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

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 2

 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 3 Cost-drivers of public drug plans in Canada

4 Drug cost component – largest share

5 Declining rates of growth in drug cost

6 Sustained growth in fee expenditures

 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

 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 9 “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 Important push and pull effects drive costs

11 Price effects pull drug costs downward

Pull effect: generic price reductions

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

Push effect: Growth in beneficiaries

Push effect: Higher use of drugs

Push effect: Increased use of high-cost drugs

18 Fee expenditures mainly driven by push effects

19 Fee Driver: reduction in Rx size

 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. 20 Conclusions Future editions of the CompassRx will monitor cost drivers in public plans

Thank you Elena Lungu NPDUIS website