Prescription Drug Expenditures and ‘Universal’ Coverage: the Quebec Experience in Canada

Abstract

This paper examines the relationship between public expenditures on prescription drugs and public-insurance coverage in Canada over the period 1985 to 2012 using data from the Canadian Institute for Health Information and Statistics Canada. We pay particular attention to the introduction of universal prescription drug coverage in Quebec in 1997. Employing an OLS procedure with panel-corrected standard errors (PCSE) and correcting for AR(1) disturbances, we find that universal coverage in Quebec led to an increase in per capita public expenditures on prescription drugs. It also led to a reduction in spending for over-the-counter medications, suggesting some substitutability between prescription and non-prescription drugs.