Before the holidays, CIHI released its annual analysis of public drug spending, and it’s worth more than a cursory examination for anyone who cares about how much money is spent on pharmaceuticals in Canada, on what and where, and how those numbers have changed over time.
(Despite the comprehensive of the analysis, it’s also important to note that two major components of pubic sector spending on pharmaceuticals are NOT included in the overall spending figures: spending on drugs delivered in hospitals and spending on cancer medications funded by dedicated cancer agencies.)
Our deeper review of the report identifies five key trends that will resonate with payers and policymakers across the country:
- Drug plans across Canada have been remarkably successful at reining in their pharmaceutical spending over the past five years. From 2010-2015, drug plans in Canada increased their prescription drug spending by an average of 1.6% a year – significantly lower than the 7.6% annual increases from 2005 to 2010, and lower still than the 10.6% annual increases between 1985 and 2005.
- However, the impact of the “Patent Cliff” is beginning to recede. Canada is well past the years when spending increases were dramatically reduced based on the genericization of multiple high-volume small molecule drugs. (In 2012, for example, spending on statins decreased by 20.9% – a far cry from 2015’s drop of 1.9%.) According to CIHI, public drug program spending in 2015 increased by 9.2% year-over-year – a substantial increase the previous year.
- Increases in drug spending are being driven by biologics broadly – and anti-TNF and Hep-C drugs in particular. Anti-TNFs accounted for the largest category of total spending, while “Other Antivirals” – of which Hep-C drugs account for 95.7% of expenditures – accounted for 61.4% of the growth in spending year-over-year.
- Public drug plans actually account for less drug spending than many people think. Although the public sector still spends the most on prescription drugs, its share is less than 50% and private payers are close behind. In 2014, spending on prescribed drugs reached $29.4B – split between the public sector ($12.5B or 42.6%), the private sector ($10.4B or 35.2%) and Canadian households ($6.5B or 22.2%).
- The pCPA’s impact is small but growing. Looking at the Alliance’s impact on 14 generic molecules alone, CIHI found that public drug program spending decreased by $535.1 million, or 6.1% of public drug program spending in 2015. Notwithstanding the complexity of accurately assessing the pCPA’s impact on a collective set of confidential PLAs, the figure referenced above clearly understates the impact of the Alliance on the negotiating results of its members.
As the conclusions above drive home, CIHI has laid out a carefully researched and thoughtfully argued analysis of how public spending on prescription drugs changed in 2015 – and in so doing illuminated some of the key trends and insights we can expect to have carried through 2016 and to continue into this New Year.
By Ross Wallace