Introduction to the 2020 Pricing Doc

In Canada, annual prescription medication costs were over $34 billion in 2019.1 Roughly 45% of that spending is financed by the publicly funded drug plans. Much of this spending is on treatment of chronic conditions predominantly cared for by family physicians2,3 and high cost medications used by a minority of Canadians.

While generic medications make up ~78% of public drug claims, generic medications/biosimilars account for only ~30% of spending. Brand name medications and biologics represent only ~22% of claims but ~70% of all costs.1

Almost 40% of public drug dollars are spent on ~2% of Canadians, 60% of who are using drugs that cost $10,000 per year or more. The top 3 drug classes (biologics, hep C and macular degeneration medications) are used by ~1% of the population, but account for almost 20% of total drug spending.1  

Canada has the second highest spending per capita on and average price of biologics in the OECD, after only the United States. Canada has one of the lowest biosimilar use rates of OECD countries.4 While over 90% of patients in some European countries are using biosimilar products, only 8% of Canadians who require biologic/biosimilar are on biosimilars4. Programs that require the use of biosimilars may change that over the next few years.

Best evidence demonstrates similar clinical outcomes for starting patients on either biosimilar or originator biologic and switching patients from originator to biosimilar.5 In Alberta, if 90% of patients on RemicadeTM and EnbrelTM were transitioned to biosimilar products, we would save at least $50 million savings annually.5

Canada is currently the only OECD nation with a universal health insurance system but no national pharmacare program. Adopting a national pharmacare program would save approximately $4 billion annually in prescription drug costs.6

In 2015, pharmaceutical companies spent over $500 million on journal advertisements and sales representative visits in Canada, with over 90% of that marketing aimed at medications with little or no gain in therapeutic value over existing products.7,8

A national formulary with a focus on cost-effective and evidence-based drug utilization would potentially help curtail some of the impact of pharmaceutical industry marketing on prescribing patterns. New Zealand has a rigorous national formulary system focused on evidence based on clinical outcomes and cost-effectiveness.9 A comparative analysis of Ontario and New Zealand drug spending found that if Ontario implemented a comprehensive formulary management system like that of New Zealand, the savings just for statins, PPIs and ACE inhibitors would be over $370 million annually.10

However, a national pharmacare program does not appear to be imminent, and therefore educating prescribers about medication costs may influence them to choose lower cost alternative medications.11

With this in mind, we are pleased to publish our 2020 Price Comparison of Commonly Prescribed Pharmaceuticals in Alberta. We encourage prescribers to consider costs (and medication coverage) when treating chronic medical conditions and especially when choosing between therapeutically similar medications. In addition to considering lowest cost alternatives, other ways of decreasing drug costs include:

  • Prescribing products priced at or lower than MAC products (see below)
  • Using combination products
  • Extending long term prescriptions to 100 days
  • Splitting medications, if possible

Specific examples of where prescribing can substantially decrease unnecessary pharmaceutical spending without negative patient outcomes includes:

  • PPIs: Use MAC PPI (pantoprazole magnesium) when possible
  • ACE inhibitors: Change to MAC ACE inhibitors when possible (ramipril or lisinopril)
  • Biosimilars: Use biosimilars when possible
  • Anti-VEGFs for macular degeneration: Bevacizumab as effective and less expensive than alternatives
  • DPP-4 inhibitors: Stop prescribing; no patient oriented outcomes
  • Long-acting insulins: Use biosimilar insulin glargine or change patients to NPH
  • LABA/ICS combo inhalers: Change Advair to Symbicort; same effect, less expensive

Maximal Allowable Cost (MAC) Program

The Maximum Allowable Cost (MAC) pricing program limits the amount paid by the government of Alberta for publicly funded drug plans.

Currently ACE inhibitors, ARBs, CCBs, statins and PPIs are subject to MAC pricing.

The coverage of drugs under MAC pricing is not impacted, but the amount the government pays for those drugs is. Within each class, a reference drug is chosen as the Maximum Allowable Cost drug.

The government will pay the cost of the drug OR the cost of the MAC drug, whichever is lower. The difference between the actual cost of the drug and the amount paid by the government will be paid out of pocket by the patient.

A quick example: Tony takes perindopril 8mg once daily. The reference drug for ACE inhibitors is lisinopril 20mg. 100 days of perindopril would cost $43.35 whereas lisinopril would be $33.59. The government will only cover the portion of the price up to the MAC price. In this case, the difference to which the patient would pay would be $9.76.

For more information, please see the table of MAC medications: Maximum Allowable Cost (MAC) Policy — Table Expanded Drug Categories and the Alberta Blue Cross bulletin.

In this document, costs listed are primarily for the generic product (with generic name bolded) as provincial drug plans will generally only pay for the lowest cost formulation. Brand name prices (with brand name bolded) are for products still under patent protection. We also provide information on coverage by Alberta Blue Cross (BC) and Indigenous Affairs (IA) formularies and which products require Special Authorization (SA). Medications that are not covered (NC) are paid for entirely by your patients.

The prices, rounded to the nearest $5, represent the entire retail cost of the prescription filled at a community pharmacy in Alberta, including markups and dispensing fee. This does not reflect what a patient would pay if covered under a drug plan, but rather the cost to an individual without coverage, or to the health system. The reported price reflects the maximum allowable dispensing fee charged under provincial regulations. Some pharmacies may charge less than that, but this tool allows for relative cost comparisons between medications in the same class or for treating the same condition. This list is updated annually by the authors, with the cost updated monthly by Alberta Blue Cross.

We encourage you to contact your local pharmacist for information on medications not included that you routinely use in your practice.

Please forward any feedback, including cases where knowledge of medication cost or coverage made a difference to your patients or practice to: mkolber@ualberta.ca or tony.nickonchuk@ahs.ca

Top 10 Prescriptions by class: By number of active beneficiaries

Top 5 Medication Classes by Drug Spending Dollars

References:

1 CIHIs Prescribed Drug Spending in Canada, 2019. Available at https://www.cihi.ca/sites/default/files/document/pdex-report-2019-en-web.pdf. Accessed June 26, 2020.

2 Stewart M, Ryan B. Ecology of health care in Canada. Can Fam Physician 2015; 61:449-53.

3 Prescription medication use by Canadians aged 6 to 79. Statistics Canada. 2014. Available at: http://www.statcan.gc.ca/pub/82-003-x/2014006/article/14032-eng.htm. Accessed November 23, 2015.

4 Patented Medicine Prices Review Board. Biosimilars in Canada: Current Environment and Future Opportunity. April 2019. Available at http://www.pmprb-cepmb.gc.ca/CMFiles/News%20and%20Events/Speeches/biosimilars-april2019-en.pdf. Accessed June 26, 2020.

5 Perry D, Ton J, Kolber M. Tools for Practice: It’s all in the details…or is it? Biosimilars versus biologics for inflammatory conditions. Available at https://gomainpro.ca/wp-content/uploads/tools-for-practice/1559165324_1558969328_tfp236biosimilarsfv.pdf. Accessed July 7, 2020.

6 Wolfson MC, Morgan SG. How to pay for national pharmacare. CMAJ 2018; 190: E1384-8. doi: 10.1503/cmaj.180897

7 Lexchin J. Drug prices: How do we get to a better place? CMAJ 2017; 189:E792-3.

8 Lexchin J. The relation between promotional spending on drugs and their therapeutic gain: a cohort analysis. CMAJ Open 2017;DOI:10.9778/cmajo.20170089.

9 Zafar A. CBC News January 29, 2017. Generic drug industry agrees to cut prices up to 40% in 5-year deal with provinces Available at: http://www.cbc.ca/news/health/generic-drug-prices-1.4509073. Accessed June 26, 2020.

10 Kelley LT, Tenbensel T, Johnson A. Ontario and New Zealand pharmaceuticals: Cost and coverage. Health Policy 2018;13(4):23-34.

11 Gorfinkel I, Lexchin J. We need to mandate drug cost transparency on electronic medical records. CMAJ 2017;189:E1541-2.