BACKGROUND AND OBJECTIVES: In May 2003, the government of British Columbia adopted income-based pharmacare, replacing an age-based drug benefits program. Income-based pharmacare has been proposed as a national model for Canada. Prior to evaluating the policy impact of the change, we sought to understand classic elements of the policy process: the problem that prompted the policy change, the objectives to be met, the choice of policy instruments and potential measures of success or failure. METHODS: We conducted interviews with decision-makers in British Columbia shortly after the policy was introduced. We used purposive sampling to target individuals specifically involved with BC pharmacare policy, including current or former government employees, government ministers and the leader of the opposition party. Seventeen of 24 invited subjects participated. RESULTS: Participants identified primary and secondary problems that required remedy through policy change: financial pressures and equity issues. Financial pressures were framed in the context of budgetary constraints on the BC PharmaCare Program, with reduction in public spending cited as the primary policy objective. Participants also indicated that it was important to minimize potential harm from any program change and, ideally, to improve access for low-income families. DISCUSSION: Income-based pharmacare in British Columbia appears to be the result of a two-stage policy-making process. Budgets were set by pan-ministerial actions of the provincial government. In turn, these budgetary measures constrained policy design at the ministerial level. Income-based coverage was BC PharmaCare's choice among options that would meet budget expectations. Success or failure of the policy would be gauged by (a) meeting budget targets, (b) maintaining or increasing access to medicines and (c) improving financial equity.