Study: Out-of-pocket spending on prescription drugs

Household spending on prescription drugs jumped more than 70% in the decade-long period between 1992 and 2002, according to a new study published today in Perspectives on Labour and Income.

Out-of-pocket spending on medications represented less than 1% of the family budget in 2002. However, it surged 71% in 2002 dollars during the decade, according to the study, which used data from the Survey of Household Spending and the Family Expenditure Survey.

At the same time, average household spending on all aspects of health care increased only 53%, while spending on food, clothing and shelter increased only 11%.

The 7.8 million households that reported spending on prescription drugs in 2002 had average out-of-pocket expenses of $378. This compares with $222 in 1992. The gain is likely due to at least two factors: the introduction of new, more expensive drugs, as well as the higher volume of drug use resulting from a larger, and aging, population.

Total out-of-pocket spending in 2002 amounted to an estimated $3 billion. Pharmacies filled around 300 million prescriptions, about 10 for each man, woman and child.

The most important factor associated with prescription drug spending was the province of residence, even when factors such as household type, income, unionization and others were taken into account.

Spending varied from province to province, reflecting the diversity of provincial drug plans, as well as the age and health of the population.

In 2002, Ontario households spent the least on prescription drugs, $257 on average. This may be attributable to the availability of high-quality drug plans. An estimated 62% of Ontarians were covered by private drug plans, the highest level in Canada.

On the other hand, Saskatchewan families spent an average of $415, the highest in Canada, possibly because of the composition of its population. Saskatchewan had the highest percentage of senior citizens (15%) of all the provinces, and one of the highest proportions of Aboriginal people (13%).

In addition, Saskatchewan's large farming population meant that many people had no access to prescription drug insurance through employment. One-fifth of Saskatchewan's work force was self-employed, the highest in Canada.

A 2002 Senate report recommended that provinces and territories should implement programs to ensure that households would never have to pay more than 3% of their after-tax income for prescription drugs. In Saskatchewan, 15.9% of households did so in 2002, compared with only 3.3% of households in Ontario and the national average of 6.5%.

Income and age were also factors related to household drug expenditures. All provinces have introduced some form of drug plan for those aged 65 and over. However, senior households are still more likely to report out-of-pocket prescription drug spending and to have higher than average expenditures.

Households with at least one senior reported prescription drug spending of $518 in 2002. This represented about 1.2% of their total household spending that year.

Definitions, data sources and methods: survey number 3508.

The article "Out-of-pocket spending on prescription drugs" is available in the September online edition of Perspectives on Labour and Income, Vol. 6, no. 9 (75-001-XIE, $6/$52).

For more information, or to enquire about the concepts, methods or data quality of this release, contact Jacqueline Luffman (613-951-1563; jacqueline.luffman@statcan.gc.ca), Labour and Household Surveys Analysis Division.