Drug spend in Canada may have remained flat in 2011, but private drug plans wasted approximately $5 billion last year, according to Express Scripts Canada’s latest Drug Trend Report. The report, which defines waste as “spending that does not result in improvements to health outcomes,” points to the following ways in which plan sponsors could be losing out.
• Channel waste — According to the report, channel waste is created by using suboptimal dispensing intervals for maintenance drugs, and by not using the most cost‐effective distribution channels. Express Scripts says that such waste totalled up to $1.1 billion in 2011.
• Drug mix waste — This refers to waste in drug spend that occurs by using higher‐cost medications that generate no additional health benefits. According to the study, drug mix waste in 2011 was up to $4.2 billion.
• Non–adherence waste — Express Scripts defines this as waste from the patient not taking medications as prescribed, which can lead to a worsening of the patient’s condition and, in turn, more physician visits, laboratory tests, drug therapy, emergency room visits, hospital admissions and short‐term disability insurance payments. According to the report, the total cost of non-adherence is estimated at $7 billion to $9 billion per year.
Eliminating plan waste requires applying behavioural science techniques to plan members, says Express Scripts, in order to encourage them to actively participate in controlling costs. This may include helping plan members to understand the importance of prescription adherence and explaining to them when and why to use generic substitution.
“The key to reducing waste is to actively engage plan members and help make it easy for them to consistently choose a lower‐cost, clinically effective medication from a lower‐cost delivery channel while encouraging and facilitating adherence to their medication therapy,” said Michael Biskey, president of Express Scripts Canada. “Optimal outcomes for the patient and the plan sponsor are only possible by changing the behaviour of patients.”
Other findings from the report include the following:
- Drug spend — On a national basis, the average annual drug spend per claimant in 2011 was $761, compared with $757 in 2010.
- Utilization— Usage continues to rise by about 2.5% every year, bringing the average number of prescriptions per claimant to 12.6 in 2011. By comparison, the average number of prescriptions per claimant was 12.3 in 2010.
- Cost per prescription — The cost per prescription decreased 1.8% to $60.45 in 2011, compared with $61.55 a year earlier.
- Dispensing fee — Overall, the average dispensing fee submitted in Canada increased to $10.74 in 2011, compared with $10.64 in 2010.
- Generic drug costs — Generic prices reduced during 2011 from approximately 60% of brand price to anywhere between 30% and 45%, depending on the region. However, this change was limited to formulary generics (approximately 15% of the total overall spend).
- Brand drug costs — Although specialty drugs comprised just 1% of all drug claims, they contributed to almost 20% of the total spend. In addition, specialty drug spend increased by 12% in 2011, compared with traditional drugs, which had a negative trend of 1.9%.
- Brand/generic mix — Generic fill rate (GFR) in Canada reached an all‐time high of 50.8% in 2011, thanks to patent expiries of several highly utilized drugs. The first‐time generic availability of brand drugs, such as Avapro and Zomig, also contributed to an overall 2.1% increase in the GFR in 2011.
The Express Scripts Canada 2011 Drug Trend Report can be downloaded at express-scripts.ca/research/drug-trend-reports. Get a password to access the document by emailing ExpressScriptsCanadaOutcomesConferenceTOR@express‐scripts.com.