The distribution and determinants of catastrophic out-of-pocket prescription drug expenditures in Canada

Background: As the need to achieve the financial protection goal of Universal Health Coverage (UHC) continues to grow globally, it is imperative to develop appropriate policy interventions to address the financial risks that out-of-pocket prescription drug expenditures (OOPDE) in Canada poses. Empirical studies of the prevalence and determinants of catastrophic OOPDE (expenditure that poses a significant threat to households’ living standards) in Canada are very few and there is a paucity of scholarly works in this regard. Objectives: i) to assess the current prevalence of financial catastrophe and impoverishment from OOPDE; ii) to analyze the factors that are possibly associated with catastrophic OOPDE; and iii) to examine the implications of the proposed national Pharmacare plan on the distribution of OOPDE. Methods: This study used the 2016 Statistics Canada Survey of Household Spending; 11,446 households were included in the analysis. Catastrophic OOPDE was analysed at several thresholds using a novel budget share – capacity to pay approach. Concentration indices were constructed to determine which households overshot their budget shares. Canada’s official poverty line was used to construct a Pen’s parade to show impoverishment from OOPDE. Further, multivariate logistic and partial proportional odds regression models were fitted to investigate the determinants of catastrophic OOPDE. Results: Residents who are in the working poor income category in Quebec and Prairie provinces had a higher risk of incurring catastrophic OOPDE compared to the reference group – the households with higher than average income living in Ontario. Type of employment and education were also associated with catastrophic OOPDE. Also, households with a lower capacity to pay experienced a higher prevalence of incurring catastrophic spending. The Pen’s parade also showed most households that fell below the poverty line as a result of OOPDE were in the lower half of the income distribution. Conclusion: This study revealed that despite the existing public-private mix of prescription drugs insurance, some households are being drawn into poverty and for some others, poverty is deepened when they make OOPDE. The findings suggest, particularly based on the experience of Quebec, that the presence of a mandatory insurance for all residents does not necessarily better protect them from financial catastrophe compared with other insurance programs. Instead, the comprehensiveness of the health insurance package determines the effectiveness of a health insurance program