Poor decisions by plan members lead to drug plan waste and can cost plan sponsors more than $5 billion every year, according to a report.

The 2012 Express Scripts Canada Drug Trend Report found that the use of higher-cost medications that don’t generate additional benefits wastes $3.9 billion, while not using cost-effective distribution channels wastes an additional $1.2 billion annually.

“There’s often a predisposition for prescribing the newest type of therapy versus one that may be an older therapy that may be just as clinically effective for the patient,” said Michael Biskey, president of Express Scripts Canada in an interview with Benefits Canada.

He added that physicians often don’t understand drug pricing and don’t usually know what kind of drug plan coverage the patient has.

“In other words, you’re not getting necessarily the lowest cost, clinically effective therapy prescribed for the patient, and, therefore, that creates waste.”

Plan members who don’t take their medications as prescribed can also create more costs for sponsors as this action could lead to a worsening in their medical condition, increased absenteeism, decreased productivity and higher disability costs.

Another component of drug plan waste is when patients choose to get their prescriptions filled at pharmacies that charge higher dispensing fees. The report found that the national average for dispensing fees was $10.91 last year. And 37% of all claims were submitted with a fee of $11.99 or more.

In Quebec, the standard practice is to dispense just a 30-day supply, even on maintenance medications used on a regular basis.

“There’s nothing preventing pharmacies from giving a longer day supply. But it does result in more dispensing fees than necessary,” said John Herbert, director, pharmacy and clinical services, also with Express Scripts Canada. “In other regions, you do see patients get a 90-day supply. It’s more practice than anything else in the province of Quebec.”

That’s part of the reason why drug spend waste was the highest in the country. Thirty-six percent of its total drug spend qualifies as waste compared with 28.5% in Atlantic Canada. Quebec also had the lowest generic fill rate in Canada.

While the national average for prescription drug spend has flattened as patents have expired and government price reforms have gone through, Biskey expects costs will rise again as new medications and specialty treatments come to market.

To help reduce costs, he recommends plan sponsors take an active benefits management approach to engage plan members and make them understand the choices available as they use their benefit.

“And if plan sponsors don’t take action now, they’re going to be caught with some significant cost increases in the future, and they may be faced with tough decisions on what they want to cover in the drug plans in the first place, primarily driven by the higher-cost drugs that are coming to market,” Biskey said. “And that’s not what any Canadian plan sponsor wants.”

Copyright © 2017 Transcontinental Media G.P. Originally published on benefitscanada.com

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See all comments Recent Comments

Norm Johnston:

Employers and insurance companies need to be more vigilant and circumspect in managing health and dental plans. For example, independent dental hygienists offer economic cleaning services but most plan providers do not promote same.

Thursday, June 06 at 2:27 pm | Reply

Ross Perry:

The same waste applies to dental benefits. The orientation of these benefits is to treatment rather than prevention, and few dental plans promote risk assessment and the appropriate treatment of the infection associated with dental decay. About 40% of all spending on group dental plans is related to restoration of dental decay.

Monday, June 10 at 11:50 am | Reply

Jim Cochrane:

Guilt tripping seems to be the new normal. Try this on employees and their dependents at your peril. I suggest the decision over which Pharmacy has a lot to do with comfort zone. Buying drugs in a noisy supermarket next to the Dairy supply or in a warehouse with forklifts beepng their way past scores of bargain hunters is not condusive to the confidence of the employee or spouse that they have heard all the instructions properly.

Thursday, May 29 at 8:12 am | Reply

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