I remember when employers were concerned about the potential impact of a little blue pill called Viagra that came with an annual price tag of about $1,200. In those days, $1,200 would have been a high-cost drug. In 2017, that seems like a bargain, as today’s specialty drugs cost tens of thousands of dollars per patient per year.
For severe cases of rheumatoid arthritis, Crohn’s disease and psoriasis, specialty drugs can cost between $20,000 and $30,000 annually, while the cost of new medications approved to treat cystic fibrosis and other rarer diseases can exceed $250,000 each year. Drugs to treat hepatitis C can cost more than $100,000 but they essentially cure the disease in most patients. British Columbia announced recently it would cover those drugs as part of its provincial plan, which should provide cost relief for private insurers and employers. It’s uncertain other provinces will follow British Columbia’s lead.
More than half of all approvals by the Food and Drug Administration in the United States in 2015 were for specialty drugs, more than double the rate of 26 per cent in 2008, according to a recent study by Telus Health. The numbers tie into new data from the Equitable Life Insurance Co. of Canada, which found an employer with 100 employees has a 25 per cent probability of incurring a specialty drug claim. Within the next four years, the probability will likely increase to 50 per cent.
Employers are taking several approaches to managing high-cost drugs. Most drug plans have pooling protection and require some form of step therapy or prior approval before a plan member can access coverage for certain specialty drugs. Some plan sponsors have chosen to impose annual drug plan maximums, such as $10,000 per member per year, or exclude specialty medications from coverage altogether.
In some provinces, there are social safety net drug programs like the non-group program in Alberta and Trillium in Ontario. Those programs can help reduce the financial burden on plan members who have limited coverage for specialty drugs. But in some other provinces, there’s little or no safety net, which makes the issue challenging for national employers.
What Canada really needs is a national program that provides drug coverage for all citizens. As it is, if employers and employees can no longer afford the cost of specialty medications, the resulting burden of medical care will fall on the public health-care system.
Canada is the only country in the world with universal health care that doesn’t include universal drug coverage. The government is reluctant to spend money on the issue as long as private plans continue to cover the drugs, and employers are reluctant to limit coverage until there’s a public program. I suspect there will be a tipping point in the future where employers can no longer afford to fully cover the drugs and the government can no longer ignore the impact coverage limits will have on the public health-care system.
No one wants a price tag to get in the way of a drug that could save or change a life. But until the government decides to play a bigger role in providing drug coverage, employers need to start asking some hard questions, including:
- How much is too much to pay for a medication?
- How does covering specialty drugs benefit the organization?
- Should biosimilars be mandatory for new patients?
- Should specialty drugs have a limitation for pre-existing conditions or an extended waiting period?
- Should coverage be higher for employees than dependants?
- Should plans exclude drugs that only extend life by a few months?
- Should they increase employee cost-sharing?
- What, if any, social safety-net programs exist in the provinces where their employees work?
- What drug cost management options are available through their insurance provider?
The answers to those questions will be different for every employer, and there are no wrong answers. What’s important is to begin the conversations now, devote some time to understanding the health drivers within an organization and make decisions that are right for each organization before costs spiral out of control. Since many health conditions and their associated drug treatments relate to lifestyle factors — and are preventable with a few key behaviour changes — answering the questions above may be a good place to start.