CADTH 2015 Symposium

1. r e l e a s e d: m a r c h 3 1, 2 0 1 5
Cost-drivers
of public drug
plans in canada
E l e n a l u n g u
Manager, NPDUIS, PMPRB
2015 CADTH Symposium

2. About NPDUIS
 Established in 2001 as an F/P/T research initiative to provide policy
makers and drug plan managers with analyses of price, utilization and
cost trends
 A partnership between the PMPRB and the Canadian Institute for Health
Information (CIHI)
 CIHI developed the NPDUIS Database in consultation with the PMPRB
 The NPDUIS Database houses pan-Canadian prescription claims-level
data from publicly financed drug benefit programs in Canada
 The NPDUIS Advisory Committee advises the PMPRB and provides
expert oversight and guidance for the analytical reporting of the initiative
 Representation: BC, AB, SK, MB, ON, NB, NS, PEI, NL, YK, NIHB & HC, CIHI and
CADTH
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3.  Purpose
 Points towards the most important cost pressures, measures their
impact, and delves into the factors determining trends
 Value
 Insight into the recent drivers allows to anticipate future cost pressures
and expenditure levels
 Methods
 Builds on the cost driver methodology developed by the PMPRB
 Main data source: NPDUIS Database, CIHI
 Plans reported: AB, SK, MB, ON, NB, NS, PEI and NIHB
 Focus: 2012/13
 Includes drug costs, dispensing fees, and pharmacy markups
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Cost-drivers of public drug plans in Canada

4. 4
Drug cost component – largest share

5. 5
Declining rates of growth in drug cost

6. 6
Sustained growth in fee expenditures

8.  Changes in drug expenditures are multifactorial
 e.g. aging of the population, the increased use of drugs, the rate
of generic substitution, price changes, and shifts in the mix of
drugs utilized
 Some factors may have a “push” or positive effect
on the change in prescription drug expenditures
 e.g. aging and the increased use of drugs
 Other factors may have a “pull” or negative effect
 e.g. generic substitution and price reductions
 The net effect of these opposing forces yields the rate
of change in prescription drug expenditures
8
Cost drivers – 101

9.  Demographic Effects
 Population effect
 Aging effect
 Gender effect
 Volume Effects
 Prescription volume effect
 Prescription size effect
 Strength-form effect
 Drug Mix Effects
 Existing drug effect
 Entering drug effect
 Exiting drug effect
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“Push” and “Pull” Effects
 Price Effects
 Price change
 Generic substitution effect
“How much would public plan drug
expenditures have changed between
2011/12 to 2012/13 if only one factor (e.g.
price of drugs) changed while all the
others remained the same?”
In reality though, multiple factors change
simultaneously, creating a cross effect.

10. 10
Important push and pull effects drive costs

11. 11
Price effects pull drug costs downward

12. Pull effect: generic price reductions

13. Data Source: NPDUIS Database, CIHI
Pull effect: generic substitution

14. Push effect: Growth in beneficiaries

15. Push effect: Higher use of drugs

16. Push effect: Increased use of high-cost drugs

18. 18
Fee expenditures mainly driven by push effects

19. 19
Fee Driver: reduction in Rx size

20.  Low rates of change in drug cost in recent years in public plans
 Driven by opposing “push” effects and “pull” effects which nearly off-set
each other
 Demographic, volume, and drug-mix pushed costs upward:
 In the absence of generic savings, would have increased drug costs by 8.5% in
2012/13
 Generic price change and substitution pulled costs downward:
 In the absence of other cost pressures, would have decreased drug costs by
9.2% in 2012/13
 Prescription size matters, and pushed dispensing costs in some plans.
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Conclusions
Future editions of the CompassRx will monitor cost drivers in public plans

21. Thank you
Elena Lungu
Elena.Lungu@pmprb-cepmb.gc.ca
http://www.pmprb-cepmb.gc.ca/en/npduis
NPDUIS website