11 - Drug Utilization Flashcards
Is the amount spent on drugs in Canada as a percentage increasing over time?
Yes, it has been steadily increasing since the 1980s. We now spend more than the amount on physician services.
What is drug utilization?
Utilization refers to both the amount(Q) as well as the types(P) of medicines prescribed and consumed.
Drug Cost = Amount (Q) x Type of drug (P)
What factors affect Drug Utilization?
Demographic Changes: growth/decline and age distribution (Seniors and Newborns disproportionately used health resources)
Disease Patterns: changes in rates of diseases requiring drug therapy due to societal and cultural changes (trends of consuming less red meat, alcohol, and tobacco)
Availability of Drug Therapy: drug therapy tends to replace other types of treatment/intervention. This is done because they are effective and convenient.
Perceived cost: Those with higher incomes or access to subsidies are generally more likely to seek and obtain their medications.
Prescribing Patterns: there is a tendency to persists with, or rely upon a particular drug or treatment option. Changes in patterns tend to replace older (cheaper) medications with newer (expensive) medications
Patient Expectations: patients compare benefits vs. Risks (Covid-19 vaccines). Direct to consumer advertising also helps brands get the attention of consumers without the input of healthcare professionals.
What is the role of the Federal government in affecting drug availability?
There are three main policy areas of federal jurisdiction affecting availability (price, cost, supply) are the following:
Food and Drugs Act (ensures efficacy and safety): drug approval and promotion
Patent Act (encourages innovation by pharmaceutical industries)
Patent Medicines Price Review Board (secure value for money): price enforcement to prevent drug companies from charging high prices due to limited competition.
How are drugs approved under the Food And Drugs Act?
A manufacturer must file a new drug submission that includes:
Results of a pre-clinical and clinical trials
Details about production, packaging and labeling
Therapeutic Use
Conditions for use and side effects
Approved drugs receive a Notice of Compliance (allows manufacturers to sell) and a DIN (allows manufacturers to be paid by provincial plans or private insurance)
How is drug promotion regulated in Canada?
Section 9.1 of the Food and Drugs Act mandates that advertising should not include information that is false, misleading, deceptive or likely to create an erroneous impression. Complaints can be directed to Health Canada and they are responsible for the review process.
Why is the Patent Act important?
This act enforces patents as a way to support drug R&D, but they can result in monopolies. To combat this they are regulated by other pieces of legislation.
How did the Patent Act evolve?
To combat monopolization the patent act was amended in 1969 and generic companies could make brand name drugs from day 1, but were required to pay a 4% royalty. This hurt the sales of brand name drug companies, but resulted in a lot of savings to the consumers.
In 1986, the Patent act was amended by Bill C-22. This gave protection from compulsory licensing for a period of 7-10 years. To prevent monopolization, the Patent Medicines Price Review Board was created to control prices for patent medicines
In 1992, Bill C-92 conformed patent laws in Canada to the NAFTA/international standards. This extended patent protection to 20 years and following this change there was lots of R&D money spent in Canada
Were the changes to the Patent Act really worth it?
In terms of R&D investment, the amounts have returned to traditional levels despite increased patent protection. It seems like Canadians got a raw deal
What is the role of the Patent Medicines Price Review Board (PMPRB)?
Established in 1987, it monitored the price of patent medicines. The prices set by the PMPRB by taking the median price from a group of peer nations and this is especially true for a breakthrough drug.
Are provinces able to control drug costs?
Yes, provincial public drug plans hold most of the responsibility to control drug costs
They have an increasingly harder time holding down costs with patent extensions for existing medicines (fewer generics) as well as new increasingly expensive medicines.
What are some strategies used by the provinces to control drug costs?
Formularies: Therapeutic benefit and alternatives (economic consideration and rule explicit criteria for use)
Generics: this is a major source of cost savings and this helps dismantle monopolies by increasing competition
Reference-based pricing: all drugs available, but price of ‘reference’ rug the price for any drug in the category. ex. All H1 antagonists are the same price even if they are different compounds
Price Freezes and Rollback:
Legislative interventions to eliminate pharmacy rebates and reduce costs to the public payer
Professional Fees and Mark-ups:
This accounts for 1/3 of prescription’s final cost. Provinces negotiate with professional pharmacy associations
Cost shifting: consumer/patient pays more if the drug cost (less public funding)
Risk-sharing: formulary approval subject to conditions the drug companies and province take a risk on cost overruns due to mistakes in sales forecasting
Interprovincial Cooperation: Collectively determine value for money based on common criteria when considering a drug for addition to their individual formularies. They can also collectively negotiate with industry for discounts on brand and generic drugs.
