Prescription Drug Expenditures and Population Demographics

Abstract

To provide detailed demographic profiles of prescription drug utilization and expenditures in order to isolate the impact of demographic change from other factors that affect drug expenditure trends. Demographic information and drug utilization data were extracted for virtually the entire British Columbia (BC) population of 1996 and 2002. All residents had public medical and hospital insurance; however their drug coverage resembled the mix of private and public insurance in the United States. A series of research variables were constructed to illustrate profiles of drug expenditures and drug utilization across 96 age/sex strata. Drug use and expenditure information was extracted from the BC PharmaNet, a computer network connecting all pharmacies in the province. Per capita drug expenditures increased at an average annual rate of 10.8 percent between 1996 and 2002. Population aging explained 1.0 points of this annual rate of expenditure growth; the balance was attributable to rising age/sex-specific drug expenditures. Relatively little of the observed increase in drug expenditures in BC could be attributed to demographic change. Most of the expenditure increase stemmed from the age/sex-specific quantity and type of drugs purchased. The sustainability of drug spending therefore depends not on outside forces but on decisions made by policy makers, prescribers, and patients.