[72] Prescription drug costs: BC versus Canada

31 Dec 2008 [72] Prescription drug costs: BC versus Canada

In December 2008, the University of BC Centre for Health Services and Policy Research (CHSPR) published its second edition of the Canadian Rx Atlas on its website.¹ In this Letter we highlight the findings that compare the cost of prescription drugs in BC to Canada as a whole. We also summarize the therapeutic categories where BC physicians prescribe less than, equal to and more than the Canadian average.

How were the data in the Canadian Rx Atlas produced?

The Atlas reports information on retail sales of all prescription medicines sold in Canada, regardless of formulation (e.g. tablets, liquids, creams, inhaled medicines). It excludes non-prescription and hospital drugs. IMS Health Canada (a pharmaceutical market research firm) provided the patient specific data, which it collects anonymously from over 5,000 retail pharmacies across Canada. The cost data includes both ingredient and dispensing costs for all drugs paid for by governments, private insurers and individual patients. The Atlas provides both crude and age-standardized cost per capita for each of the provinces and Canada as a whole.

We use age-standardized data in this Letter focusing on the comparison between the cost of prescribing in BC and the national average. The cost of prescription drugs has three distinct determinants: volume effects, therapeutic choice effects and price effects. Volume effects reflect the absolute amount of drugs prescribed for a population, calculated by multiplying the number of individual prescriptions by the average prescription size. Therapeutic effects reflect different prescribers’ choices between drug classes (e.g. diuretics vs. ACE-inhibitors for hypertension) or within a class (e.g. simvastatin vs. atorvastatin) that lead to differences in average cost per capita. Price effects reflect the average cost for chemical entities plus dispensing fees.

Per capita cost of prescribing in BC is 28% below the national average

Canadians spent a total of $19 billion on prescription drugs in 2007, or approximately $578 per capita. The average per capita expenditure was highest in Quebec at $681, and lowest in British Columbia at $432. Age-standardized prescribing in BC was 28% less than the national average, with Saskatchewan the next lowest at 16% below the national average. The 28% decrease in cost of prescribing in BC is predominantly explained by an 18% decrease in volume of drugs dispensed and an 8.2% decrease in therapeutic choice effects. Price effects accounted for only 1.5% of the decrease.

How much did BC save on prescription drug costs in 2007?

If BC’s drug utilization was the same as the Canadian average in 2007, total spending in our province would have been $701 million higher. $455 million of this saving was due to BC residents purchasing fewer drugs, while $208 million reflects the savings from choosing lower-cost treatment options than in the rest of Canada.

BC has the second lowest rate of increase in prescribing costs between 1998 and 2007

The Rx Atlas also analyzed the rate of increase in prescription drug costs between 1998 and 2007 for Canada and for each province. The mean age-standardized annual rate of increase in Canada was 5.1%, with a range from 4.2% (Nova Scotia) to 8.0% (Manitoba). BC at 4.3% had the second lowest rate of increase in Canada.

Are BC’s lower prescription drug costs similar for different therapeutic categories?

The Rx Atlas provides separate data for 20 major drug categories. These data show that BC costs are above the national average for some therapeutic categories, but substantially lower for others. (Table) BC drug costs range from 13% above the national average for newer drugs for chronic pain to 41% below the national average for cholinesterase inhibitors for Alzheimer’s dementia.

Why are prescription drug costs in BC lower than in other provinces?

The Atlas authors found that the number of drugs funded through government reimbursement plans did not explain the provincial differences in cost. They found paradoxically that Ontario had the lowest number of formulary listings, but had above average drug costs. Similarly, BC has slightly more formulary listings than Quebec, but drug costs were over 50% higher in Quebec than BC. When the authors attempted to explain inter-provincial differences according to population characteristics such as income, health status or access to health care, no identifiable factor pointed to a clear cause for the variation in drug spending. For example, BC and Ontario have the two highest life expectancies in Canada (BC 81.2 years, Ontario 80.7 years, Canada 80.4 years) ², whereas prescription drug costs are 34% higher in Ontario than in BC.

Table: Prescribing in BC as compared to Canada by therapeutic category

Conclusions

• BC had the lowest per capita prescription drug costs in Canada in 2007.
• Rate of increase of drug spending in BC between 1998 and 2007 was the second lowest in Canada.
• Prescribing in BC for different therapeutic categories ranges from 41% below the national average to 13% above the national average.
• The reasons for the significantly higher prescription drug costs in the rest of Canada are not known, but it is clear that they are NOT associated with better health outcomes.

References

1. Morgan S, Raymond C, Mooney D, Martin D. Canadian Rx Atlas. Second Edition. http://www.chspr.ubc.ca/rxatlas/canada
2. Canadian Institute for Health Information, Health Indicators 2008 (Ottawa: CIHI, 2008). http://secure.cihi.ca/cihiweb/dispPage.jsp?cw_page=AR_152_E&cw_topic=152