A British Columbia labour arbitration decision is providing insight on how a block level implementation of a benefits provider’s drug cost-control program violated a collective agreement in a unionized workplace.

The Douglas College Faculty Association grieved the implementation of Manulife’s DrugWatch program contravened their collective agreement, which ensured “there will be no change to the level of health and welfare benefits without prior consultation between the local parties.”

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According to the published decision, Manulife didn’t consult with plan sponsors about the cost-control program, as it believed the terms of its contracts gave it the authority to make administrative changes and implemented the program as the default for its book of business.

According to background information included in the decision, Manulife didn’t intend for plan sponsors to choose to opt in or out of the program, however, plans with administrative services-only contracts could opt out based on certain conditions. This could include restrictions such as new drugs not being eligible for pooling, which could result in higher premiums; or increased pooling charges for plans that didn’t defer or deny drugs in line with the program. Manulife didn’t respond to Benefits Canada’s request for comment.

The complaint alleged there was no consultation between the plan sponsor and union about implementing the program. According to the published decision, the plan sponsor had no knowledge of the new program until they were contacted by Manulife and as a result, they weren’t able to consult with the union prior to implementation.

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The arbitrator found the introduction of the program could delay or deny coverage of a new drug, which effectively reduced the level of coverage and changed the scope of the plan. The insurer plan member booklet, group policy contract and plan document all stated the provisions of the collective agreement prevailed if there were any discrepancies.

The decision determined the program was an impermissible amendment to the prescription drug plan, because it changed the level of benefits outlined in the collective agreement and was implemented without prior consultation. It also noted an insurer’s administrative discretion can’t be used to change the core elements of “whose expenses are covered, when those expenses are covered and what expenses are covered.”

“Administrative rules should be a concern for all parties, in light of the potential impact to plan members,” says Joanne Jung, pharmacy practice leader at WTW Canada, who wasn’t involved in the decision. “The best approach is to require as much transparency as possible from carriers on transition so that all stakeholders can consider the risk issues, financial and member impacts related to particular changes.”

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