Almost nine in 10 plan sponsors are concerned about the rising costs of their drug plans over the next two to three years, according to Benefits Canada research.
At the 2016 Face-to-Face Drug Plan Management Forum in Vancouver in May, a panel discussed what’s driving these costs, where plan sponsors are finding savings and where there are opportunities for further reductions.
The panellists, who discussed research based on Benefits Canada interviews with more than 200 plan sponsors, included Anson Tang, drug product manager at Desjardins Insurance; John Herbert, director of strategy, product development and clinical services at Express Scripts Canada; Steve Smyth, director of private payer strategy at Janssen Inc.; and Bruno Mäder, vice-president of the biologics and diversified products division at Merck Canada. Shelley Kee, senior vice-president of group business at Pacific Blue Cross, moderated the panel.
Read: Employers urged to take more active role in controlling drug costs
The research found an average 13.6 per cent increase to health benefits premiums over the last year. The cost increase in drug plans specifically was 11.3 per cent, on average.
Delving into the drivers of the drug plan increases, the research found 32 per cent of respondents pointed to the cost of medication; 21 per cent pointed to utilization and claims; and 19 per cent pointed to biologics and specialty drugs. Other drivers included aging workforces, chronic conditions and new drugs.
Tang said the results are largely in line with his experience but noted new drugs, biologics and specialty medications should likely be higher on the list of cost drivers based on what he has seen.
Smyth said it’s important to consider the value people are getting from medications and the benefits that curing a disease or preventing absenteeism will have down the road for employers. “As you look at what goes into drug plan cost, you can’t do that without looking at the value that’s being received by these medications as well,” he said.
The research asked plan sponsors what controls they have in place to contain drug plan costs. The top three answers were generic substitution (71 per cent), prior authorization (45 per cent) and plan maximums (30 per cent). Case management was also cited as a control, by 19 per cent of respondents.
Read: Employers urged to embrace design changes to control drug costs
“I’m still surprised by seeing things like case management still not being utilized a lot,” said Mäder. He also said it was interesting that plan sponsors didn’t mention biosimilars as an area to control costs. “To me, that’s very surprising when you think that for the next five, six years, biosimilars could probably generate $3 to $4 billion in savings just in the private industry and more than double of that if you consider the public side,” he said.
The panel dug deeper into the use of specialty biologics. The research found 51 per cent of respondents had plan members who were currently, or in the past year, prescribed a high-cost specialty or biologic drug. Another 19 per cent of respondents said they didn’t have plan members in that situation, while 30 per cent didn’t know.
Tang said plan sponsors should be aware of what kinds of claims members are making and should ask for that information from their insurers.
Herbert said plan sponsors should view their drug spend as an investment and suggested plans concerned about rising costs should look for ways to reduce waste on existing maintenance medications to help fund new high-cost ones.
Read more from the Face-to-Face Drug Plan Management conference