BACKGROUND AND OBJECTIVES: In May 2003, the government of British Columbia adopted income-based pharmacare, replacing an age-based program. Stated policy goals included the reduction and reallocation of government spending. It was also hoped that income-based deductibles would increase consumer price sensitivity in decision-making. This analysis measured policy impacts on private and public expenditure and on expenditure drivers. METHODS: We employed a longitudinal research design using PharmaNet records of every prescription dispensed in the province from January 1996 to December 2004. Expenditure dynamics were analyzed using non-stochastic decompositions of trends. Analyses were stratified by five age categories and five socio-economic quintiles. The effect of the policy on expenditure trends and their sources was assessed using time series analysis. Additional analyses, using equivalent methods, were conducted using market-level data to compare per capita expenditure in British Columbia to the Canadian average over the period 1998-2004. RESULTS: The BC Ministry of Health was successful in reducing the public share of drug expenditure through the introduction of seniors' co-payments in 2002 and then income-based pharmacare in 2003. The policy change did not have major effects on aggregate expenditure trends in the province. While several statistically significant changes in expenditure dynamics occurred during the period of study, only an increase in seasonal "stockpiling" of medicines by seniors can reasonably be attributed to the policy changes. DISCUSSION: The lack of large and differential policy impacts on drug expenditure and utilization rates across age and income groups suggests that changes in the BC PharmaCare Program were designed in a manner that ensured continued access to medicines for the populations previously served by the drug plan (e.g., senior citizens). It also indicates that the policy did not significantly increase access to medicines by populations that might have been better served under the new policy (e.g., non-seniors). Finally, although it was hoped that income-based pharmacare might increase consumer cost consciousness, changes in the relative cost of certain drugs purchased following the policy change appear to have stemmed from other policies directly targeting the expenditure impact of therapeutic choices.