Purpose: Patient cost-sharing usually reduces overall health resource utilization. However, under the Canadian medicare system, where all health services except prescription drugs are free, the converse may be true. To test this hypothesis, we estimate healthcare demand elasticities (percentage change in quantity demanded for each percentage change in price) to evaluate the impact of cost sharing policies for prescription drugs on overall health resource use among seniors with rheumatoid arthritis (RA) in British Columbia (BC), Canada.

Methods: Medication and physician visit data between 2001/01/01 and 2002/12/31 for all seniors were selected from a population-based RA cohort. Under the BC drug insurance program, prior to 2002, seniors paid 100% of their dispensing fee costs to an annual maximum of $200 (Plan A) after which drugs became free of charge. Starting in 2002, this plan was split into Plans A and A1(Premium Assistance) whereby seniors paid a maximum of $25 and $10 per prescription to an annual maximum of $275 and $200, respectively. Only seniors who either reached or did not reach the annual deductible in both years were considered. Patients were classified into 4 groups based on reaching the annual deductible and their Plan. Own-price and cross-price elasticities were estimated using mixed effect models controlling for patient demographics and disease-related variables. The monthly rate of prescriptions filled and physician visits were assessed.

Results: A total of 5,227 patients were included in the study. Estimated own-price and cross-price elasticities are presented (Table). All four groups have negative own-price and positive cross-price elasticites. Positive cross-price elasticities of demand on physician visits with respect to the change of drug price suggested that when cost sharing for prescription drugs increased, so did the demand for physician visits. However, with increased cost of prescription drugs, the number of prescriptions filled fell.

Conclusions: In a predominantly publicly funded health care system, the introduction of market driven cost containment concepts such a patient cost-sharing might have the unintended impact of increasing overall utilization.

	Exceed deductible				Not exceed deductible
	2001	2002	2001	2002	2001	2002	2001	2002
	Plan A	Plan A	Plan A	Plan A1	Plan A	Plan A	Plan A	PlanA1
N	1,170		675		1,813		1,569
Rx’s filled	-0.13		-0.20		-0.21		-0.29
Physician visits	0.50		0.89		0.08		0.30