PMPRB report shows higher-cost medicines driving a 14.1% growth in private plan drug costs in 2023

Report explores the drivers of growth in prescription drug costs for private drug plans

February 25, 2025 — Ottawa, ON — Patented Medicine Prices Review Board

The Patented Medicine Prices Review Board has published its latest report, Private Drug Plans in Canada: Expenditure Report, 2018–2023. This report provides insight into the factors driving growth in prescription drug costs for private drug plans in 2023, as well as a retrospective review of trends in private drug plan costs and utilization since 2018.

As key stakeholders in the healthcare system, private drug plans play an important role in drug reimbursement in Canada and drug plan costs are a major concern for plan sponsors. Private insurance accounts for an estimated 38% of prescribed drug spending, or $15.8 billion.

The report provides policy makers and researchers with information on the sources of cost pressures and the cost-saving opportunities for Canadian private drug plans.

Prescription drug expenditures for private plans rose by 12.9% in 2023, returning to the pre-pandemic growth trend. Between 2018 and 2023, prescription drug expenditures in private drug plans grew at a compound annual growth rate of 7.1%.

Drug costs, accounting for 88% of prescription drug expenditures, increased by 14.1% from 2022 to 2023, while dispensing costs, representing the remaining 12%, grew by 4.5%. Private insurers typically covered 88% of the total prescription costs, leaving beneficiaries responsible for the remaining 12%.

Drug costs jumped by 14.1% in 2023, rebounding from three years of moderate increases (4–5%) during the pandemic. The primary driver was the increased use of higher-cost medicines (the drug-mix effect), averaging 6.3% from 2018 to 2023 and peaking at 9.2% in 2023.