the NPDUIS Database as of December 2013 are 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. N/A: Data not available. Source 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 only generic products were available, generics accounted for 65.5% of spending and 80.6% of claims in

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33 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 one claim accepted by a public drug program, either for reimbursement or applied toward a deductible. In Manitoba and Saskatchewan, claimants 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 one 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. 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. claim: One 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 (that is, the amount of the total prescription cost accepted that is paid out of pocket by the beneficiary or through another plan/program/insurer). cost-sharing mechanisms: The ways through which prescription costs can be shared between drug programs and their beneficiaries (for example, 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). 21

34 drug class: Subgroups of chemicals classified by the World Health Organization at the fourth level of the ATC classification system. At this level, subgroups are, in theory, regarded as groups of different chemicals that work in the same way to treat similar medical conditions (for example, 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 one 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. 22

35 Appendix B: Overview of Drug Program Design and Formulary Overview of Drug Plan Design Although public drug coverage is available in the nine jurisdictions included in this analysis, the design of public drug programs varies widely across jurisdictions. One major difference is that drug programs in B.C. and Manitoba, as well as FNIHB s drug program, offer similar coverage to people of all ages, while the other jurisdictions have a separate plan designed specifically for seniors. There is less consistency in the coverage of non-seniors across jurisdictions. In B.C., Saskatchewan, Manitoba and FNIHB, drug costs are reimbursed if they exceed a certain percentage of an individual s income. In most other jurisdictions, similar plans are available but only to those without private insurance. In all jurisdictions, coverage is available to individuals receiving income assistance. Coverage is also available for selected drugs to treat particular conditions in all provinces, though the drugs and conditions vary. The differences in coverage of non-seniors across jurisdictions, along with population demographics, greatly impact the age distribution of the active beneficiary population, and in turn how drug program spending is distributed across age groups. In jurisdictions offering similar coverage to both non-seniors and seniors, non-seniors account for the vast majority of active beneficiaries, and the majority, albeit a lower proportion, of total drug program spending (Table 10). In these jurisdictions the proportion of non-senior beneficiaries ranges from 77.0% in B.C. to 92.8% for FNIHB beneficiaries, where the large proportion is due to both plan design and the relatively lower average age of the population it covers. Non-seniors accounted for a proportion of drug program spending ranging from 58.1% in B.C. to 81.1% for FNIHB. Table 10: Public Drug Program Spending, by Age Group, Selected Jurisdictions, 2012 Non-Seniors (<65) Seniors (65+) Percentage of Active Percentage of Active Jurisdiction Beneficiaries (%) Percentage of TPS (%) Beneficiaries (%) Percentage of TPS (%) P.E.I N.S N.B Ont Man Sask Alta B.C FNIHB Notes * The nine jurisdictions submitting claims data to the NPDUIS Database as of December 2013 are 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. Source National Prescription Drug Utilization Information System Database, Canadian Institute for Health Information. 23

36 In Saskatchewan, the proportion of non-senior beneficiaries (78.0%) is similar to the proportion in B.C. and Manitoba; however, the proportion of total program spending accounted for by non-seniors (49.3%) is slightly lower due to differences in cost sharing. Among the remaining provinces, seniors accounted for the majority of both active beneficiaries and total program spending. The seniors proportion of beneficiaries ranged from 59.4% in Ontario to 80.2% in Nova Scotia and the proportion of program spending accounted for by seniors ranged from 58.0% in P.E.I. and New Brunswick to 84.2% in Nova Scotia. It should be noted that drug claims from drug programs for income assistance recipients in Alberta and Nova Scotia are not submitted to the NPDUIS Database. This results in a lower proportion of non-seniors appearing in the data for these provinces, as these programs provide coverage to non-seniors only. Another important difference between drug programs is the cost-sharing mechanism employed; such as a deductible ix or copayment (or combination of the two), which will affect the amount that individuals and drug programs pay for each drug claim. For example, even for consistently covered populations like seniors, cost-sharing mechanisms vary. In Nova Scotia and New Brunswick, seniors must pay premiums to enrol in the program, and then costs are shared for each claim. P.E.I., Ontario and Alberta also have copayments for each claim but do not charge premiums. In Manitoba, deductibles are used whereby seniors pay for their drug costs up to a certain percentage of their income and the drug program pays for their drug costs once the deductible has been reached. In Saskatchewan, some seniors have copayments, while others have deductibles, depending on income level; in B.C., deductibles are used, but there are also copayments for each claim once the deductible has been reached. FNIHB covers all eligible costs for those enrolled in its drug program, regardless of age or income. Common to all provinces included in the analysis, seniors covered by provincial workers compensation boards or federal drug programs are not eligible for coverage under provincial drug programs. Federal drug programs include those delivered by Correctional Service of Canada; First Nations and Inuit Health Branch; x and Veterans Affairs Canada. In addition to the overview presented here, further information about public drug programs in Canada can be found in the NPDUIS Plan Information Document, available at or on the websites of the public drug programs (Appendix F). ix. A deductible is an amount paid by the beneficiary toward eligible drug costs before any part of the drug costs will be paid by the drug program. Any drug cost exceeding the value of the deductible may be paid, entirely or in part, by the drug program. x. This excludes seniors living in Ontario who also have coverage through FNIHB. These seniors first have their drug claims covered by the Ontario Drug Benefit program; any remaining drug costs are covered by FNIHB. 24

37 Formulary Overview Variation in the number and types of drugs covered by provincial formularies is one of many factors that can lead to differences in drug utilization and expenditure. Other factors include the health, age and sex of the population, prescribing trends and the availability of non-drug therapies. In 2012, drugs common in all nine public drug programs made up 94.1% of drug claims and 81.8% of drug program spending on seniors. xi For drug classes covered in at least eight jurisdictions, the rates increased to 95.9% of drug claims and 95.7% of total program payments. Because such a large portion of program expenditures relates to drug classes that are listed in most jurisdictions, differences in formulary coverage are not expected to play a large role in any provincial differences in overall utilization and expenditure. However, differences in formulary coverage may have a significant impact on the utilization of specific drugs or drug classes across provinces. Given this potential impact, it is important to consider differences in formulary listings when comparing provincial drug utilization or expenditure for specific drugs or drug classes. xi. Formulary information for products available through Part III of the Manitoba formulary is not submitted to the NPDUIS Database. 25

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39 Appendix C: Drug Classification Systems Drugs can be analyzed using many different classification systems. For the purposes of this analysis, the following systems were used: The drug identification number (DIN) as assigned by Health Canada: A DIN is specific to manufacturer, trade name, active ingredient(s), strength(s) of active ingredient(s) and pharmaceutical form. In this analysis, references to drug products are implied to be specific to the DIN level. The pseudo-drug identification number (PDIN), as assigned by a drug program, in cases where a benefit has not been assigned a DIN by Health Canada: This may occur when a benefit is not a drug product (for example, a glucose test strip) or when it is a compound consisting of multiple drug products, each with its own DIN. World Health Organization ATC classification system as reported in the Health Canada Drug Product Database: xii In the ATC classification system, drugs are divided into different groups according to the organ or system on which they act and their chemical, pharmacological and therapeutic properties. The ATC does not distinguish between strength, dosage, route or form of drug, except as implied by the ATC (for example, inhaled corticosteroid). Drugs are classified in groups at five different levels: o The drugs are divided into 14 main groups (first level), with one pharmacological/ therapeutic subgroup (second level). o The third and fourth levels are chemical/pharmacological/therapeutic subgroups. o The second, third and fourth levels are often used to identify pharmacological subgroups when they are considered more appropriate than therapeutic or chemical subgroups. o The fifth level is the chemical substance. Drug products assigned a DIN but not assigned to an ATC classification by Health Canada are automatically classified under the ATC classification unassigned. Benefits assigned a PDIN are automatically classified under the ATC classification not applicable. Where appropriate, CIHI may assign DINs or PDINs to other ATC classifications. Drug program spending on and use of DINs and PDINs not assigned to ATC classifications are included in total amounts, but the default drug classes unassigned and not applicable are not counted as drug classes. This applies to any count of drug classes and to any top 10 lists (that is, they are not included in any top 10 lists, even if their utilization or spending level puts them in the top 10). xii. Although Health Canada typically assigns drug products to a fifth-level ATC, in some cases it may assign an ATC at the fourth or even third level. 27

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41 Appendix D: Factors That May Influence Drug Use and Expenditure in Canada Prices Changes in the unit prices of drugs (both patented and non-patented) Changes in retail and wholesale markups and professional fees Availability of generics International prices Inflation Entry of New Drug Chemicals Volume of Drug Use Population-related Changes in population size Changes in population structure/distribution Age, sex and ethnicity Changes in health status of a population Emergence of new diseases Epidemics Prevalence and severity of disease System-related Changes and transition associated with health system reform Availability and access to third-party insurance coverage Changes in policies and programs Extent of formulary listings Eligibility and copayments Research- and technology-related New treatment approaches Drugs replacing surgery Drug therapy for previously untreatable or undertreated diseases Availability of more and/or improved diagnostic technology Outcomes research, evidence-based preventive or curative approaches in diagnosis or treatment Use of programs and technology in monitoring patients 29

42 Pharmaceutical industry related Development of new drug products (for example, new strengths, new drug forms and presentations) Promotion of drugs to physicians Drug sampling Direct-to-consumer advertising Practice- and people-related (health care providers and consumers) Changes in prescribing and dispensing practices Number and mix of prescribers (specialists, general practitioners, nurse practitioners and others) Multiple doctoring Consumers expectations and behaviours Adherence to treatment 30

43 Appendix E: Methodological Notes Data Sources National Health Expenditure Database CIHI s National Health Expenditure Database (NHEX) contains a historical series of macro-level health expenditure statistics by province and territory. The drugs category in NHEX is intended to measure final consumption, outside an institutional setting, of drugs purchased by consumers or third-party payers on their behalf, generally from retail outlets. Drug expenditure data in NHEX is an estimate that represents the final costs to Canadian consumers, including dispensing fees, markups and appropriate taxes. For more information on the drugs component of NHEX, please refer to CIHI s National Health Expenditure Trends report series. National Prescription Drug Utilization Information System Database The drug claims and formulary data used in this analysis comes from the NPDUIS Database, as submitted by Prince Edward Island, Nova Scotia, New Brunswick, Ontario, Manitoba, Saskatchewan, Alberta, British Columbia, and the First Nations and Inuit Health Branch provincial and federal public drug programs. The NPDUIS Database houses pan-canadian information related to public program formularies, drug claims, policies and population statistics. It was designed to provide information that supports accurate, timely and comparative analytic and reporting requirements for the establishment of sound pharmaceutical policies and the effective management of Canada s public drug benefit programs. The NPDUIS Database includes claims accepted by public drug programs, either for reimbursement or to be applied toward a deductible. xiii Claims are included regardless of whether the individual actually used the drugs. The NPDUIS Database does not include information regarding Prescriptions that were written but never dispensed; Prescriptions that were dispensed but for which the associated drug costs were not submitted to or not accepted by the public drug programs; or Diagnoses or conditions for which prescriptions were written. Drug claims data from Nova Scotia, New Brunswick, Manitoba, Saskatchewan and Alberta was available for 2002 through 2012; for Ontario and FNIHB, it was available from 2011 onward; for P.E.I. and B.C., it was available from 2007 through Analyses that include drug claims data prior to 2007 do not include data from P.E.I. or B.C., and those prior to 2012 do not include data from Ontario or the FNIHB. xiii. In Manitoba and Saskatchewan, this includes accepted claims for people who are eligible for coverage under a provincial drug program but have not submitted an application and, therefore, do not have a defined deductible. 31

44 Table 11: Claims Data Sources Jurisdiction Prince Edward Island Nova Scotia New Brunswick Ontario Manitoba Saskatchewan Alberta Plan/Program Code Description Diabetes Control Family Health Benefit High-Cost Drug Nursing Home Drug Cost Assistance Children-in-Care Financial Assistance Sexually Transmitted Diseases Quit Smoking Program Drug Assistance for Cancer Patients Diabetic Assistance Pharmacare Program Pharmacare Long-Term Care (Under 65) Seniors Pharmacare Program Nova Scotia Family Pharmacare Program Seniors Cystic Fibrosis Individuals in Licensed Residential Facilities Family and Community Services Children in Care of the Minister of Family and Community Services Multiple Sclerosis Organ Transplant Special Authorization Human Growth Hormone HIV Nursing Home Extra-Mural Hospital Influenza Tuberculosis Ministry of Community Services (MCSS) MOHLTC Ontario Drug Benefit Program (ODB) Employment and Income Assistance Program Palliative Care Pharmacare Personal Home Care/Nursing Homes Universal Program Non-Group Seniors Palliative Care (cont d on next page) 32

45 Table 11: Claims Data Sources (cont d) Jurisdiction British Columbia First Nations Inuit Health Branch Plan/Program Code Description Fair PharmaCare Permanent Residents of Licensed Residential Care Facilities Recipients of B.C. Income Assistance Cystic Fibrosis Children in the At Home Program No-Charge Psychiatric Medication Plan BC Palliative Care Drug Plan Smoking Cessation Non-Insured Health Benefits Program Provincial Notes Prince Edward Island Claims dispensed through the following programs are included in the NPDUIS Database: Children in Care Drug Program; Financial Assistance Drug Program; Seniors Drug Cost Assistance Program; Diabetes Drug Program; Family Health Benefit Drug Program; High Cost Drug Program; Nursing Home Drug Program; Quit Smoking Drug Program; and Sexually Transmitted Disease Drug Program Claims for all other plans are not submitted. Nova Scotia Claims dispensed through the Department of Community Services Pharmacare Benefits Program are not submitted. Manitoba Oxygen claims are not submitted. Saskatchewan Claims for non-published DINs (that is, DINs not listed on the Saskatchewan Drug Formulary) and claims dispensed through special programs, such as the Saskatchewan Cancer Agency, are not submitted to the NPDUIS Database. Claims dispensed through Saskatchewan Aids to Independent Living and Supplementary Health are included in the NPDUIS Database only if they are for DINs published on the Saskatchewan Drug Formulary. Alberta Claims dispensed through the Income Support, Alberta Adult Health Benefit, Assured Income for the Severely Handicapped and Alberta Child Health Benefit programs are not submitted. Claims dispensed to residents of long-term care facilities are not submitted to the NPDUIS Database. 33

46 Calculation Methods Claims from years 2002, 2007 and 2012, from the nine jurisdictions submitting claims data to the NPDUIS Database (P.E.I., Nova Scotia, New Brunswick, Ontario, Manitoba, Saskatchewan, Alberta, B.C. and FNIHB) were used for this analysis. Due to data availability, Ontario and FNIHB data is excluded for analysis using data prior to 2012, and P.E.I. and B.C. data is excluded for analysis prior to Total drug program spending is calculated by summing the amount that the drug program paid for each accepted claim. Total plan paid per beneficiary is calculated by dividing the total amount paid by the public drug program for each claim by the total number of paid beneficiaries. Rate of use is calculated by dividing the number of active beneficiaries who had at least one claim for a given drug class by the total number of active beneficiaries. Top 10 drug classes exhibiting the greatest increase in public drug program spending was found by first calculating the average annual growth rate between 2007 and 2012 for each drug class within a jurisdiction/within all jurisdictions. For a drug class to be considered among the top 10 fastest-growing drug classes, it had to account for at least 1.0% of total drug program spending in For a drug class to be considered among the top 10 fastest-declining drug classes, it had to account for at least 0.2% of total drug program spending in Identification of brand and generic products is based on the methodology developed by CIHI using data sources such as the Health Canada Drug Product Database (HC-DPD), the Health Canada Notice of Compliance (HC-NOC) and the Health Canada Patent Register. Products may be categorized in one of the following categories: 1. Brand Name Products: Products submitted as new drug submission/active ingredient(s) to Health Canada as reported by the HC-NOC database, associated with a patent number as reported by the Health Canada Patent Register database, or manufactured by an innovative pharmaceutical research company. Products assigned with Schedule D (Biological) as reported by the HC-DPD. 2. Generic Products: Products with a description that contains the main active ingredient as reported by Health Canada and/or a prefix of a generic company name (for example, NOVO, APO, PMS, RATIO, SANDOZ); products not otherwise defined as brand name products. Over-the-counter products (those with an assigned schedule of OTC as reported in the HC-DPD) were excluded from analyses involving brand name and generic drugs. Limitations Since the NPDUIS Database does not contain information regarding diagnoses or the conditions for which prescriptions were written, the conditions that contribute to drug program spending cannot be identified with certainty. However, identifying the most common indications for the drug classes that account for the majority of spending gives an idea of which conditions are the main contributors. 34

47 Appendix F: Provincial and Territorial Drug Programs More information on public drug programs is available from the following websites: Newfoundland and Labrador Prescription Drug Program Prince Edward Island Pharmacare Nova Scotia Pharmacare New Brunswick Prescription Drug Program Régime général d assurance médicaments du Québec (RGAM) Ontario Drug Benefits Manitoba Pharmacare Program Saskatchewan Drug Plan Alberta Prescription Drug Program British Columbia PharmaCare Yukon Pharmacare Northwest Territories Health Care Plan Nunavut 35

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49 Appendix G: Percentage of Total Public Drug Program Spending, by Broad Therapeutic Category, Selected Jurisdictions,* 2012 Broad Therapeutic Percentage of Drug Program Spending (%) Category P.E.I. N.S. N.B. Ont. Sask. Man. Alta. B.C. FNIHB Combined Nervous System Cardiovascular System Antineoplastic and Immunomodulating Agents Alimentary Tract and Metabolism Respiratory System Anti-Infectives for Systemic Use Sensory Organs Musculoskeletal System Blood and Blood Forming Organs Genitourinary System and Sex Hormones Systemic Hormonal Preparations Dermatologicals Various Anti-Parasitic Products, Insecticides and Repellents Unassigned Notes * The nine jurisdictions submitting claims data to the NPDUIS Database as of December 2013 are 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 ATC assigned by Health Canada and products assigned as pseudo-dins. Source National Prescription Drug Utilization Information System Database, Canadian Institute for Health Information. 37

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51 Appendix H: Percentage of Paid Beneficiaries and Total Drug Program Spending, by Program Spending per Paid Beneficiary, Selected Jurisdictions,* 2007 and 2012 Jurisdiction <$500 $500 $1,499 $1,500 $2,499 $2,500 $4,999 $5,000 $9,999 $10, P.E.I. PB TPS N.S. PB TPS N.B. PB TPS Ont. PB N/A 49.4 N/A 25.7 N/A 10.7 N/A 9.4 N/A 3.3 N/A 1.6 TPS N/A 5.1 N/A 17.2 N/A 15.0 N/A 23.6 N/A 16.2 N/A 22.9 Man. PB TPS Sask. PB TPS Alta. PB TPS B.C. PB TPS FNIHB PB N/A 71.1 N/A 15.9 N/A 5.8 N/A 4.9 N/A 1.6 N/A 0.7 TPS N/A 13.1 N/A 18.9 N/A 15.2 N/A 22.6 N/A 14.8 N/A 15.4 Total PB TPS Notes * The nine jurisdictions submitting claims data to the NPDUIS Database as of December 2013 are Prince Edward Island, Nova Scotia, New Brunswick, Manitoba, Saskatchewan, Alberta, British Columbia and the First Nations and Inuit Health Branch. Ontario and FNIHB data is not available prior to 2011; these jurisdictions are thus excluded from the total calculation. N/A: Data not available. PB: Paid beneficiaries. TPS: Total drug program spending. FNIHB: First Nations and Inuit Health Branch. Source National Prescription Drug Utilization Information System Database, Canadian Institute for Health Information. 39

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53 Appendix I: Top 10 Drug Classes With the Highest Proportion of Total Program Spending, by Jurisdiction, 2012 Prince Edward Island Drug Class Tumor necrosis factor alpha inhibitors (anti-tnf drugs) TPS ($ 000) Proportion of TPS (%) Rate of Use (%) 3, HMG-CoA reductase inhibitors 2, Proton pump inhibitors 1, ACE inhibitors, plain 1, Dihydropyridine derivatives 1, Diazepines, oxazepines, thiazepines and oxepines Insulins and analogues for injection, fastacting 1, Selective serotonin reuptake inhibitors Protein kinase inhibitors Interferons P.E.I. Note TPS: Total program spending. Source National Prescription Drug Utilization Information System Database, Canadian Institute for Health Information. Nova Scotia Drug Class TPS ($ 000) Proportion of TPS (%) Rate of Use (%) Tumor necrosis factor alpha inhibitors (anti-tnf drugs) 17, HMG-CoA reductase inhibitors 14, Proton pump inhibitors 9, ACE inhibitors, plain 6, Dihydropyridine derivatives 6, Adrenergics and other drugs for obstructive airway diseases 4, Beta-blocking agents, selective 3, Selective serotonin reuptake inhibitors 3, Anticholinergics 3, Natural opium alkaloids 3, N.S. Note TPS: Total program spending. Source National Prescription Drug Utilization Information System Database, Canadian Institute for Health Information. 41

54 N.B. New Brunswick Drug Class TPS ($ 000) Proportion of TPS (%) Rate of Use (%) HMG-CoA reductase inhibitors 12, Proton pump inhibitors 11, Tumor necrosis factor alpha inhibitors (anti-tnf drugs) 10, Diazepines, oxazepines, thiazepines and oxepines 8, ACE inhibitors, plain 6, Dihydropyridine derivatives 5, Selective serotonin reuptake inhibitors 5, Drugs used in opioid dependence 4, Adrenergics and other drugs for obstructive airway diseases 4, Other antipsychotics 4, Note TPS: Total program spending. Source National Prescription Drug Utilization Information System Database, Canadian Institute for Health Information. Ont. Ontario Drug Class TPS ($ 000) Proportion of TPS (%) Rate of Use (%) HMG-CoA reductase inhibitors 249, Antineovascularization agents 184, Tumor necrosis factor alpha inhibitors (anti-tnf drugs) 170, Proton pump inhibitors 140, Adrenergics and other drugs for obstructive airway diseases 128, Natural opium alkaloids 114, ACE inhibitors, plain 111, Other antidepressants 100, Anticholinesterases 99, Selective serotonin reuptake inhibitors 98, Note TPS: Total program spending. Source National Prescription Drug Utilization Information System Database, Canadian Institute for Health Information. 42

55 Manitoba Drug Class TPS ($ 000) Proportion of TPS (%) Rate of Use (%) Tumor necrosis factor alpha inhibitors (anti-tnf drugs) 43, Proton pump inhibitors 11, HMG-CoA reductase inhibitors 10, Diazepines, oxazepines, thiazepines and oxepines 10, Natural opium alkaloids 8, Protein kinase inhibitors 8, Adrenergics and other drugs for obstructive airway diseases 7, Interferons 7, Selective serotonin reuptake inhibitors 6, Other antiepileptics 6, Man. Note TPS: Total program spending. Source National Prescription Drug Utilization Information System Database, Canadian Institute for Health Information. Saskatchewan Drug Class TPS ($ 000) Proportion of TPS (%) Rate of Use (%) Tumor necrosis factor alpha inhibitors (anti-tnf drugs) 35, HMG-CoA reductase inhibitors 15, Proton pump inhibitors 10, Natural opium alkaloids 7, ACE inhibitors, plain 7, Diazepines, oxazepines, thiazepines and oxepines 6, Adrenergics and other drugs for obstructive airway diseases 6, Other antiepileptics 6, Interferons 6, Dihydropyridine derivatives 6, Sask. Note TPS: Total program spending. Source National Prescription Drug Utilization Information System Database, Canadian Institute for Health Information. 43

56 Alta. Alberta Drug Class TPS ($ 000) Proportion of TPS (%) Rate of Use (%) Tumor necrosis factor alpha inhibitors (anti-tnf drugs) 75, HMG-CoA reductase inhibitors 51, Antineovascularization agents 43, Proton pump inhibitors 39, Adrenergics and other drugs for obstructive airway diseases 27, ACE inhibitors, plain 24, Dihydropyridine derivatives 18, Natural opium alkaloids 16, Angiotensin II antagonists, plain 15, Selective serotonin reuptake inhibitors 13, Note TPS: Total program spending. Source National Prescription Drug Utilization Information System Database, Canadian Institute for Health Information. B.C. British Columbia Drug Class TPS ($ 000) Proportion of TPS (%) Rate of Use (%) Tumor necrosis factor alpha inhibitors (anti-tnf drugs) 111, HMG-CoA reductase inhibitors 44, Diazepines, oxazepines, thiazepines and oxepines 44, Selective serotonin reuptake inhibitors 36, Natural opium alkaloids 31, Drugs used in opioid dependence 27, Proton pump inhibitors 27, ACE inhibitors, plain 26, Other antipsychotics 24, Other antidepressants 23, Note TPS: Total program spending. Source National Prescription Drug Utilization Information System Database, Canadian Institute for Health Information. 44

57 First Nations and Inuit Health Branch Drug Class TPS ($ 000) Proportion of TPS (%) Rate of Use (%) Natural opium alkaloids 16, Proton pump inhibitors 16, HMG-CoA reductase inhibitors 16, Tumor necrosis factor alpha inhibitors (anti-tnf drugs) 15, ACE inhibitors, plain 12, Drugs used in opioid dependence 11, Other antiepileptics 10, Selective serotonin reuptake inhibitors 9, Diazepines, oxazepines, thiazepines and oxepines 8, Glucocorticoids 8, FNIHB Note TPS: Total program spending. Source National Prescription Drug Utilization Information System Database, Canadian Institute for Health Information. 45

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59 References 1. Canadian Institute for Health Information. National Health Expenditure Trends, 1975 to Ottawa, ON: CIHI; Morgan S, et al. The Canadian Rx Atlas, Third Edition. Centre for Health Services and Policy Research, University of British Columbia Canadian Institute for Health Information. Drivers of Prescription Drug Spending in Canada. Ottawa, ON: CIHI; Canadian Institute for Health Information. Drug Use Among Seniors on Public Drug Programs in Canada, 2002 to Ottawa, ON: CIHI; Council of the Federation. Provinces and Territories Seek Significant Cost Savings for Canadians on Generic Drugs /122-territories-seek-significant-cost-savings-on-generic-drugs. Accessed December 20,

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61 Production of this report 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. All rights reserved. The contents of this publication may be reproduced unaltered, in whole or in part and by any means, solely for non-commercial purposes, provided that the Canadian Institute for Health Information is properly and fully acknowledged as the copyright owner. Any reproduction or use of this publication or its contents for any commercial purpose requires the prior written authorization of the Canadian Institute for Health Information. Reproduction or use that suggests endorsement by, or affiliation with, the Canadian Institute for Health Information is prohibited. For permission or information, please contact CIHI: Canadian Institute for Health Information 495 Richmond Road, Suite 600 Ottawa, Ontario K2A 4H6 Phone: Fax: ISBN (PDF) 2014 Canadian Institute for Health Information How to cite this document: Canadian Institute for Health Information. Prescribed Drug Spending in Canada, 2012: A Focus on Public Drug Programs. Ottawa, ON: CIHI; Cette publication est aussi disponible en français sous le titre Dépenses en médicaments prescrits au Canada 2012 : regard sur les régimes publics d assurance-médicaments. ISBN (PDF)

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