Canadian Public Drug Plan Expenditure Hits $14.1 Billion in 2022/23
New CompassRx report reveals a 7.4% rise in public drug plan expenditure driven by high-cost medicines and a post-pandemic surge in beneficiaries.
Public drug plan expenditure for the plans participating in the National Prescription Drug Utilization Information System (NPDUIS) rose by 7.4% in the 2022/23 fiscal year, reaching a total of over $14.1 billion . This growth rate outpaced the 1.7% increase in total health care spending in 2022 and exceeded the 4.9% change in the Consumer Price Index for Health and Personal Care during the same period . The primary drivers behind this increase were a sustained rise in the use of newer, more expensive medicines and a significant rebound in the number of active beneficiaries following the COVID-19 pandemic.
What Comprises the Total Expenditure?
The total prescription drug expenditure is composed of two main categories: drug costs and dispensing costs . In 2022/23, drug costs accounted for 83.1% of the total, while dispensing costs made up the remaining 16.9% .
Drug Costs: These costs, which include associated markups, grew by 7.9% from the previous year .
Dispensing Costs: These fees grew by 4.5% .
Public plans covered the vast majority of these expenses. Of the $14.1 billion total, the public drug plans paid approximately 88% . The remaining 12% was paid by beneficiaries through co-payments or deductibles, or by third-party private insurers .
What is Driving the Increase in Costs?
The report utilizes a cost driver analysis to isolate the specific pressures pushing costs upward . The most significant factor in 2022/23 was the “drug-mix effect,” which refers to the shift in use toward higher-cost drugs . This effect alone contributed 7.1% to the overall growth in drug costs .
High-Cost Drugs Dominate Spending
The financial impact of high-cost medicines is disproportionate to the number of patients using them.
Medicines with an annual cost exceeding $10,000 were used by less than 3% of beneficiaries but accounted for over 37% of total drug costs .
Medicines costing over $25,000 annually were used by less than 1% of beneficiaries yet consumed over 20% of the drug cost budget .
The segment of drugs costing over $100,000 per year saw the steepest rise, growing from 1.0% of total drug costs in 2017/18 to 5.1% in 2022/23 .
The Demographic Rebound
The pandemic caused fluctuations in the number of people accessing public plans. After a decline in 2020/21, the active beneficiary population fully recovered in 2022/23, increasing by 7.4% to reach 6.6 million people . This increase in the number of active beneficiaries exerted a 5.8% “demographic push” on drug costs .
Are There Any Savings?
While demographics and expensive drugs pushed costs up, other factors helped pull costs down. The “substitution effect,” which tracks the shift from brand-name drugs to lower-cost generics or biosimilars, reduced overall drug costs by 3.0% . Additionally, price changes reduced drug costs by 1.2% .
The Role of Biosimilars
Biosimilars, which are highly similar versions of biologic drugs, are playing a larger role in cost containment .
The substitution effect was largely driven by generics, but biosimilars contributed -0.7% to the savings .
Biosimilar switching initiatives in various provinces have increased uptake . For example, biosimilars for the drug infliximab captured 57.9% of the market in 2022/23, while biosimilars for etanercept captured 68.6% .
The total drug costs for biologics reached $3.8 billion, representing 32.6% of total drug costs .
Trends in Dispensing Costs
Dispensing costs, which represent the fees charged by pharmacies, grew by 4.5% in 2022/23 . This marks a return to pre-pandemic growth trends following stagnation in previous years .
The primary driver for this increase was the demographic rebound. The increase in active beneficiaries pushed dispensing costs up by 5.1% . However, this was partially offset by a “drug volume effect.” The quantity of drugs dispensed per patient decreased, which pulled dispensing costs down by 2.2% .
The Numbers
$14.1 billion: Total prescription drug expenditure for NPDUIS public plans in 2022/23.
300 million: The number of prescriptions filled by active beneficiaries in 2022/23.
6.6 million: The number of active beneficiaries in the public plans, a full rebound from the pandemic.
$2,127: The average annual prescription cost per active beneficiary.
62.3%: The percentage of total public plan drug costs accounted for by the 7.6% of beneficiaries with annual drug costs exceeding $5,000.
$300,000+: The average annual treatment cost for each of the top 10 highest-cost drugs in 2022/23.
Takeaway
The 2022/23 data indicates that public drug plan expenditure is growing at a rate faster than general health spending and inflation . This trajectory is defined by two opposing forces. On one side, a recovering beneficiary population and a shift toward high-cost, specialized medicines (particularly biologics and oncology drugs) are driving significant cost pressure . On the other side, the system is finding savings through price reductions and the substitution of brand-name drugs with generics and biosimilars .
As the number of high-cost medicines continues to rise—specifically those exceeding $100,000 annually—the pressure on public plans to manage these expenditures will likely intensify . Stakeholders and decision-makers will need to monitor how these expensive therapies interact with the saving potential of biosimilar initiatives to maintain the sustainability of the plans .
Source Documents
Patented Medicine Prices Review Board. (2025). CompassRx, 10th edition: Annual Public Drug Plan Expenditure Report, 2022/23. Ottawa: PMPRB .