Getting the most out of what’s spent on employee benefits plans is an ongoing challenge for drug plan sponsors. In May, nearly 200 drug plan stakeholders gathered in Vancouver for the third annual Face to Face Drug Plan Management Forum, where industry experts discussed the latest drug plan trends and offered ideas for managing costs and improving health outcomes.

Year after year, the drug plan industry studies trends in utilization and costs with an eye on what’s coming next. Joanne Jung, director of pharmacy services for Pacific Blue Cross, moderated a panel discussion looking at various factors that could influence future trends.

Robert Taylor, a principal with TRG Benefits & Pensions Inc., stressed the different ways to analyze drug trend numbers and the importance of recognizing variances among provinces and plan designs. “Insurers tend to give global trend assumptions, but, when you go down to the plan sponsor level, you generate much different results,” he explained. “Lots of sponsors are doing things to try to manage drug benefits, but when it comes to drug trend analysis and pricing, insurers don’t factor in their specific experience and plan design when setting future rates.”

Acknowledging that many factors affect drug trends, the panel discussed whether the predictions made by IMS Brogan’s Private Drug Plan Forecasting Study, commissioned by Canada’s Research-Based Pharmaceutical Companies (Rx&D) and presented at last year’s Face-to-Face forum, matched the reality. IMS Brogan created a drug-spending baseline with data from five years prior to 2013 and considered the impact of generic pricing, new medicines and aging. As a result, IMS forecast an annual growth rate of 1.6% to 2.8% for 2013 to 2017.

Actual numbers from 2013 IMS data showed that the growth rate that year was 2.2%—clearly within the range forecast, said Michelle Boudreau, vice-president, private markets, with Rx&D. But she added that although the numbers for 2014 haven’t been crunched yet, the results may be different because of the impact of Hepatitis C products, such as Sovaldi, that are considered breakthrough cures for the disease.

David Willows, vice-president, strategic market solutions, with Green Shield Canada (GSC), reiterated his point that, to really understand drug trends, the industry needs to look at the interconnectivity of total benefits spending to find solutions. He expressed concern about the IMS study’s premise that new high-cost drugs are typically targeted at a low population of patients. “But then we got the Hep C drugs in 2014 with high cost and high population,” he said. “Those of you calculating your stop loss now will see very different trends than a year ago.”

One way GSC is dealing with expensive Hep C drugs is by limiting coverage to only one course of treatment. “We’ve required prior authorization since the Hep C drugs arrived and tell patients to choose an appropriate treatment with their doctor, to be adherent in taking the drugs and to enrol in a patient assistance program. We’ll reimburse the $60,000–$70,000 cost for the drug, but only once,” said Willows.

“Drug trend numbers are always about utilization, and the conversation will be about affordability for the next little while,” added Boudreau. “We may need to change the methodology of our forecast going forward because the market is changing so much.” But some things haven’t changed. While the patent cliff is over, she noted “there are still some rolling hills as products continue to be genericized. We know there will continue to be much innovation in the cancer area and that some important elements were not in our original forecast, like the impact of SEBs [subsequent entry biologics] and generic inhalers.” Emphasizing that all these factors will have a big impact going forward, Boudreau said “it’s important we focus on value and sustainability to ensure access to the medicines people need.”

Provincial drug plan policies are another factor affecting drug trends, said Taylor. “We saw lots of claims for the new Hep C therapies since being launched last spring. But, from a B.C. perspective, I think we dodged a bullet because PharmaCare has made these a covered benefit under special authorization. However, PharmaCare has also recently offloaded diabetes costs by limiting the number of test strips it will pay for. In the coming years, “we expect to see [a] significant spillover of costs to private plans related to non-insulin diabetics.”

He added that although the reduced trends from the past five years may have given payers a false sense of security, that’s about to change. “Many of the drug cost drivers (e.g., government pricing policy) that created the trend reductions are over,” he said. “It’s akin to coming out of the eye of the storm, and, with the launch of additional therapies, many plan sponsors will be taken by surprise.”

All the articles from the event can be found in our special section: Face to Face Drug Plan Management Forum coverage.

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Copyright © 2019 Transcontinental Media G.P. Originally published on

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