The financial burden of out of pocket prescription drug expenses in Canada

Abstract

Pharmaceutical expenditures account for approximately 15.9 % of total health expenditures in Canada. Unlike hospital and physician services, in which costs are universally covered, most pharmacological therapy does not fall under the umbrella of 'medically necessary' services set out by the Canada Health Act, and therefore is funded through a mix of public and private plans. Little is known about the actual financial burden experienced by Canadians from out-of-pocket drug expenditures (OOPDE). This paper examines the burden of OOPDE in Canada. 1.1 % of Canadian households exceed our catastrophic threshold (9 %) of the drug budget share. Additionally, 2.6 and 8.2 % of households exceed lower thresholds of 6 and 3 % respectively. We find an inverse relationship between household income and the burden of OPPDE. Low-income households have the highest likelihood of being in the 'catastrophic' drug expenditure category. This finding suggests that a vulnerable population of 'working poor' are likely to be experiencing disproportionate financial burden because they are not eligible for public assistance programs. Seniors experience the highest burden of OPPDE when compared to other age groups. We also find that there is significant interprovincial variation in the burden of OOPDE, which partly reflects different provincial government drug coverage policies.

Filling the Gaps: A Prescription for Universal Pharmacare

“…About 1.1 percent of households spend more than 9 percent of their income on medication and 8.2 percent spend more than 3 percent of income on medication (Figure 4). 8 In particular, lowincome households and people over the age of 65 are more likely to spend significant portions of their household budgets on medication (Caldbick 2015). These gaps are puzzling because tax-funded insurance plans cover seniors and social assistance recipients.…”

“…To estimate the cost of providing insurance against 'catastrophic' prescription drug costs we use results from Caldbick et al (2015) that estimate the percentage of households that face expenses greater than 3 percent, 6 percent and 9 percent of household income by province and age group (Figure 4). Individual income is projected using a three-year compound annual growth rate and the percentage of people with income is assumed to remain constant at 2016 levels (Statistics Canada).…”

Universal Pharmacare in Canada: A Prescription for Equity in Healthcare

“…Provincial governments have individually implemented a variety of public drug coverage programs that alleviate some of the burden on some particular classes of residents, including low-income households, seniors, and those households using social assistance. 2,10,11 Significant interprovincial variation in drug coverage has led to notable variation in the burden of out-of-pocket expenses on drugs and pharmaceutical products (OPEDP). 11 Since Medicare was first introduced in Canada by Saskatchewan Premier Tommy Douglas and his social democratic government in 1947, 12 there has been no shortage of calls to include universal prescription drug coverage for all Canadian residents.…”

“…2,10,11 Significant interprovincial variation in drug coverage has led to notable variation in the burden of out-of-pocket expenses on drugs and pharmaceutical products (OPEDP). 11 Since Medicare was first introduced in Canada by Saskatchewan Premier Tommy Douglas and his social democratic government in 1947, 12 there has been no shortage of calls to include universal prescription drug coverage for all Canadian residents. Royal Commissions, such as the Hall Commission (1964) 13 and the Romanow Commission (2002), 14 as well as numerous recent provincial and federal government reports 2,10,12,15 have recommended the adoption of universal pharmaceutical drug coverage in some form.…”

“…Several empirical studies have demonstrated the financial hardships suffered by Canadians because of the uninsured costs of pharmaceutical drugs. 11,16,17 Even with brief periods of public attention in the past, the topic of pharmacare has remained relatively untouched by Canadian policy-makers because of a lack of electoral incentives and general concern over costs to be incurred by government 18,19 -despite robust cost proposals by Morgan and colleagues, 20,21 and Wolfson and Morgan. 22 Recently, however, pharmacare has become a central topic of public discussion and political discourse, which is demonstrated by its inclusion in the platforms of major political parties for the recent federal election and the establishment of the federal government's Advisory Council on the Implementation of National Pharmacare.…”