cadth 2015 b5 symposium oral - cost-drivers in public drug plans in canada
TRANSCRIPT
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
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
CADTH2
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
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Drug cost component – largest share
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Declining rates of growth in drug cost
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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
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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
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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.
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Important push and pull effects drive costs
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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
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Fee expenditures mainly driven by push effects
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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.
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Conclusions
Future editions of the CompassRx will monitor cost drivers in public plans
